Steemit Crypto Academy Week 6 Task: Stable coins- Tether (USDT) | lecture by @yohan2on

Thanks to @yohan02 for this wonderful lecture about Stable coin

A “stable” coin is a digital asset or cryptocurrency that is tied to fiat currency or other financial assets. Stable coins, originally created to address the volatility of cryptocurrencies, are now more useful.
In this article, I'll be writing about Tether (USDT) which is one of the well known stable coin.

WHAT IS TETHER (USDT)?

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Tether

Tether Is one of the most common stable coins with a fixed value to the fiat monetary system. Launched in July 2014, The token price is pegged at $1.00 to minimize real currency friction in the cryptocurrency ecosystem. Tether is the largest stablecoin and can reserve dollars for its users.

The coin is operated by Tether Limited, a company registered in the British Virgin Islands, whose regulators are loyal to crypto startups. There is no address of the company's office on the project website - only an indication that it is located in Hong Kong.

Tether stresses on the website and in the documents that the USDT is not currency, that they have no real price, and that the company does not have an obligation to guarantee every token's value and protection. Furthermore, the corporation has no duty to refund US dollars to customers and is entitled to deny the service and compensate users who have broken the user agreement for damages. Nobody will refund the funds to the users if Tether goes bust.

Why is USDT so in demand?

Stable coins have become a response to the volatility and unpredictability of the crypto market. Projects without practical use are gradually leaving the market. And stablecoins are taking their place.

During crises, investors traditionally move into less volatile assets. On the crypto market, these are stablecoins. Since some exchanges do not offer fiat pairs, stablecoins are the only available option for traders entering fiat assets during periods of volatility. In addition, it is often unprofitable for crypto investors to go out to fiat due to fees.

Another reason for the growing dominance of USDT recently was the rapid growth of the DeFi sector, which uses stablecoins to provide liquidity. 65% of USDT are Ethereum tokens of the ERC-20 standard, which has become the industry standard for stablecoins and DeFi projects (Tether also launched on the Tron, EOS, Algorand, Solana, Omni, Liquid, Bitcoin Cash, and OMG blockchains).

According to the Cambridge Center for Alternative Finance (CCAF) 2018-2020. the share of service providers supporting USDT has grown from 4% to 32%, of other stablecoins - from 11% to 55% during the same time. The demand for stablecoins is constantly growing, primarily from institutional investors and traders. It is convenient for exchanges to carry out settlements not in US dollars, as this does not attract too much attention from regulators. It also helps to work with banks that refuse to cooperate with crypto companies. By using Tether, exchanges can reduce risk, speed up transactions, and save on fees.

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Thanks to you all for reading though