• Tether recently announced plans for a major cross-chain swap that would transfer 1.6 billion USDT from the Tron network to Ethereum.
• This large transfer is likely part of a collaboration between networks to boost liquidity, and will not lead to an increase in the supply of USDT in circulation.
• The Tron network’s latest announcement may provide more clarity as it hinted at collaborations with other networks like Huobi and BitTorrent for a “super network” linking major networks.
Tether Announces Major USDT Swap from Tron to Ethereum
Tether recently announced plans for a major cross-chain swap that would transfer 1.6 billion USDT from the Tron network to Ethereum. This large transfer is uncommon in the crypto space, but what could be the reason for this one?
Potential Reasons Behind Large Transfer
One potential scenario where such a large transfer occurs is when funds surpass the amount of USDT that Tether holds in its treasury wallet for the destination blockchain. There have been concerns about the USDT supply potentially increasing if Tether uses the large transfer to mint more USDT, however; Tether noted that this will not lead to an increase in circulation.
Collaboration To Boost Liquidity
The purpose of this collaboration may be to boost liquidity across networks by maintaining stablecoin supply balance on all participating networks, which was hinted at by Tron’s latest announcement expressing excitement in collaborations with other networks like Huobi and BitTorrent for a “super network” linking major networks.
Mint and Burn Mechanisms
To facilitate these transfers Tether employs both mint and burn mechanisms allowing tokens to be swapped between different blockchains without affecting their overall supply or circulation rate.
The exact reason why Tether decided make such a large swap remains unclear, but it might have something to do with boosting liquidity across different blockchains through collaborative efforts between them.