Tether Discontinues USDt Redemptions on Five Legacy Blockchains for Enhanced Scalability

Tether, the issuer of the widely used stablecoin USDt, has announced that it will discontinue USDt redemptions on five legacy blockchains starting from September 1, 2024. This decision is part of a strategic shift aimed at enhancing the scalability and efficiency of its stablecoin ecosystem. The affected blockchains include Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand. This move is designed to focus resources on more active and scalable platforms, thereby improving the overall performance and user experience of USDt.

Paolo Ardoino, Tether’s CEO, highlighted that this decision allows the company to prioritize networks with stronger developer engagement and scalability. By discontinuing support for these legacy chains, Tether aims to streamline its infrastructure and enhance transaction efficiency for its users. The affected blockchains represent a relatively small portion of USDt’s overall circulation, with Omni Layer holding approximately $82.9 million USDt, and the others maintaining significantly lower balances. This measured approach ensures minimal disruption while reallocating efforts towards platforms with greater growth potential.

Among the affected blockchains, Algorand is notable as a key ecosystem where USDt ranks as the third-most-popular stablecoin. Despite Tether’s withdrawal, the Algorand Foundation has assured users that the transition will be seamless. Since Tether ceased issuing USDt on Algorand in 2023, users have had ample time to redeem their tokens, mitigating any immediate impact. Data from DefiLlama and Token Terminal underscores Algorand’s growing stablecoin activity and revenue generation, with transaction fees contributing to $42,300 in revenue over the past month. This continued growth suggests that Algorand’s stablecoin market remains vibrant, supported primarily by USDC, which holds a dominant market share on the network.

Tether’s phased approach to sunsetting USDt on legacy blockchains has been underway since mid-2023, with initial halts on minting for Omni Layer, Kusama, and Bitcoin Cash SLP, followed by EOS and Algorand in 2024. This gradual withdrawal highlights Tether’s commitment to maintaining liquidity and user access during the transition period. As the largest stablecoin by market capitalization, currently valued at $139.4 billion, USDt’s network optimization has far-reaching implications for the broader crypto market. By concentrating on blockchains with higher throughput and developer activity, Tether is positioning USDt to better compete in an increasingly crowded stablecoin landscape, where scalability and network efficiency are paramount.

CEO Paolo Ardoino’s statement underscores the importance of developer activity and community engagement in Tether’s strategic realignment. Blockchains with vibrant ecosystems tend to foster innovation, security improvements, and user adoption, all critical factors for stablecoin success. By focusing on these attributes, Tether aims to enhance USDt’s usability and integration across decentralized finance (DeFi) platforms and other blockchain applications. This strategy aligns with industry trends where stablecoins are increasingly integrated into complex financial products, requiring reliable and scalable underlying infrastructure. Tether’s decision to sunset legacy chains can thus be seen as a proactive measure to future-proof USDt’s role in the evolving digital asset economy.

In conclusion, Tether’s discontinuation of USDt redemptions on five legacy blockchains represents a calculated effort to optimize its stablecoin’s performance by prioritizing scalability and developer engagement. While the impact on users of Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand is mitigated through phased rollouts and ample notice, the move signals a broader industry shift towards more efficient blockchain networks. As USDt continues to dominate the stablecoin market, this strategic realignment positions Tether to better serve its users and maintain its competitive edge in a dynamic crypto environment.