What Is USDT and Why Should You Care?

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According to the crypto community, stablecoins are one of the most promising use cases of blockchain technology. These tokens are designed to maintain a stable value. For example, they can be launched as ethereum-based coins that are pegged to the U.S. dollar or some other stable asset like gold or real estate. The idea is to reduce volatility and make them a more trustworthy medium of exchange than standard tokens like bitcoin or ether. This article explains what USDT is and why you should care about this type of stablecoin. We’ll also take a look at three examples of USDT implementations, explaining why they are important for the future viability of the stablecoin concept.

What is USDT?

Tether is a stablecoin pegged to the U.S. dollar that is run by the company Tether Limited. There is a fixed supply of 2.2 billion USDT tokens in circulation, and the Tether company maintains an equivalent amount in USD in a bank account to back up the value of the tokens. Tether contracts a trusted auditing company to regularly check that their bank account has the appropriate amount of USD in it. If it does, then the circulating supply of USDT is backed by the full amount in the bank account. The tokens are designed to be used in online exchanges as an alternative to fiat currencies like the dollar. Exchanges like Binance, Bitfinex, and Kraken regularly use USDT to process trades between people who want to use a traditional banking method and people who want to use a cryptocurrency.

Tether: The Problem

Tether has been the subject of controversy since it was first launched in 2015. It was originally created as an alternative to the dollar for use on the crypto exchange Bitfinex. Although the company has been regularly auditing their bank accounts and maintaining appropriate amounts in USD, there have been a lot of questions raised about the transparency of the company. These questions stem from the fact that Tether does not have a public-facing board of directors or a public audit of its accounts. In fact, the company has been fighting a court case against the U.S. Commodity Futures Trading Commission over the fact that they have not been audited by an outside accounting firm. This lack of transparency has led many in the crypto community to question whether or not Tether actually has the amount of USD in their bank accounts that they’ve claimed. Some people have suggested that Tether might be using the USD for other purposes and using the token to prop up the value of bitcoin and other cryptocurrencies.

USDT and the Blockchain Transparency Institute’s Report

There has been a lot of speculation about the transparency of Tether, but there has not been a lot of hard evidence. The Blockchain Transparency Institute (BTI) put out a report earlier this year suggesting that Bitfinex, the company that originally created Tether, has been printing USDT tokens out of thin air and depositing them into their bank account. One of the findings in this report is that there is a large discrepancy between the amount of USD deposited into the Bitfinex bank account and the amount of USD that Tether possesses in their bank account. The report suggests that Bitfinex is using the USD for Tether to cover the exchange’s own USD deficit. This report triggered a lot of speculation about the legitimacy of Tether and whether or not the company is using some funny accounting to prop up the value of bitcoin and other cryptocurrencies.

Trust Corp’s USDT Anchor

Trust Corp recently launched a new USDT token called USDT-U that is designed to be a fully transparent and auditable stablecoin. This new USDT token is backed by physical assets, such as a trust fund, gold, and real estate. Trust Corp also has a 1:1 pegged stablecoin called One Trust Coin (OTC). OTC promises to maintain a 1:1 ratio with USDT but it is not auditable because it is not issued on a blockchain. Trust Corp’s new USDT-U token is a fully transparent stablecoin that is audited by a third-party accounting firm. The transparency of this new USDT-U implementation is an important step towards ensuring that Tether is not overvaluing the value of cryptocurrency on exchanges.

StableUSD’s Commitment Contract and Escrow Fund

StableUSD (USDS) is another new stablecoin implementation that is designed to be fully transparent and auditable. StableUSD is a decentralized ethereum token issued on the MakerDAO blockchain. StableUSD is designed to maintain a 1:1 ratio with USD by using both a commitment contract and an escrow fund to back the value of the token. Both of these mechanisms function as an assurance contract that is designed to ensure that the stablecoin maintains its 1:1 ratio with USD. The commitment contract works like a futures contract and allows StableUSD to receive the appropriate amount of USD from a third-party auditor to back up the value of the token. The escrow fund is a separate fund that is designed to cover any losses that the commitment contract might incur.

Havven’s Anchor to USD

Havven is another new USDT implementation that is designed to be fully transparent and auditable. Havven is a decentralized ethereum token designed to maintain a 1:1 ratio with USD. Havven’s token is designed to be backed by collateral and have a decentralized auditing system. The collateral backing the value of the token is regularly audited by a third-party accounting firm to ensure that the token maintains its 1:1 ratio with the USD. The decentralized auditing system is designed to make it easy for anyone to verify the amount of collateral backing the value of Havven. This transparency is an important step towards ensuring that the stablecoin maintains its 1:1 ratio with the USD.

Conclusion

Tether has been the subject of controversy since it was first created in 2015. The controversy surrounding Tether stems from the fact that the company does not have a public-facing board of directors or a public audit of their accounts. This lack of transparency has led many in the crypto community to question whether or not Tether actually has the amount of USD in their bank account that they claim. The launch of new stablecoin implementations like Trust Corp’s USDT-U and StableUSD (USDS) are an important step towards ensuring the legitimacy of Tether’s stablecoin. These new implementations are fully transparent and auditable, meaning that anyone can verify the amount of USD backing the value of the tokens.