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Tether is the issuers of one of the most popular stable coins pegged to USD dollar USDT. A few days ago it had apparently moved 3 million tokens to the OMG network. As we all know, Tether recently was integrated into the OMG network, which is a layer 2 solution that was designed to reduce network congestion in the Ethereum blockchain. Tether is the largest stablecoin in the market and is compatible with 7 blockchains namely Algorand, Ethereum, EOS, Liquid Network, Omni, OMG Network, and Tron. But the Ethereum blockchain is still the most relevant for Tether.
Earlier integration with OMG
After its much-publicized integration with OMG, Tether now plans to add support for another Layer-2 scaling solution called ZK-Rollups. ZK-Rollups is a knowledge proof technique that assists in the rolling up transactions into one single transaction. This bundling up of transactions helps in reducing the overall pressure on Ethereum. It operates with the idea of aggregating multiple, painstaking operations into a single L1 layer transaction that will condense transactions. Now what comes under the paradigm of multiple operations is the overall management of Ether and ERC-20 token transfer along with the management of smart contract operations. ZK-Rollups is by far the most extensible scaling solution because it assists in having all data on-chain and not being dependent on a sidechain.
Ethereum fees a cause for concern
An analysis from Glass Node showed that gas spending on Ethereum has reached new heights with big names like Uniswap and Tether adding to it. Further investigation identified that Tether was the single largest source of Ethereum gas spending along with DeFi applications such as Uniswap and arbitrage bots trying to keep the market at equilibrium levels. It is considered as a part of Ethereum’s growing agenda awaiting the arrival of Ethereum 2.0 touted to bring in relief. Of all the fees paid on the Ethereum network so far in August, Glassnode found that 14% came as a result of transfers of Tether’s USDT stablecoin. All the other stablecoin transfers accounted for a little over 1% of fees in August to date. This only shows how popular the stablecoin has become among the Ethereum users. Tether as we all know is the largest stablecoin in the market with a whopping 85% market share.
Moving forward
Nearly two weeks ago, Tether announced the launch of USDT stable coin transfers on the OMG network, which is the first viable Ethereum Layer 2 scaling solutions. The launch will help in better speed and reduced transaction costs for Tether transfers. If good volumes coming from Tether transfers to the OMG network, it could result in the much-needed reduction in fees paid to interact with the Ethereum blockchain.
OMG Network is a Thailand based concern that came from OmiseGo which is a peer-to-peer payment network. It raised $25 million from an ICO in 2017. The network was launched this year in June and helps in easy transfer of ERC20 tokens at a relatively lower fraction of cost compared to the current Ethereum gas prices.