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What is Tether: USDT, Simply Explained By Swaps

Published
December 14, 2023
Updated
October 27, 2023
< 3 min read

Tether is one of the top five cryptocurrencies today. It’s also the biggest representative of a special class, called stablecoins, that are used in clever ways in various areas of trading and Decentralized Finance (DeFi) to potentially earn sizable profits.

In this article, we’ll break down what USDT is all about, and touch on some of its main use cases.

What is Tether (USDT)?

Tether is the number one stablecoin in existence today, with a market cap of over $78B. It’s issued mainly on the Ethereum chain (USDT-ERC20), and on the Tron network (USDT-TRC20), and is used for a wide variety of functions. These include trading, lending, staking, or just simply holding while waiting for an opportunity.

What is a stablecoin?

Generally speaking, a stablecoin is a cryptocurrency that has its price pegged to a fiat currency, such as USD, or EUR. This means that one stablecoin is always worth really close to the price of its fiat pair. Tether, for instance, is pegged to the U.S. Dollar, meaning 1 USDT is almost always worth $1. Issuers usually achieve a steady price by holding an equivalent amount of fiat currency as a reserve after every token is released.

Tether is the number one stablecoin in existence today, with a market cap of over $78B.

Opportunities with Tether

nLeveraging their attributes, Tether combines the reasonable stability of a real currency with the opportunities of crypto assets. It’s often used by traders who want to take advantage of various Decentralized Finance (DeFi) protocols that could offer relatively high annual percentage yields (APYs). Essentially, what they do is similar to individual locking funds in a savings account in a traditional bank: the longer one leaves holdings untouched, the higher the potential yields can climb. The difference is that with Tether, holders delegate their USDT to DeFi lending pools that are operated by smart contracts, creating and enforcing a secure environment.

Additionally, traders on exchanges can use Tether (USDT) as the perfect common nominator, as it provides the same stability as traditional currencies while being much more flexible in terms of handling, and easily transferable at the same time.

Also, sending, or receiving Tether (USDT) is the closest to everyday transactions. As their prices barely fluctuate, both sender and receiver can be sure that their funds will not lose their value dramatically between the start and finish of a settlement. Needless to say, since Tether is a crypto token, after all, it can be used by anyone, anywhere, providing an equally wide array of opportunities for developed areas, and unbanked regions.

Final thoughts

Tether (USDT) is the main representative of stablecoins, which is a unique, innovative cryptocurrency class. It combines the best elements of traditional currencies, such as reasonable stability, with the great opportunities offered by the crypto world, like relatively high-yield lending and borrowing, steady transacting, and common value of exchange. With all that in mind, it’s not hard to see why many consider diversifying with Tether (USDT)—if you’re one of them, head over to Swaps App, where buying Tether and other cryptocurrencies is lightning-fast and easier than anywhere else.

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