How Tether Supports the Decentralization of Finance

how-tether-supports-the-decentralization-of-finance
by Tether | May 2 2022

Cryptocurrencies are the fastest growing technology market of the last decade, there is nothing remotely comparable to the rapid growth experienced by this sector. On the most fundamental level, the growth of cryptocurrencies and blockchain applications has been driven by a belief in the impact that decentralization could have on finance and the world.

No matter where you look, every project in the cryptocurrency world is trying to use decentralization to solve a problem. Some will fail and some will succeed, but there are countless teams that are trying to determine the right approach to decentralization and which problems it can solve.

Tether and USD₮ support the growth and adoption of a decentralized financial system. While USD₮ itself is not a decentralized asset, it solves various core challenges that have supported the growth of decentralized systems and will continue to for years to come.

Integrating Decentralized Infrastructure

Ultimately, decentralized financial systems and infrastructure cannot exist in isolation, at least at this time. Perhaps one day decentralized financial systems will just be known as “The Financial System” but currently users must have the ability to enter and exit the decentralized world.

There are many on-ramps that have grown up around providing users the ability to convert government currencies held in banks into crypto assets, but USD₮ solves a different problem which is equally important to the growth of decentralized financial markets.

USD₮ is a native blockchain asset that is supported on most major blockchains. It is the largest stablecoin in the world and has been the top choice for individuals, traders, and companies for years.

Due to the fact that USD₮ exists on blockchains, it provides a useful tool where users can have the option to exit their positions in digital assets into something which is benchmarked against a dollar value without needing to exit into a bank.

This promotes the ability for money to stay within the growing cryptocurrency market. If a tool like USD₮ was not available, users would need to consistently transfer money out of cryptocurrency markets back into banks. This would add tremendous friction and exert unnecessarily pressure on the ability of users to use decentralized infrastructure as a major part of their lives. It would also open up the avenues for financial censorship!

Supporting Global Markets

Decentralized financial markets need to be truly global. However, every user must onboard into the ecosystem from a local national currency and from a national financial infrastructure (cash, banks, etc).

USD₮ provides users the ability to benchmark their digital wealth against a fiat currency without needing to transfer it to a bank. This promotes the ability for users who build value in a decentralized financial system to keep their value there while maintaining the ability to transact internationally.

In a world where most economic transactions do not utilize Bitcoin or another digital asset, most people still have all of their expenses and purchases accounted for in fiat currency terms. USD₮ provides a way to allow control over how they denominate their value, even while staying within  global, decentralized financial infrastructure.

It’s important to the growth of crypto ecosystem that users can utilize decentralized financial infrastructure to transfer fiat value as well as crypto assets.

Liquidity

USD₮ is a critical pillar of liquidity within the crypto ecosystem. The daily trading volume of USD₮ usually far exceeds every other digital asset except Bitcoin. It also trades more tha blue-chip stocks like Apple trade in a day!

It is a remarkable milestone that an asset that is less than a decade old is one of the most liquid assets on the planet.

This liquidity is critical to the growth of the crypto ecosystem. It allows large quantities of digital assets to be easily converted into fiat denominated value. It ensures that large investors and companies can seamlessly onboard into an alternative financial system.

In Order to Build the Future, Integrate the Past

An alternative decentralized financial system stands the best possibility of growth when it is able to interface with the traditional infrastructure and world that most users are used to and that exerts the most direct influence over their lives.

Users are excited about the potential for crypto assets because they see how they can impact their real lives. They provide exciting new opportunities, solve core challenges, and offer people around the world the ability to generate economic value online.

However, it's the ability for this value to bridge back to their local environments that makes the value real for most users. While it's true that one day this may no longer be necessary, the growth of this technology depends on integration.

Due to USD₮’s ability to be redeemed for USD on a 1-1 basis, it is able to function as a placeholder for dollar value on blockchains. Without the ability to represent dollar value on-chain, it's hard to imagine that exchanges, derivatives, and De-Fi could have grown as fast or as large as they have.

Tether is proud of the role it has played in promoting the growth of this highly disruptive industry. If you have more questions about Tether, we encourage you to visit our website to learn more about Tether and how we work. You’ll also find information about how to use USD₮ and on the basics of stablecoins.


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