Tether to Ethereum Chain Swap: What Does It Mean?
•Tether says it is moving 1 billion USDT from Solana to Ethereum in a chain swap
• The move comes after Binance suspended deposits of USDC and USDT from Solana
• Tether says the total supply of USDT will not change as a result of the chain swap
As more FTX contagion rears its head around corners and destroys more of the crypto community more companies are taking a steadfast approach to deal with the situation, some of these methods include hurting Solana.
Solana has had its fair share of controversy, but the most recent decision to move over 1 billion USDT from Solana to Ethereum was a solid reminder of how volatile the DeFi industry can be, and how quickly new problems can emerge.
The move by Tether came after Binance suspended deposits of USDC and USDT from Solana, as part of its wider efforts to protect the safety of its users. Cryptocurrency exchange giant Binance had announced it would be suspending deposits of two popular stablecoins, USDC and USDT, from the Solana network. In response, Tether says it will be moving 1 billion USDT from Solana to Ethereum in a chain swap. So what does this all mean? Let’s take a closer look.
Binance’s Suspension of Solana Stablecoin Deposits
Binance made the announcement on Twitter, saying that it would be suspending deposits of USDC and USDT from the Solana network “until further notice.” The reason for the suspension is unknown but many speculate that it is due to the negative relationship between Binance and FTX. The collapse of that crypto exchange that was heavily into Solana could be the reason that Binance decided to cut ties. As a result, depositing USDC or USDT on Binance could result in “significant delays” in credit being given to users.
In the meantime, Binance has stated some continued support for withdrawals of USDC and USDT from Solana. However, the exchange advises users to do so “only if absolutely necessary.” Binance says it is “exploring solutions” to the issue and will provide an update on when deposits will be reopened.
Tether to Move 1 Billion USDT from Solana to Ethereum
In response to Binance’s announcement, Tether says it will be moving 1 billion USDT from the Solana network to Ethereum. Tether says the total supply of USDT will not change as a result of the chain swap. The company did not say when the move would take place but said it would provide updates in the future.
It’s worth noting that this is not the first time Tether has moved large sums of USDT from one blockchain to another. In January 2018, Tether moved 500 million USDT from Bitcoin’s Omni Layer protocol to Ethereum’s ERC20 protocol. At the time, Tether said the move was meant to “increase efficiency.”
What This Means for Users
For now, the biggest impact of this news is on users of Binance who hold USDC or USDT on the Solana network. If you have USDC or USDT on Solana and you want to deposit it on Binance, you’ll need to wait until further notice. Withdrawals are still possible but should only be done “if absolutely necessary.”
Tether’s decision to move 1 billion USDT from Solana to Ethereum is part of their effort to strengthen the platform, increase liquidity and enhance user experience. The company says that the total supply of USDT will not change as a result of this chain swap.
Although moving 1 billion USDT from Solana to Ethereum is a big step toward more secure and reliable DeFi projects, it also speaks to the fact that the industry is still in its infancy. There are several challenges that need to be overcome, and companies like Tether will want to use their experience and expertise to help develop a healthier and more resilient ecosystem.
Tether’s decision also serves as a reminder of how quickly new problems can emerge, such as FTX contagion, and how companies need to be proactive in their efforts to protect users. As the DeFi industry continues to grow, it is crucial that companies remain vigilant and take all necessary steps to ensure these new products are secure and reliable.