Tether (USDT) has announced that it’s coordinating a chain swap to transfer USDT assets from Tron’s TRC-20 to Ethereum and Avalanche’s blockchain after recent developments in the sphere of stablecoins.
It has been reported that 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 stablecoin.
However, 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 on many exchange platforms on Thursday. As a result, many expressed concerns over the most-traded stablecoin showing signs of struggle.
The report said that Tether’s chief technology officer 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 and cash equivalents.” This includes treasury bills, money market funds, and commercial paper holdings.
Likewise, Ardoino also pointed out that the ongoing fear, uncertainty, or doubt (FUD) surrounding stablecoins is becoming a money-making stream for 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.
In another statement released by Tether, the firm highlighted that verified customers are still able to redeem USDT on its website. The stablecoin issuer reported that it's not facing any issues even after honoring 300 million USDT redemptions in the last few hours.
“Tether is gratified that the market continues to show its trust and confidence in Tether [...] We are a quickly evolving industry and as an industry. we will learn from these events together.”
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.
Thus, 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.”