The Road of USDT Expansion: Advancing Horizontally and Vertically

USDT, as the largest stablecoin by market capitalization, saw its market value grow from 80 billion USD to 144 billion USD over the past year, an increase of 80%. Nevertheless, its market dominance has decreased from 70% to 61% as other stablecoins are also rapidly developing. To maintain its growth momentum, USDT has adopted an aggressive expansion strategy, including the implementation of the multi-chain token USDT0 based on LayerZero OFT, as well as the construction of hubs centered around Legacy Hub and Plasma.

Challenges Facing USDT Expansion

Limited native support

USDT currently supports only about 12 native blockchains, but it actually exists on over 80 chains. On non-natively supported chains, USDT relies on third-party bridging, which introduces additional risks and management challenges. The security and reliability of bridged USDT completely depend on the bridging operators, not Tether itself.

The growth of bridging USDT

About $8 billion of USDT has been bridged to other blockchains on Ethereum. This fragmentation makes it difficult for Tether to comprehensively monitor supply, ensure compliance, and manage associated risks.

the value flowing to Tron

USDT on Tron accounts for over 98% of the stablecoin supply on the network, driving 99% of the transactions. As a result, Tron generates over $2.5 billion in fee revenue from USDT-related activities each year. This has prompted Tether to consider launching its own blockchain to capture the ecosystem value currently flowing to Tron.

Tether's Horizontal and Vertical Expansion Strategy

Horizontal Scaling:USDT0

USDT0 is a multi-chain version of USDT based on the LayerZero OFT framework. It simplifies cross-chain operations, reduces costs, and achieves "issuer-aligned interoperability". The expansion of USDT0 is primarily driven by strategic decisions rather than technical limitations.

Vertical Scaling: Legacy Mesh and Plasma

Legacy Mesh serves as a central network, connecting existing USDT deployments with USDT0, unifying 98% of the USDT supply. Plasma, on the other hand, is a Bitcoin sidechain focused on payment efficiency, which has supported USDT0 from the very beginning. Together, these two initiatives create a comprehensive liquidity and ecosystem hub for USDT.

Interoperability: The Key to Stablecoin Expansion

As the blockchain ecosystem expands, the long-term growth and adoption of stablecoins depend on effective cross-chain strategies. Cases like WYST demonstrate that interoperability strategies must run in parallel with issuance strategies. LayerZero, with its customizable infrastructure and extensive chain support, is becoming an important gateway for stablecoins to achieve cross-chain scalability.