Explaining USDT and the Networks it Uses
Tether (USDT), is the world’s first stablecoin and is currently the largest. Even though it is highly liquid and widespread, it does not operate its own blockchain. Instead, it works as a second-layer token on existing blockchains. These third-party blockchains allow users to deposit, transfer, and exchange the stablecoin.
|Binance Smart Chain (BEP-20)
|OMG Network (OMG)
|Bitcoin Cash (BCH)
|Liquid Network (L-BTC)
The above table lists some of the networks that USDT currently uses and it is crucial to note that the list increases and decreases constantly. As of August 2023, Tether discontinued support for Omni, Kusama, and Bitcoin Cash SLP which were part of this list.
In this article, I will explain some of these networks but first, let’s fully understand what USDT is.
What is USDT?
Tether (USDT) is a stablecoin that is fiat-collateralized to the value of the U.S. dollar. This type of crypto is pegged 1:1 to the value of the dollar. Its relative stability means it can shield investors and traders from market volatility in the crypto market.
Tether is of particular interest as it exists on multiple blockchains with the ability to perform cross-chain transfers. Users can move Tether seamlessly across different blockchains and do not have to go through a centralized exchange.
The main functions of USDT are to:
- Hedge against losses from crypto investments to protect cryptocurrency investments against extreme price swings.
- Make a profit for traders who can take advantage of high crypto prices to make a profit. USDT allows for quick transfers so traders can react to rapid price movements at low fees.
USDT does not work on its own network or blockchain but functions by creating tokens on existing networks. These networks each have unique features for processing transactions with USDT so keep reading as we explore these further.
What are the Different USDT Networks?
As mentioned, USDT is traded on numerous blockchains and this can become confusing when making transactions. This article will put to rest the question of “What blockchain network is USDT on?”
Let’s dive in shall we…
Ethereum (ETH) is a popular cryptocurrency that has been labeled the ‘father’ of decentralized finance (DeFi), decentralized applications (dApps) and smart contracts.
This has made it a promising investment with a huge market capitalization of around 19 billion in October 2023 — one of the largest in the market — indicating both traders and investors value the currency.
Tether is hosted on the Ethereum blockchain as ERC-20 tokens and has become a widely used version of USDT within the DeFi ecosystem. This standard enables interoperability between different tokens and grants them access to various dApps, wallets, and exchanges.
Some key features of USDT-ETH tokens include:
- Increased availability of USDT to all Ethereum users as they can easily transfer the currency across multiple networks.
- Faster transactions & lower fees compared to Bitcoin due to the large user base and quick confirmation times and high liquidity. The fees charged by ETH are known as gas fees and will fluctuate depending on network congestion.
- Use as a stable medium of exchange as Ethereum customers are able to hold a less volatile cryptocurrency as USDT.
- Widespread adoption across the Ethereum network making USDT available to more traders and users.
- Easy transfers as Ethereum is a leader in the cryptocurrency world so by integrating USDT with Ethereum, Tether can be moved to numerous other blockchains via specialized services or bridges. Some of the currencies that can be exchanged include Binance Smart Chain and Tron which I will be explaining further.
- Access to decentralized finance as well as use of Ethereum-based dApps. This lets them conduct financial activities including lending and borrowing.
Binance Smart Chain (BSC)
Tether supports the Binance Smart Chain as a BEP-20 token which is used for transactions within the Binance ecosystem. These tokens are more versatile compared to ETHUSDT and provide faster transaction confirmation.
By integrating USDT with BSC, the utility of both platforms was greatly enhanced as users can take advantage of Tether’s stability and liquidity as well as BSC’s low fees and fast transaction speeds.
BSC is compatible with Ethereum Virtual Machine (EVM) which results in a high level of interoperability. This allows for seamless cross-chain transactions. Users can easily move USBT-BSC between the two networks.
