Tether as a vital part for DeFi

Tether is playing a vital role in the nascent decentralized finance (DeFi) sector. 

This is what Multicoin Capital co-founder Kyle Samani said during Laura Shin’s Unchained podcast. 

During the podcast, Samani talked about the defensibility of the main DeFi protocols on Ethereum, and about Tether he said: 

“The source of the defensibility for Tether is clear: it’s the most liquid asset in the crypto ecosystem alongside bitcoin. It is available on all major non-US exchanges, serves as collateral for many derivatives exchanges, and is used to settle a huge percentage of OTC trades. Despite fierce competition from USDC, PAX, TUSD, GUSD, DAI, and others, USDT still commands >80% of the stablecoin market (when measured using market cap)”.

Although Tether is not actually a DeFi protocol, it was included in the analysis because it is now an integral part of the crypto ecosystem due to its high market capitalization of over $6 billion. 

This has more than tripled since February last year when it was around $2 billion, and now USDT is available on the Ethereum, Omni, EOS, Liquid Network, TRON and Algorand blockchains. 

In his personal ranking in terms of defensibility, Samani puts USDT in first place because it is already facing its biggest competition, and yet it is still 5-10 times bigger than its greatest competitor, USDC. 

Moreover, USDT remains a controversial project, whereas USDC is backed by Coinbase, which is one of the largest crypto companies in the world. 

Samani also revealed that there are some teams working on clearing houses using stablecoins, including DeFi protocols such as StableCoinSwap and Shell and centralized clearing houses such as Stablehouse. 

However, this could also negatively affect USDT because it could allow exchanges offering derivatives to accept other stablecoins as collateral.