More than half of the stablecoin Tether (USDT) is currently held on the Tron blockchain.
Why is USDT shifting to Tron?
Recent data from DeFi Llama shows that over 50% of USDT supply is held on the Tron network and less than 40% is held on the Ethereum blockchain.
According to Patrick Scott, founder of Dynamo DeFi, the growing demand for USDT on Tron is due to its common usage in many countries where access to USD is difficult.
Another Twitter user pointed out that the practice is particularly common in China.
The move towards using Tron instead of Ethereum could also be related to Ethereum’s transaction gas fees.nevertheless gas price Ethereum transactions are still more expensive than Tron transactions as they have not risen significantly since April.
Many exchanges offer USDT withdrawals as TRC-20 tokens with fairly low fees. Until recently, Gate.io offered free his USDT withdrawals via the Tron network.
TRON showing signs of growth
Increased use of USDT is not the only indicator of Tron’s growth. DeFi Llamma data shows that Tron’s Total Value Locked (TVL) has jumped from $4.11 billion to his $5.04 billion, indicating growing interest in the network. is showing.
TVL is a key metric in the DeFi space, reflecting the amount of value locked across various protocols.
USDT Reserve Practices Are Often Questioned
Stablecoins such as Tether’s USDT are gaining in popularity because they provide users with stable value and avoid volatility in cryptocurrency prices. However, the safety of USDT has often been questioned due to alleged fractional reserve practices.
Unlike other major stablecoin issuers, Tether has failed to deliver on its promise to publish third-party reports. As a result, many users have migrated to stablecoin alternatives like his USDC.
This apparent lack of transparency has been a recurring topic in the cryptosphere, with many believing that they do not hold a full reserve of USDT tokens issued by Tether, and that Tether is ” We are printing money.”
In fact, in October 2021, the US Commodity Futures Trading Commission (CFTC) fined USDT $41 million for inadequate reserves. The CFTC found USDT only held enough reserves to back its tokens 27.6% of the time between 2016 and 2018, hence the fine.
Since the events that led to the demise of FTX, many users have started looking for more transparent and secure alternatives to USDT. I have.