- Tether mints 1 billion USDT tokens to support chain swap functionalities.
- The newly minted tokens are held in Tether’s treasury and not issued.
- Minting process does not lead to an expansion of stablecoin’s overall circulation.
Tether, a leading stablecoin issuer, has recently generated 1 billion USDT tokens on the Ethereum blockchain to replenish its inventory. Although some speculate that creating new USDT could potentially boost demand for the cryptocurrency, Tether’s CTO, Paolo Ardoino, has clarified that the primary objective of minting additional USDT tokens is to support chain swap functionalities.
Ardoino took to the public forum to state in response to Whale Alert’s tweet regarding the staggering 1 billion USDT.
Note this is a authorized [sic] but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests and chain swaps.
Tether, the stablecoin issuer, has recently minted one billion USDT tokens for the second time in less than two months. This move follows the minting of 1 billion USDT on the Ethereum blockchain in April. It is worth noting that the newly minted tokens are currently held in Tether’s treasury and are classified as “authorized but not issued.” Therefore, they are not included in Tether’s total market capitalization calculation.
At times, during the execution of a chain swap to transform USDT from one blockchain’s token standard to another, Tether may find it necessary to mint extra USDT tokens. It is crucial to understand that this minting process does not lead to an expansion of the stablecoin’s overall circulation, as it involves a corresponding burn.
When an exchange encounters an uneven allocation of USDT across various blockchains, it may seek a swap from Tether. The exchange will transfer USDT from the current blockchain to Tether, overseeing the seamless transfer of funds from the preferred blockchain to the exchange.
If Tether encounters a shortfall of funds on the designated blockchain, it will initiate the minting of fresh USDT tokens. A corresponding sum of USDT on the initial blockchain will be incinerated to ensure equilibrium. Tether has elaborated on this process in a previous blog entry, providing a comprehensive explanation.
