Tether Launches On OMG Network To Reduce Load On Ethereum
- The OMG Network claims to support thousands of transactions per second at a third of the cost of the same transaction on Ethereum.
- With the new integration, Tether is now available on seven different blockchains, though Ethereum remains its largest value settler.
Tether cover image. Tether LinkedIn company page.
The largest stablecoin by market capitalization, Tether (USDT), is now available on the plasma-based Ethereum sidechain OMG Network, the project said in a press release on 1 June.
According to the announcement, the new integration is aimed at reducing the transaction confirmation times and fees, as well as easing the burden on the Ethereum network. According to ETH Gas Station, USDT is by far the largest consumer of gas on the Ethereum network, with it having spent almost 9,000 ETH (around $1.86 million) in fees last month, which is more than the next five protocols combined.
The CTO at Bitfinex, Paolo Ardoino, said in the press release:
“At Bitfinex we are committed to improving our service to better support our customers. By migrating USDT value transfers to the OMG Network, we save costs, drive performance improvements, and relieve pressure on the root chain. This is good for Bitfinex, our users, and the entire Ethereum ecosystem.”
The OMG Network, which is a layer 2 scaling solution for transferring value on Ethereum, can reportedly support “thousands of transactions per second at a third of the cost of the same transaction on Ethereum”. Though the network is still new, and for now only accessible through Bitfinex, it would allow traders to “react faster to trading opportunities, considering that the Ethereum network can only support up to 12 transactions per second (tps), and once the demand exceeds that tps, settlement times increase and gas costs rise significantly.
The project, formerly known as OmiseGo, launched its mainnet beta the same day the integration was announced, 1 June. Marketing itself as a “More Viable Plasma”, the sidechain is based on a Proof-of-Authority (PoA) consensus, with its documentation clarifying that it is operated by a single entity. With that said, the network does support a “decentralized network of watchers”, which verify the correctness of the transactions.
Including today’s integration, Tether is now available on Algorand, Ethereum, EOS, Liquid Network, Omni, OMG Network, and Tron. Despite its availability on seven different blockchains, Ethereum remains the largest value settler for Tether. According to a research conducted by The Block, around $212 billion in value was transferred through the stablecoin in 2019.
- The exchange is also waiving any fee on the conversion of USDT to USDC in order to stimulate the swap and make it frictionless.
- The move came only three months after rival exchange Binance started to auto-convert USDC to its own BUSD stablecoin.
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- The stablecoin issuer was order to produce a number of financial documents, as well as records of crypto trades, transfers, and its accounts with crypto exchanges.
- The order was made as part of a case that was started in 2019 by a group of investors, who alleged the company had manipulated the crypto market in 2017.
- Tether said the rumor its commercial paper portfolio was 85% backed by Chinese commercial papers was “completely false and likely spread to induce further panic”.
- The company also noted that it has reduced its portfolio to $11 billion, down from $20 billion in March, and that the goal was to eventually reduce its commercial paper backing to zero.