Tether, the dominant stablecoin, has set aside $1 billion USDT to strengthen the Tron network. It’s essential to note that this allocation doesn’t immediately create new USDT coins. Paolo Ardoino, Tether’s Chief Technology Officer, clarified that these funds are reserved for future issuance requests and chain swaps on the Tron platform.
Ardoino explained in a recent statement that the newly minted $1 billion USDT is intended to replenish the network’s reserves. Importantly, this allocation does not impact the overall market value of USDT because it represents an “authorized but not issued” transaction. These freshly created tokens will be kept in reserve until they are needed for future issuance requests and chain swaps.
This decision by Tether comes at a time when its market capitalization has surged beyond $83 billion in 2023, with approximately $16 billion in USDT issued since January. This firmly establishes USDT as the leading stablecoin pegged to the US dollar. In contrast, Circle’s USD Coin (USDC) has experienced a decline, falling from $50 billion at the beginning of 2023 to its current $26 billion valuation. This decline is attributed to the troubles faced by Silicon Valley Bank (SVB), in which Circle held significant holdings.
However, Tron has encountered challenges in maintaining its value during a bear market. TRON (TRX) is expected to remain sluggish unless it surpasses the $0.08000 mark.
The pre-authorization of USDT represents an enhanced security feature for the Tron blockchain. This year, the Tron network has witnessed a remarkable surge in USDT issuance, reaching a circulation of $42.8 billion. This surpasses Ethereum’s circulating supply of USDT, which stands at $39 billion. Tether’s strategic decision to allocate “authorized but not issued” USDT serves as a security measure. It reduces the frequency of accessing authorization private keys, enhancing security and mitigating potential threats during the token issuance process.
By pre-authorizing USDT in their Treasury, Tether ensures prompt issuance when customer funds are received, maintaining a 100% reserve. This move underscores Tether’s commitment to upholding stability and security while meeting the increasing demands of blockchain networks like Tron.