USDT transforms the U.S. dollar into a global digital asset by bringing it on-chain. It has become the largest stablecoin

Article Author: xparadigms

Article Translation: Block unicorn

Key Takeaways

Despite rumors of insufficient collateral in the past, USDT has maintained its position as the leading stablecoin.

As the stablecoin market expands, Tether USDT's market cap has grown from $80 billion to $144 billion.

In order to maintain growth, USDT is taking a bold approach to expand cross-chain capabilities, with multi-chain token USDT0 powered by LayerZero OFT and a hub with Legacy Hub and Plasma at its core.

Preface

Tether’s USDT brings the U.S. dollar on-chain, transforming it into a global digital asset. It is the largest stablecoin, with a market cap of over $140 billion. Despite rumors of insufficient collateral in the past, USDT has maintained its position as the leading stablecoin.

However, as the stablecoin market expands, USDT's market dominance is decreasing. Last year, Tether's market cap was around $80 billion, but it has since increased by 80% to reach $144 billion in 2025. Meanwhile, other stablecoins are expanding, causing USDT's market dominance to drop from 70% to 61%.

In order to maintain growth, USDT must take a more aggressive approach. To expand its cross-chain capabilities, USDT is launching a multi-chain token called USDT0 powered by LayerZero OFT. Additionally, they are building a hub with Legacy Hub and Plasma at its core. Through these approaches, they aim to address the problems they face.

1. Problems with Tether’s USDT expansion plan

1.1 Tether USDT only supports 12 chains

In 2014, the stablecoin USDT issued by Tether was first launched on the Omni Layer protocol on the Bitcoin blockchain. Over the years, Tether has expanded the issuance of USDT to other major blockchains, including Ethereum (ERC-20), Tron (TRC-20), Binance Smart Chain (BEP-20), Solana (SPL), etc. As of early 2025, Tether natively supports USDT on approximately 12 blockchains.

However, according to data from DeFiLlama, USDT exists on more than 80 blockchains. Among them, more than 50 blockchains have a value of more than $1 million in USDT, and 17 of the top 30 blockchains in terms of USDT trading volume rely on bridged versions of tokens rather than native support.

When USDT is not natively supported on a blockchain, it means that Tether will not issue or redeem USDT directly on that chain. Instead, a third-party bridge locks the native USDT on the supported chain and issues a corresponding “wrapped” or “bridged” version on the new blockchain. For users, this introduces issues of incompatible bridge versions and an additional layer of risk. The security and reliability of bridged USDT depends entirely on the third-party bridge operator, not Tether itself. If the bridge is hacked or has problems, users may lose bridged USDT, and Tether is not responsible for these losses. Only USDT on natively supported blockchains is directly endorsed and redeemable by Tether, so holding bridged USDT means relying on the solvency and security of the bridge.

In addition, Tether has stopped minting USDT on multiple blockchains due to low usage or security issues. These include Omni Layer on Bitcoin, Kusama’s AssetHub, Bitcoin Cash’s Simple Ledger Protocol (SLP), EOS’s EOSIO.TOKEN, and Algorand. Although redemption may still be possible for a limited time, new USDT tokens are no longer issued on these networks.

Although USDT appears to be available on a wide range of blockchains, only a few are natively supported by Tether. On all other chains, users interact with bridged versions of USDT, which carry additional risks that do not apply to the native token.

1.2 Bridging USDT is increasing

The current circulating supply of USDT on Ethereum is approximately $64.94 billion, of which approximately $8 billion of USDT has been bridged to other blockchains. For example, on Binance Smart Chain (BSC), approximately $5.2 billion of USDT has been minted through the BSC bridge. In addition, several major Layer 2 networks — such as Arbitrum, Polygon, Optimism, and Mantle — operate their own native bridges for USDT transfers. Other Layer 1 blockchains, including Fantom, Kaia, and Sui, rely on third-party bridges to facilitate the movement of USDT between chains.

From Tether's perspective, the growth of bridged USDT presents significant management challenges. Tether can only directly monitor and control USDT issued on its native backing network. Once USDT is bridged to other chains through third-party bridges, Tether loses direct oversight of these tokens. This