Tether has issued a "new stablecoin." What is the difference between USDT0 and USDT?

Author: Penny, BlockBeats

Today, Tether announced the first deployment of its new token USDT0 on Kraken's Ethereum scaling network Ink, aiming to leverage LayerZero's Omnichain Fungible Token Standard to develop a cross-chain liquidity layer, simplifying the cross-chain transfer of USDT and providing a seamless experience for users and developers.

As Tether's previously launched stablecoin, USDT has become the largest single stable asset globally. However, the liquidity of stablecoins is currently fragmented, with USDT on different chains unable to flow interchangeably, and high cross-chain costs have deterred ordinary investors. The launch of USDT0 aims to address this issue by significantly enhancing the security of cross-chain transactions in collaboration with LayerZero, while also achieving zero loss in cross-chain transfers (examples below), further expanding the business scope of USDT and enhancing its utility on the blockchain.

Tether CEO Paolo Ardoino stated, "USDT0 brings a much-needed solution for the smooth flow of USDT across different ecosystems. By enhancing interoperability and reducing barriers, it aligns with Tether's overall vision and optimizes the user experience. It is truly exciting to see such innovation emerge that can effectively meet market demands."

Significantly Reducing Cross-Chain Costs

USDT has always had interoperability, but its approach has been quite fragmented. Each blockchain has its own USDT, and transferring USDT between different chains relies on solutions like cross-chain bridges, which involve burning USDT on one chain and minting it on another.

With USDT0, the situation is different: USDT has now become a single, liquid asset across various blockchains, no longer fragmented. Specifically, the same token can be smoothly transferred across different networks.

For users, USDT0 eliminates the fragmentation issue, meaning higher capital efficiency. Here is an example of transferring 10,000 USDT from Ethereum to Avalanche (left), and now using USDT0 powered by LayerZero (right). It can be seen that with USDT0, users can transfer out exactly what they receive cross-chain, significantly reducing costly fee losses.

Expansion Plans

Ink: The Gateway to Institutional Liquidity

USDT0 will first launch on Ink, one of the largest and most trusted cryptocurrency exchanges in the world—Kraken's L2 blockchain. Leveraging the world's largest stablecoin, USDT0 builds a seamless channel for liquidity between institutions.

Andrew Koller, founder of Ink, stated, "Both USDT0 and Ink are committed to ensuring that users and developers can maximize control over their assets and access various opportunities as seamlessly as possible. Choosing Ink as its launch chain will set a new standard for stablecoin liquidity flowing across all chains in the future."

Additionally, USDT0 has been integrated with Kraken, allowing users to deposit and withdraw USDT0 on Ink. More integrations are planned within the Kraken tech stack, which will set standards for the interoperability of USDT0 and pave the way for a world-class experience for USDT users.

First Round of Partnerships and Expansion: Berachain and MegaETH

Following Ink, the first round of partners for USDT expansion through USDT0 includes Berachain and MegaETH, with more related announcements to be released in the coming weeks.

Berachain is a first-layer (L1) blockchain fully compatible with the Ethereum Virtual Machine (EVM), built on an innovative Proof of Liquidity (PoL) consensus mechanism. This mechanism rewards users who actively contribute resources to the network with the native governance token $BGT. The integration of USDT0 on Berachain will launch on the Boyco platform, which aims to directly channel funds into core applications on Berachain. Boyco consists of 11 decentralized applications and 15 asset issuers (including USDT0), making it an ideal channel for reserving yield-seeking funds on Berachain. Boyco's pre-reserve has already attracted over $1.5 billion in deposits, and this number is expected to grow significantly with the launch of official projects and the addition of high-utility assets like USDT0.

MegaETH is the first real-time blockchain capable of achieving 100,000 transactions per second and block times of less than 10 milliseconds, while inheriting the security of Ethereum. MegaETH looks forward to leveraging USDT0 in a wide range of DeFi applications and payment products. Combining real-time applications with Tether's distribution capabilities will accelerate the next wave of cryptocurrency adoption.

Overall, USDT is the largest stablecoin in the world and the most sought-after on-chain asset for users and the blockchain itself, while USDT0 is a scaling solution for USDT, optimizing the high cross-chain costs associated with USDT, making USDT and the entire cryptocurrency ecosystem more user-friendly.