USDT

May 20, 2025 | Updated May 20, 2025

USDT, or Tether, is a stablecoin pegged to the value of the US dollar, designed to maintain a consistent price.

What Is USDT?

USDT is the ticker symbol for Tether, a type of cryptocurrency designed to consistently provide a stable value in the crypto space. It is a fiat-collateralized stablecoin that is pegged to the value of the U.S. dollar at a 1:1 ratio. This means that 1 unit of the token is always intended to be worth approximately 1 USD.

The token was launched by Tether Limited in 2014 to bridge the divide between fiat currencies and blockchain assets. It was tailored to serve as a hedge against the inherent volatility of cryptocurrencies while maintaining its value in the cryptocurrency markets.

It is currently the largest stablecoin by market cap, claiming the biggest market cap compared to its counterparts. It is also the largest cryptocurrency in terms of trading volume.

How Does Tether Work?

Brock Pierce, Craig Sellars, and Reeve Collins first launched Tether on the Bitcoin blockchain via the Omni Layer protocol in 2014. It was originally known as Realcoin, but was shortly changed to Tether.

The stablecoin is currently issued on multiple networks, including Algorand, Tron, Ethereum, Cosmos, EOS, Solana, and Tezos, among others. Simply put, it doesn’t have its own protocol. Instead, it relies on other blockchains to facilitate its transactions. On each blockchain where USDT is issued, it functions according to that blockchain’s native token standards and protocols. This multi-chain deployment strategy means users can transfer, trade, and utilize USDT across various blockchain ecosystems without being limited to a single network.

What’s more, the stablecoin uses a proof-of-reserves (PoR) system to prove that its tokens are always backed 1:1. Additionally, its circulating supply fluctuates based on market demand and liquidity, with Tether minting or burning tokens accordingly.

As such, Tether claims that each USDT in circulation is collateralized by at least one USD or equivalent assets, though the company has at times faced significant regulatory scrutiny and legal challenges regarding the transparency and composition of these reserves.