Following recent developments in the sphere of stablecoins, Tether (USDT) has announced that it’s coordinating a chain swap to transfer USDT assets from Tron’s TRC20 to Ethereum and Avalanche’s blockchain.
In a Tweet, Tether said that 1 billion USDT will be moved from Tron’s blockchain to Ethereum. On the other hand, an additional 20 million USDT will be converted to Avalanche. According to Tether, this will not change the total supply of the stablecoin.
The announcement came amid fears of a stablecoin meltdown after the recent TerraUSD (UST) and Terra (LUNA) debacle. Apart from this, USDT also showed price fluctuations, slipping below $0.99 cents on many exchange platforms on May 12. As a result, many expressed concerns over the most-traded stablecoin showing signs of struggle.
However, in an interview, Tether CTO Paolo Ardoino assured traders that USDT is not like algorithmic stablecoins such as UST. Ardoino said that Tether has a “strong, conservative, and liquid portfolio that consists of cash & cash equivalents.” This includes treasury bills, money market funds and commercial paper holdings.
Ardoino also pointed out that the ongoing FUD surrounding stablecoins is becoming a money-making stream to some traders. He explained that some firms are buying USDT below $1 on some exchanges and are redeeming it for above $1 on Bitfinex and the Tether website.
Meanwhile, Terra founder Do Kwon recently shared plans to restore the UST stablecoin peg. Kwon explained that before re-pegging UST, the path forward will be to “absorb the stablecoin supply that wants to exit.”
Because of this, Kwon endorsed the increase of the base pool from 50 million to 100 million special drawing rights. Additionally, the Terra founder said that they can decrease PoolRecoveryBlock from 36 to 18. Kwon said that this will let the system “absorb UST more quickly.”