Is Tether (USDT) built on Ethereum blockchain?

Two of the biggest cryptocurrencies that rank just below Bitcoin are homophones of sorts. For quite some time, Ether (ETH) and Tether (USDT) became a cause for confusion for early cryptocurrency enthusiasts. Tether, however, is not only spelled differently and is an independent project but it is also not a typical cryptocurrency like Bitcoin or Ether. USDT’s value must always match with that of the US dollar due to the 1:1 peg, which makes it a stablecoin.

Another question that many ask is whether Tether is based on Ethereum’s blockchain. Every cryptocurrency, including stablecoins, needs a distributed ledger to operate on. Does Tether use Ethereum’s network or does it have its own blockchain protocol? Let us explore the Tether ecosystem to find answers and understand the core characteristics of the stablecoin.

What is Tether’s blockchain?

Tether’s ecosystem comprises tokens but is not an independent blockchain. In Bitcoin, Ether, and other cryptocurrencies like Solana and Cardano, the cryptocurrency comes with a native blockchain protocol. Tether, however, is a plain stablecoin ecosystem where new tokens are issued with a claim that every USDT is backed by adequate reserves.

Tether is said to have begun with Bitcoin’s blockchain as its transport protocol. Here, tokens could be moved on the Omni Layer, but soon the use of Ethereum’s blockchain was favoured. Notably, Ethereum bills itself as a network for developers seeking to deploy decentralised products. One such product is ERC-20 tokens, and Tether falls in the same group. In fact, it is the biggest ERC-20 token by market cap. Tether’s ecosystem also advises users to carefully undertake the transfer of tokens since it also uses other blockchains aside from Ethereum as a transport protocol.

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Ether and Tether

Ether is the primary cryptocurrency of Ethereum’s mainnet with its utility as a payment token. Tether, on the other hand, is not a native cryptocurrency of any blockchain protocol. It is a token that can be issued on any blockchain network, including Ethereum, Algorand, and Solana. Tether bills itself as a digital token for quick payment transfers using blockchain, with a 1:1 value peg with the US dollar.

Bottom line

Tether uses blockchain technology to support the movement of USDT tokens from the sender to the recipient, with both having a specific address within the network. This blockchain can be Ethereum or any other, including Bitcoin. Tether now issues tokens pegged not only to the US dollar but also to other fiat currencies, including the Chinese yuan and the euro.

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