The stablecoin issuer Tether today announced a $1 billion chain swap to convert the USDT it had on the exchange. Solanablockchain to Ethereum blockchain.
The announcement comes as Solana, which was one of the top 5 cryptocurrencies by market cap just a few weeks ago, has struggled following the collapse of FTX cryptocurrency exchange. Solana is now ranked 16th by market capitalization and is down 25.4% over the past seven days. It is currently trading at $13.33, 95% off its all-time high of $256.
A chain swap is the process of moving cryptocurrencies from one blockchain to another. leash has done so in the past as demand for its stablecoins shifted from one blockchain to another. For example, in mid-2020 Tether swapped twice US$1 billion from Tron to Ethereumduring two months.
In a few minutes, Tether will contact a third party to perform a chain swap converting Solana to Ethereum ERC20, for $1 billion. #leash the total offer will not change during this process. Learn more about chain swaps ⬇️https://t.co/abfgnELSvi
Like Tron and other smart contract blockchains, Solana, traded as SOL, is a competitor to Ethereum. Every major cryptocurrency like Bitcoin and Ethereum has experienced selloffs since the FTX fiasco, but Solana was amazed especially hard.
FTX, once one of the largest exchanges, has close ties to Solana: the company has invested heavily in several Solana-related crypto projects and has been instrumental in the development of Solana’s main decentralized exchange and DeFi liquidity provider, Serum.
After the alleged hack of the FTX exchange on November 12, when withdrawals were disabled, Serum effectively went offline. Solana DeFi developers have disabled access to Serum, fearing that the project’s private keys, which were also hosted on FTX, were compromised.
The not-for-profit Solana Foundation, which helps develop the Solana blockchain, also admitted that $1 million in cash or equivalent assets was stuck on FTX.
Yesterday, Binance, the world’s largest digital asset exchange, announced it has temporarily suspended deposits of Tether (USDT) and the main stablecoin USD Coin (USDC), which run on the Solana blockchain. Last week Crypto.com also announced this will disable USDC and USDT support on Solana.
Stablecoins are actively used by crypto traders. Unlike major cryptocurrencies such as Bitcoin or Ethereum, they are not volatile because they are pegged to real-world assets such as US dollars or euros and help those who buy and sell digital assets do so quickly without having to access fiat currencies. Thus, stablecoins are tools in the DeFi world.
Tether is the world’s largest stablecoin issuer, and its dollar (and euro or yen) digital tokens can be used on a range of blockchains such as Ethereum, Tron or Polygon.
FTX lost billions of dollars of cash investors in one of the biggest crypto stories of the year when its exchange and related entities collapsed this month. FTX used the exchange’s money to place bets through Alameda Research, a trading firm founded by the exchange’s CEO Sam Bankman-Freed.
After falling on FTX last week, the company was forced to admit it had no individual reserves of client assets, leading to a withdrawal freeze and subsequent bankruptcy filing.
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