After Terra’s UST stablecoin meltdown, there seems to be a storm within the stablecoin space with a second stablecoin and one of the most popular stablecoin, Tether (USDT) also losing its dollar peg. Following the recent developments, Tether has announced via a tweet that it shall coordinate a chain swap to move its USDT assets from the Tron blockchain to Ethereum and Avalanche blockchains.
In the announcement, Tether says that it plans to move one billion USDT assets from Tron to Ethereum and 20 million USDT assets from Tron to Avalanche. This will however not affect the total supply of the USDT stablecoins.
In few minutes Tether will coordinate with a 3rd party to perform a chain swap, converting from Tron TRC20 to Ethereum ERC20, for 1B USDt and from Tron TRC20 to Avalanche, for 20M USDt. The #tether total supply will not change during this process.
— Tether (@Tether_to) May 12, 2022
The announcement has come at a time when there is heightened fear arising from the recent TerraUSD stablecoin meltdown that has taken Terra (LUNA) coin down with it. Today, the price of USDT has shown some price fluctuations that have caused the stablecoin to even slip below $0.99 on many crypto exchanges.
USDT is the most traded stablecoin and investors are worried when it starts showing signs of struggle.
USDT is not like algorithmic stablecoins such as UST
In an interview, Tether’s CTO, Paolo Ardoino assured traders that the USDT stablecoin is not similar to algorithmic stablecoins like UST. He said:
“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.
Tether’s portfolio includes treasury bills, commercial paper holdings, and money market funds.
Ardoino also pointed out that while some are scared of the current stables hiccup, some traders are utilizing the opportunity by for example purchasing USDT below $1 and exchanging it for above $1 on Bitfinex and Tether’s official website.