Tether recently announced the introduction of both USDT and EURT tokens on the Ethereum blockchain.
The company cites the efficiency, low transaction times and low fees of the Ethereum blockchain as the reason for this introduction.
The announcement reads: “Following the widespread success of our Bitcoin-based USD Tether, issued via the Omni Layer Protocol, we have today launched and issued both US Dollars and Euros as Ethereum-based Tether, compatible with the ERC20 standard. The Ethereum-based Tether allows for tokenized USD and EUR to be transferred over the Ethereum network. This enables interoperability with Ethereum-based protocols and Decentralised Applications (DApps) whilst allowing users to transact and exchange fiat pegged currencies across the Ethereum Network.”
Tether is one of the most controversial blockchain-based products available in the crypto market. Fiat currencies such as the US dollar and euro are backing this cryptocurrency. Because of this, a handful of exchanges have adopted it, as they can offer USD pairs without actually using USD. This is actually a loophole used by the exchanges, as otherwise, regulatory rules would be imposed on them for implementing USD pairs.
Originally, Tether was introduced on the Omni protocol, which uses Bitcoin’s network to issue smart contracts. So the currency faced the high transaction fees and slow transaction speeds that characterise the Bitcoin blockchain.
Tether explains in its announcement: “The ERC20 Tether will have much lower network transaction fees and much faster confirmation times (15-30 seconds) compared with Tether on Omni. This will facilitate more efficient exchange arbitrage, and several partner exchanges are already working to integrate the new tokens.”
In last September, in a partnership with Ethfinex, Tether announced the launch of Tether ERC20 tokens on the Ethereum blockchain.
Tether has attracted its fair share of controversy due to its opaque business model, and a third-party audit is about to be conducted on Tether’s reserves. Tether claims that these reserves, which are actually the firm’s bank accounts, hold a similar sum in US dollars as the total amount of USDT currently in circulation – around $1.5 billion.