By Nermeen Nabil Khear 
Within a few hours, Tether will arrange the withdrawal of a sizeable part of its cold wallet holdings across many blockchains into USDT native to the Ethereum ecosystem with a well-known third-party exchange.
Tether-performing chain swaps to Ethereum will allow more traders to use their digital assets across blockchains.
What is a Chain Swap?
A chain swap is a simple concept that helps transfer cryptocurrencies from one blockchain to another. For Tether, this means taking a part of USDT held on blockchains like TRON, Avalanche (AVAX), NEAR, CELO, and EOS and converting it to USD₮ on Ethereum.
This would be helpful for traders who want to take part in the several simplified functionalities of many blockchains while using the same digital asset.
In few hours Tether will coordinate with a 3rd party prominent exchange to perform a chain swap, converting part of their $USDt cold wallets from different blockchains to $USDt on ETH.
The #tether $USDt total supply will not change during this process.Breakdown (might be… pic.twitter.com/z17oGcrl1x
— Tether (@Tether_to) November 6, 2024
In this upcoming swap, Tether will be moving:
- 1 billion USD₮ sent from TRC20 (TRON) to Ethereum
- Trading 600 million USD₮ in Avalanche (AVAX) for Ethereum
- NEAR is funding a 300 million USD₮ move from Ethereum.
- 75 million USD₮ from CELO to Ethereum
- EOS to invest $60 million USD₮ in Ethereum
However, this swap will change the distribution of Tether assets, but the total amount of USDT in circulation will be the same during this process.
How Does a Chain Swap Work?
For most users, swapping small amounts of USDT is a fast process through any cryptocurrency exchange that supports the two blockchains involved in the swap. Let’s say you want to move your USDT from the TRON blockchain to Liquid. Here’s how it works:
- Deposit: First, you would transfer your USDT from TRON to the exchange, for example, Bitfinex.
- Request: After that, you would withdraw your USDT to the destination blockchain, here Liquid.
- Complete the Swap: The swap can begin on the platform without problems, as the exchange works with both blockchains.
However, when you involve more significant amounts, Tether sometimes receives requests from exchanges that need to balance their funds between different blockchains. If one exchange has an excess of USDT on one blockchain but a shortage on another, they might contact Tether for help facilitating a swap.
Tether will confirm the amount you sent from the original blockchain and, once verified, will transfer the equal amount of USDT to the exchange on the destination blockchain. This coordination ensures that both parties have the necessary funds without any hitches.
What About Token Burns?
You might have heard about token burns in the context of chain swaps. This occurs when the amount of USDT requested for a swap exceeds Tether’s treasury wallet on the destination blockchain. Tether must mint new USDT tokens to fulfill the request in such cases.
After transferring these new tokens, Tether may burn the same amount of USDT tokens on the initial blockchain. This process helps maintain the supply of USDT and creates room for future swaps.
1,000,000,000 $USDT was just minted at Tether Treasury yesterday.
Tether has minted a total of 32 billion USDT in the past year.
That’s a lot of cheddar!
— Lark Davis (@TheCryptoLark) August 14, 2024
Conclusion
Tether is always making bold moves. Its upcoming chain swap to Ethereum is a strategic move aimed at improving liquidity and ensuring users can access their assets across many blockchains.
Whether you’re a trader looking to swap your holdings or only interested in how these processes work, understanding chain swaps can empower you to make the most of your assets.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
The post Tether to Perform Chain Swap to Ethereum appeared first on Altcoin Buzz.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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