Tether will retire USDT from several chains with low activity, planning significant wallet transfers. All the external USDT tokens will revert to Ethereum versions.
Tether’s USDT will consolidate on Ethereum, after the main issuer planned a series of chain swaps. Tether warned of the token movements to avoid a market panic.
The biggest transfer will be for 1B TRON-based USDT, which will shift to Ethereum. The 1B tokens coincide with the same amount of authorized but not issued stablecoins. TRON’s supply will not change significantly, as the network already expanded to more than 62B tokens.
The rest of the chain swaps will involve less active networks like Avalanche (AVAX) C-chain, NEAR, CELO, and EOS.
Some of those chains still contain bridged USDT, but the recent moves will affect native assets. EOS is also being phased out from Tether’s list of chains after losing most of its activity. EOS carried 85.2M tokens, of which 14.8M were authorized but not issued. Tether will move 60M of the EOS supply back to Ethereum.
Avalanche will also be one of the chains with a lowered supply. The C-chain version of USDT has more than 1.6B tokens in circulation, with another 192M authorized but not issued. Tether will retire 600M tokens back to Ethereum.
NEAR carries 425M native USDT, of which Tether plans to revert 300M in a chain swap. CELO will diminish its supply with 70M tokens, out of the current total of 470M.
Tether has mentioned it allows chain swaps usually at the request of big clients, especially exchanges. For small-scale usage of USDT on multiple chains, traders can use exchanges.
Large holders can request Tether to increase the supply on some chains, while decreasing it on others that do not see significant activity. Some of the chain swaps are followed by token burns to control the overall available supply.
Tether may also choose to retain those tokens as authorized and not issued, in case demand returns to the alternative chain. Large holders include market operators or high-liquidity traders that want to move their liquidity to another chain. As cross-chain liquidity remains fragmented, Tether has to offer the chain swap option for large-scale traders.
AVAX, NEAR, and CELO were previously up and rising networks, though they are still competing for liquidity with Ethereum and other L2. The outflow of USDT may be a proxy indicator of demand for those chains. AVAX and CELO draw in a total of $64.7M in value from Ethereum, of which most is wrapped ETH, not stablecoins or tokens.
Stablecoin traffic and bridging has also concentrated on the largest L2 chains, Base, Arbitrum, and Optimism. Tether still carries remnant USDT on older chains, such as Algorand. Currently, one of the most widely used versions for retaio is the Toncoin native USDT, though the biggest traffic comes from TRON-based USDT. The leading stablecoin is present on a total of 10 chains, though not all have the same usage profile and activity.
USDT increases turnover, suggests new mints may be added
USDT slightly decreased its supply from 120.7B, down to 120.4B, still being the main source of liquidity for centralized and decentralized markets.
On usual trading days, not all of the USDT supply is used. The active tokens are at around 85% of the supply. The latest rally where Bitcoin (BTC) achieved a new all-time high also boosted the usage of USDT.
In a single day, USDT saw more than 160B in trading volumes, using 132% of the supply in circulation. The increased turnover far surpassed the usage of USDC, which only had 47% in volume to market cap ratio. USDC has grown on niche chains, including Base, but is yet to replace the leading stablecoin for all its use cases.
Stablecoins expanded in 2024, as the issuers benefitted from the BTC bull market. Tether continues to post significant earnings and is over-collateralized with fiat and fiat-like assets, despite doubts about its reserves in previous years.
