Tether (USDT) produces record daily revenue due to being the best-used stablecoin. USDT transfers boost the fees of both Ethereum (ETH) and Tron (TRX).
Tether (USDT) may have enough funds to offer a sharing program, as the stablecoin issuer has almost no expenses. Tether generates more than $93M in weekly fees, with up to $13.4M in daily fees on some of the most active days. The biggest source of revenue is the interest rates from US Treasury Bills.
In Q2, Tether also became the third-biggest buyer of three-month US bills, after the United Kingdom and the Cayman Islands. The holdings of Tether Inc. surpass $97.6B in US government debt, turning it into the 18th biggest holder of US treasuries worldwide.
Unlike BlackRock’s BUSD, the yield from treasuries is retained in the balance of Tether, which is used to expand the token supply. The issuers of USDT are also potential buyers of Bitcoin (BTC) and other assets.
Tether revenues are only a part of the equation. The Tether smart contract also generates more than $32K in daily fees, which are to be shared with Ethereum validator nodes. USDT on Ethereum remains the second most active smart contract in the long term.
The leading stablecoin protocol generated more than $400M in fees in the last month. The disparity with smaller protocols is visible, especially the ones that generate fees and share them with token holders. Over time, suggestions have been made for Tether Inc. to include a revenue-sharing program.
Tether competes with riskier stablecoins
Some of the asset-backed stablecoins have a form of revenue-sharing built into the protocol. The downside is they may be much riskier, especially in illiquid or niche protocols.
According to its own attestation, for the first half of 2024, Tether Inc. had $5.2B in profit. Some of the profits may be directed back into buying US T-Bills, which are now becoming the key liquid asset to back USDT. The bigger reserves also suggest Tether may be ready to print more stablecoins in the coming months.
Outside of USDT, around $2B of US T-bills have been tokenized in the form of ERC-20 tokens. Those protocols appeal to users for the opportunity to share the revenues. BlackRock’s BUIDL token generated and shared around $7M for its holders in about three months. However, USDT is not considered a tokenized RWA, despite being a token that now stands in for three-month US government bonds.
The USDT supply already expanded to 118.19B, mostly spread between Ethereum and Tron. USDT remains in use both as a micropayment currency, in its Toncoin version, and for larger transfers on Tron.
USDT also expanded its dominance on the Optimism blockchain, with a similar rate of expansion on Tron. Polygon and Base, on the other hand, turned into carriers of USDC. Ethereum still carries more than $93B in various stablecoins, while Tron carries $62B in value locked.
The last three months of 2024 came to be known as “stablecoin summer,” where some of the top assets expanded their supply. More than $179B in value is locked in stablecoins, though some funds are allocated while other stablecoin wallets wait to buy at a more favorable price.
Ethereum stablecoins fuel top ecosystem hubs
Stablecoins on Ethereum, of which USDT is more than 55B tokens, are fueling some of the most common crypto use cases in 2024.
Aave (AAVE) turned into a protocol using the biggest share of stablecoins, including USDT. Aave uses more than 29% of the supply of top 10 stablecoins. The protocol may be one of the reasons for the growth of overall transfers, up more than 28% in the past three months.
Binance and Coinbase are still among the top users of stablecoins, followed by Uniswap. MEV bots engage 9.4% of the top 10 stablecoins, generating high-speed traffic.
Ethereum is reflecting the growing dominance of USDT. Since the last quarter of 2023, Ethereum added more than 15B in additional USDT. Only about 2B USDC were added during that period.
The Ethereum ecosystem also serves as a hub, redistributing the stablecoins to Arbitrum and Optimism, two of the biggest recipients of both tokens and stablecoins. In the past, USDT has been considered a systemic risk, but due to its changed reserve structure, it is now used to back other DeFi protocols.
Cryptopolitan reporting by Hristina Vasileva
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