Tether, the issuer of the world’s largest stablecoin, USDT, which has a circulating supply of 66.65 billion USDT, has confirmed its support for Ethereum’s proof-of-stake transition.
The development comes after Circle, the issuer of USDC stablecoin, pledged their support to Ethereum’s highly anticipated upgrade.
Being one of the most important developments in the crypto market, it is important that all major players in the market remain on the same page to avoid confusion, which could impact the stability of the crypto market.
In the blog post, Tether mentioned, “Tether believes that in order to avoid any disruption to the community, especially when using our tokens in DeFi projects and platforms, it’s important that the transition to POS is not weaponized to cause confusion and harm within the ecosystem.”
“For this reason, Tether will closely follow the progress and preparations for this event and will support POS Ethereum in line with the official schedule. We believe that a smooth transition is essential for the long-term health of the DeFi ecosystem and its platforms, including those using our tokens.”
One of the prime reasons for Tether and Circle to lend support to the upcoming transitions is that large stablecoin issuers can influence the development and choose to support any single state of the chain of their choice to process redemption. Earlier, Vitalik Buterin also flagged that such a large stablecoin issuer could influence future Ethereum hard forks, depending on which chain they choose to support.
The last major hard fork of Bitcoin Cash and Bitcoin SV in 2018 had unnerved investors. Disagreement and differences impacted the overall stability of the crypto market in the short term, leading to a massive drop in crypto prices.
FAQs
What is the BNB chain?
Tether does not use proof-of-stake. It operates as a stablecoin primarily on the Ethereum blockchain, which currently employs a proof-of-work consensus mechanism.
Does Tether use proof-of-stake?
Ethereum began its transition to proof-of-stake (PoS) on March 16, 2022, with the Kiln testnet merge, marking a significant milestone in its move away from proof-of-work (PoW).
Why did Ethereum switch to proof-of-stake?
Ethereum switched to proof-of-stake (PoS) primarily to improve scalability, energy efficiency, and security compared to the proof-of-work (PoW) model. PoS reduces energy consumption and increases transaction throughput while maintaining security.
Is Tether backed 1-to-1?
Tether aims to maintain a 1-to-1 backing with fiat currencies like the US dollar, intending to provide stability and reliability in its value. However, concerns have been raised regarding its actual backing and transparency.
