Tether | Arkham

Tether (USDT) is a stablecoin, a type of cryptocurrency designed to maintain a stable value by being pegged 1:1 to the U.S. dollar. It is the most widely used stablecoin in the world, serving as a crucial component of the digital asset economy. Its primary purpose is to provide traders and investors with a stable store of value and a liquid medium of exchange, allowing them to move between volatile cryptocurrencies without needing to convert back to traditional fiat currency.

Who created Tether? USDT was launched in 2014 by the Hong Kong-based company Tether Limited. It was one of the first successful stablecoins and is closely associated with the cryptocurrency exchange Bitfinex. The project was founded with the goal of creating a digital token that could represent fiat currency on the blockchain.

How does Tether work? Tether maintains its peg to the U.S. dollar through a system of asset reserves. For every USDT token issued, Tether Limited claims to hold a corresponding value of assets in its reserves. These reserves are composed of cash, cash equivalents (like money market funds and U.S. Treasury bills), and other assets. The supply of USDT is elastic; new tokens are minted when institutional users deposit dollars with Tether, and tokens are burned when they are redeemed. USDT is not its own blockchain but exists as a token on numerous other blockchains, including Ethereum, Tron, and Solana, which makes it highly accessible and interoperable.