Tether's Interoperability Play Gets Boost with Polygon Expansion

The launch of the cross-chain stablecoins USDT0 and XAUt0 on the Polygon network marks a significant step in the expansion of interoperable digital assets. These stablecoins, built on the omnichain standards provided by LayerZero’s Omnichain Fungible Token (OFT), now offer seamless liquidity across the Polygon blockchain, which has rapidly emerged as a key player in the DeFi and stablecoin ecosystems [1].

USDT0 and XAUt0 are distinct from their traditional counterparts, USDT and XAUT, which are backed by cash and gold reserves, respectively. Instead, USDT0 and XAUt0 are generated through the deposit of USDT or XAUT into Ethereum-based smart contracts. This mechanism allows for greater flexibility in cross-chain use cases without requiring direct asset backing [1]. The launch on Polygon further supports the design goals of USDT0 as an "interoperability backbone" for Tether’s broader stablecoin strategy.

Polygon’s integration with USDT0 is the latest in a series of strategic expansions for the stablecoin. As of the launch, Polygon became the 12th blockchain to support USDT0, following its initial deployment on TON in early June 2025. Meanwhile, XAUt0 — the omnichain version of Tether’s gold-backed stablecoin — became operational on the second network, with Polygon serving as its second operating chain after TON [1]. This progression underscores the increasing adoption of omnichain solutions in the stablecoin space.

The decision to expand to Polygon is grounded in the network’s rapid growth as a hub for stablecoin usage and DeFi activity. According to Everdawn Labs, the operator of USDT0, Polygon’s ecosystem now supports over $1 billion in USDT liquidity and has amassed more than 6 million wallets. The platform’s infrastructure upgrades, such as the AggLayer and Bhilai Hardfork, have also made it an ideal environment for omnichain liquidity solutions [1].

As of the launch, USDT0 had a market capitalization of nearly $1.6 billion, reflecting strong demand in just two months since its January 2025 launch. In contrast, XAUt0 had a much smaller market cap of approximately $2.5 million as of the latest data from CoinGecko [1]. Despite the slower uptake for XAUt0, the deployment on Polygon is expected to provide a foundation for increased adoption, particularly in DeFi and institutional-grade real-world asset (RWA) applications.

The timing of the launch also aligns with a broader resurgence in the stablecoin sector. Tether’s USDT has recently crossed $167 billion in market capitalization, while its gold-backed XAUT token reached a milestone of $1 billion in value for the first time on August 8, 2025 [1]. These trends highlight the growing confidence in stablecoin utility and the role of cross-chain solutions in expanding their reach.

Polygon’s role in this expansion is further supported by its planned maintenance upgrades, which will enable USDT0 on the Polygon PoS network. The migration from MATIC to POL is set for August 26, 2025, and will be followed by a system upgrade on August 27, 2025, to facilitate USDT0 deployment. This strategic alignment of events could enhance liquidity and utility on the network [2].

Source:

[1] USDT0 and XAUt0 stablecoins launch on Polygon network (https://cointelegraph.com/news/usdt0-xaut0-stablecoin-launch-polygon)

[2] Cold Wallet, Avalanche, Polygon, and NEAR Drive Investing in Crypto Stories This Week (https://coinstats.app/news/d49e490f26e0c360e3d41cb506c6cfefb9ade1142d1493bbbf84369907c6c814_Cold-Wallet-Avalanche-Polygon-and-NEAR-Drive-Investing-in-Crypto-Stories-This-Week)