11 Billion USDT Just Burned

Tether announced the burning of 11.1 billion USDT in accordance with the organization’s periodic token burn. This is the number of user assets withdrawn from the company in the past period.

On the morning of June 21, via the official Twitter page, Mr. Paolo Ardoino, CTO of Tether company announced that the platform is burning a large number of stablecoins. Specifically, Mr. Ardoino said the organization will burn 6.6 billion tokens on the TRC-20 network and an additional 4.5 billion tokens on the ERC-20 network. This is one of the largest token burns Tether has ever conducted.

This is not the first time Tether has announced the destruction of tokens. Most recently, in early May, the company also burned about 3 billion USDT on the platform.

Unlike other cryptocurrencies, Tether’s stablecoin USDT operates on the principle of collateral. 1 USDT will be generated when a user deposits $1 of fiat into the platform. When in need, customers can bring 1 USDT to Tether and ask for $1 in return. The stablecoin, after being acquired by the company, will be transferred to the treasury wallet and periodically destroyed.

The unusually high amount of USDT burned in this phase is due to a lot of negative information targeting Tether recently, making investors worried about the reputation of this platform. Specifically, after the disaster of stablecoin UST, belonging to the Terra network, users lost confidence in supposedly stable assets.

Large amounts of Tether’s reserve assets are not available but are invested in many categories. Therefore, users are worried that the company’s business will be at a loss, not guaranteeing enough refunds as promised. In mid-May, there was a period when USDT dropped in price, staying below the $1 mark for several days because of a sell-off.

According to data from CoinMarketCap, the market capitalization of USDT has dropped from $83 billion in early May, to $67 billion today. More than $16 billion worth of Tether’s market cap evaporated in almost 2 months. This amount of assets is equivalent to the number of money investors have withdrawn from the organization in the past period.

The decline of USDT is an opportunity for other stablecoins. Coinbase-backed USDC grew by $8 billion in market capitalization in two months, reaching $56 billion. Binance’s BUSD also saw an increase of about $2 billion. These two stablecoins are trusted because it is fully backed by reserve assets, instead of partially like USDT.

Under pressure from investors, Tether had to release financial statements in mid-May. In a statement on May 19, Tether noted that the value of the commercial paper it holds had fallen 17% at the end of the first quarter of 2022 compared to the previous quarter, down to $20.1 billion. The company also said that it has continued to reduce that amount by another 20% since April 1.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Harold

CoinCu News