“In any given moment we have two options: to step forward into growth or step back into safety.” – Abraham Maslow ||
Hello everyone, I hope you’re all doing well! Although, what do you mean it’s only Tuesday?
I’m not going to cover the tariff scare unwind today – it feels like markets are still figuring out what’s going on with China and whether or not we’ll be going through this again in a month. The crypto mood still feels somewhat depressed despite the strong regulatory shifts and development moves, I’ll probably have more to say on this later this week.
Below, I look at the news that USDT is launching on Bitcoin – it’s a big deal. I also poke at the (flimsy) excitement around a US Sovereign Wealth Fund, and how it’s unlikely to end up buying BTC.
IN THIS NEWSLETTER:
Stablecoins on Bitcoin: good for Bitcoin, good for Tether
BTC in a US Sovereign Wealth Fund?
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WHAT I’M WATCHING:
Stablecoins on Bitcoin
Time for some ancient crypto history:
Back in 2012, J. R. Willett published a paper proposing a blockchain layer that would run on Bitcoin, but would allow the issuance of other tokens. It wouldn’t affect Bitcoin’s code or security, but it would enable more flexibility and therefore, in theory, bring in more users of the network.
It was called Mastercoin, and became the first blockchain “layer-2”. In 2014, the first direct-redemption dollar-backed token, known as Realcoin, launched on the network – this token later became USDT. In 2015, Mastercoin rebranded to Omni.
For the first three years of its life, USDT was limited to the Bitcoin network; it wasn’t until early 2018 that it expanded to Ethereum. Today, it runs on more than 10 blockchains, and its almost $150 billion market cap makes it roughly three times the size of its nearest competitor USDC.
(chart via Visa’s stablecoin dashboard)
Even in the early days, USDT use on Omni faced several obstacles. There were no tokens other than BTC to interact with, whereas over on Ethereum a sea of trading pairs and use cases was emerging. Plus, settlement on Omni was slower, and fees were higher.
In 2023, USDT’s issuer Tether pulled the plug on Omni support but left the door open to returning to the Bitcoin ecosystem on another layer.
Less than two years later, it has used that door. Last week, Tether announced that it was integrating USDT into the Bitcoin ecosystem. Users will be able to trade and hold the stablecoin both on the base layer and on the Lightning Network, one of the main Bitcoin layer-2s designed with fast, cheap payments in mind.
Good for Bitcoin
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