As the global cryptocurrency market experiences a continued downtrend in 2023, the total market capitalization of stablecoins has been on a steady decline. However, amidst this challenging environment, Tether (USDT) stands out as an exception. Tether, the leading stablecoin, has defied the odds by continuously minting additional USDT, resulting in an ever-increasing market capitalization during this bearish period.
At present, the total supply of USDT has reached an impressive $85 billion, surpassing the previous high in 2022. Although this development brings hope to many bullish analysts, there is a noteworthy concern surrounding the heavy concentration of USDT on the TRON Network, raising questions about the stability and potential risks associated with such dependence.
The Growing USDT Supply on TRON
Despite the general market decline, Tether has been actively minting billions of USDT each month, and a significant portion of this new supply has found its way onto the TRON Network. The steady growth of USDT on the TRON Network has coincided with the overall increase in USDT market capitalization since the beginning of 2023.
Factors Driving USDT Adoption on TRON
Several factors have contributed to the rise of USDT on the TRON Network:
BitGo’s Support for TRC20 Tokens: BitGo, a prominent cryptocurrency custodian and wallet service provider, announced its support for USDC (TRC20) and USDT (TRC20) on the TRON Network. This move has led to a surge in demand for USDT on TRON, attracting more users to the network.
Telegram Integration: The popular messaging app, Telegram, added support for sending USDT (TRC20) to contacts directly within the application. This user-friendly feature has further facilitated the adoption of USDT on the TRON Network.
Low Transaction Fees and Speed: The TRC20 standard is favored by users due to its low transaction fees and fast processing times. This makes TRON an ideal network for non-custodial storage, attracting a growing user base.
Economic Conditions in Certain Regions: Inflation in countries like Argentina has exceeded 109%, prompting citizens to seek more stable assets like the US Dollar. However, accessing USD conveniently and cost-effectively can be challenging. USDT (TRC20) presents itself as an effective solution, providing an accessible and cheaper alternative. TRON’s founder, Justin Sun, emphasized the importance of USDT on TRON in facilitating seamless Bitcoin purchases and complementing Tether’s objectives.
Exciting to witness Tether on Tron gaining traction in Latin America! As #Bitcoin gains status as the future reserve currency, USDT on Tron will play a crucial role—enabling seamless Bitcoin purchases. Tron, known for speed and low fees, complements @Tether‘s goals. https://t.co/HxGCzcuRe7
— H.E. Justin Sun 孙宇晨 (@justinsuntron) July 21, 2023
Diversification Across Multiple Blockchains
To mitigate risks associated with over-reliance on a single network, Tether has expanded its USDT offering to include support for 15 different blockchains. Apart from TRON and Ethereum, USDT is now available on Solana, Avalanche, Algorand, Polygon, Omni, EOS, Liquid Network, Kusama, Tezos, Bitcoin Cash, Near, Polkadot, and Kava.
Tether’s consistent issuance of new USDT and its subsequent concentration on the TRON Network has raised eyebrows in the cryptocurrency community. While the growth of USDT on TRON may offer advantages such as low fees and speed, the heavy dependence on a single network also presents potential risks in the event of network instability. It remains to be seen how Tether and TRON will navigate these challenges and whether diversification across multiple blockchains will be pursued further to safeguard the stability of the stablecoin market.