Tron is a developer-friendly blockchain that thrives on innovation and development. It has a higher transaction per second (TPS) rate than other networks with a reputation for high throughput levels. It is also known for low transaction fees and its ability to scale.
TRC-20 is the foundation or standard used to create and manage tokens on the Tron blockchain. TRC-20 tokens are interchangeable with any other tokens on the same standard and are compatible will Tron-wallets, dApps, and exchanges.
When USDT is used on the TRC-20 network, it results in USDT tokens (TRC-20 USDT) and they are compatible with the entire Tron blockchain ecosystem.
This integration has allowed users to benefit from USDT stability and Tron’s efficiency. A major positive outcome is the minimal fees associated with Tron transactions.
Like Binance Smart Chain, TRX is also compatible with the Ethereum Virtual Machine for smooth cross-chain operations. This flexibility means users can access and transfer USDT to all compatible networks.
TRX has a reputation for providing a user-friendly interface with a wide range of dApps. By integrating with USDT, a broader audience can now access the TRX stablecoin.
This open-source blockchain provides a solution for scaling dApps and is recognized for its unique consensus mechanism. Most cryptos follow the Proof of Work (PoW) consensus mechanism that was introduced by Bitcoin.
Instead, Solana uses a Proof of History (PoH) mechanism making it a very high-performance, high-speed blockchain.
Solana’s is designed to handle high transaction traffic and it can scale without compromising on decentralization or security. This in addition to low fees makes it ideal for dApps, NFTs, games, and other applications that require quick, cost-effective transactions.
When Solana is combined with USDT, the result is SOLUSDT which uses Solana’s high-speed technology and Tethers’ stability offers users advantages that include:
- Swift transactions: The speed that Solana offers users quick transactions that are useful, especially for DeFi transactions.
- Low transaction fees: Solana’s low fees benefit users who want to move their funds cost-effectively.
- Growth of Solana’s ecosystem: The integration of USDT has contributed to Solana’s ecosystem growth and expansion of the network with the addition of DeFi projects and NFT platforms among others.
The combination of Solana and USDT has increased the adoption rate of the currency and has helped to advance decentralized financing. This partnership has also stirred up the cryptocurrency environment as Solana is positioned to be a strong competitor to Ethereum.
What USDT Network is Best?
Now we have seen what blockchain network is on, you might be wondering how to choose the best one. The truth is, they all have their pros and cons and you will choose based on your own specific requirements.
There are however some key characteristics you should look out for when choosing a network. I have outlined these below to help you narrow down your search.
The first thing to look at when choosing a USDT blockchain network is to decide what you will be using it for. Is it for payments? Do you need it for gambling purposes or gaming?
Regardless of your needs, there are some key factors worth considering before performing any transactions on a network.
- Speed of transactions: If you need to make quick transactions, then Solana is the way to go. SOLs transactions per second (TPS) is 50,000 – 65,000, significantly higher than other blockchains.
- Transaction fees: Out of the top USDT blockchains above, Ethereum has the highest fees. If you are looking for affordability or making frequent or large transactions, BEP-20 and TRC-20 have relatively low transaction fees. However, fees change so it is best to check the fee structure of your chosen blockchain before making any transactions.
- Usage: Depending on what you need to do, different chains will offer various solutions. For trading that might require fast confirmation, consider using Solana. If you are interested in DeFi projects or gambling services that use specialized dApps, Ethereum casino is recognized as a market leader in this field.
- Recipient network: Before transferring any amount of USDT, make sure the receiver’s wallet supports the network you will be using. If you mistakenly send coins to a network that is not compatible, it may be a long and tedious process to reverse the transaction. In some cases, you might end up losing your funds.
And in the end, the answer to the main question
As we have seen, USDT is available on numerous networks although this can change at any time. Ethereum is a popular blockchain for USDT transactions, as is Tron and BSC. Different blockchains have their pros and cons which can be matched to meet your specific needs.
Overall, USDT is a game changer in the field of cryptocurrencies and looks set to make even more advances and innovative practices.