Cryptocurrency

Tether’s CTO Claims USDT Can Inject Liquidity In DeFi Space


Tether’s CTO Paolo Ardoino, believes that the USDT stablecoin can bring a lot of the needed liquidity and stability into the decentralized finance space. The chief technology officer of Bitfinex and Tether also commented about how the DeFi space is facing systematic risks and how tether’s stablecoin can help prevent that. In the latest tether news today, we read more about his idea.

Tether’s CTO commented:

“You cannot have algorithmic stablecoins relying only on the crypto-assets themselves.”

According to him, the value of the DeFi space is a space of complicated financial products and cannot be based solely on the value of one volatile asset without having the opportunity and it could blast in fire at any moment he noted. MakerDAO was really close to the emergency shutdown recently after the dramatic spike in demand for the DAI stablecoins and activity. The users tried to shore up the undercollateralized loans which eventually created a $4 million debt bubble. For the entire DeFi space to grow more and attract more investors, it has to leverage value somewhere else and to diversify the risks.

The CTO of Tether said that tether is quite resilient and the collateralized collateral of the US dollars can also provide a safe set of shoulders for the DeFi ecosystem. Tether already entered hard into the DeFi space announcing the partnership in early march with the Ethereum-based lending protocol AAve. The CEO of Aave Stani Kulechov said that with the Tether partnership they gain a fiat gateway for institutional investors and will help them inject liquidity into the DeFi space. This means that Tether has fewer chances to fall from the dollar peg and can even act as a collateral for the DeFi products with fewer risks of a sudden price drop and liquidations surge. Ardoino said that Tether has to look to its strengths:

“We need to keep evolving. If the EU launched a global stablecoin tomorrow, of course [tether] cannot compete in market cap.”

The total market capitalization of USDT has almost tripled from the $2 billion in 2019 and is now at $6.2 billion. Tether cooperates with Ethereum, EOS, Algorand, Omni, Tron and Liquid Network. The goal is to support and empower the ventures and innovations in the blockchain industry. Also as per the recent Tether news, ByBit launches two-way margin trading and as they said, using a stablecoin also removes the volatility brought by non-pegged cryptocurrencies.

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