Tether and LayerZero have made headlines with the recent announcement of their collaboration to launch USDT0, a multichain version of the popular Tether USD (USDT) stablecoin. This joint effort, revealed on Jan. 16, utilizes the Omnichain Fungible Token (OFT) standard developed by LayerZero to facilitate cross-chain transfers. OFT enables the unification of liquidity across interconnected chains and validates transactions through a decentralized network of oracles and relayers.
One of the key features of USDT0 is its ability to eliminate the need for intermediary bridges and wrapped assets by implementing a messaging layer for token transfers. USDT0 leverages USDT tokens locked in a smart contract on the Ethereum mainnet, with tokens on the target chain being minted in a 1:1 ratio reflecting the locked assets on Ethereum. Users can redeem USDT0 tokens by unlocking the corresponding USDT on the Ethereum network.
Tether CEO Paolo Ardoino expressed his excitement about the innovation, emphasizing the potential for USDT0 to improve interoperability and enhance the user experience across different blockchains. He also highlighted the scalability benefits that this multichain version of USDT can offer in expanding the stablecoin’s presence across various ecosystems.
The initial launch of USDT0 will take place on Kraken’s layer-2 blockchain, Ink, with plans to expand to other chains like Berachain and MegaETH in the near future. Ink founder Andrew Koller sees this partnership as a defining moment for stablecoin liquidity, while Bryan Pellegrino, CEO of LayerZero Labs, emphasized the role of their technology in facilitating seamless USDT transfers.
USDT has already established a presence in 11 different blockchains, with a reported aggregated transfer volume exceeding $10.5 trillion in the past year. With a supply of $141 billion, USDT remains the largest stablecoin in the market, outpacing competitors like USD Coin (USDC) by a significant margin. Despite regulatory challenges such as the impact of the Markets in Crypto-Assets Regulation (MiCA) in the European Union, Tether has responded by investing in compliant stablecoin initiatives like Quantoz and StablR.
As Tether continues to navigate regulatory landscapes and expand its reach in the crypto market, the collaboration with LayerZero and the launch of USDT0 represent a significant step towards enhancing the usability and accessibility of stablecoin transfers in the evolving blockchain ecosystem.
