Tether has officially launched USDT0 on Arbitrum to improve security, liquidity, and transaction speed. The rollout began on January 29, 2025, and will continue until February 5. USDT0 is currently on Kraken’s Layer 2 blockchain, Ink, with plans to expand to Berachain and MegaETH.
USDT0 is Tether’s new cross-chain stablecoin designed to improve interoperability between blockchains. It operates using LayerZero’s Omnichain Fungible Token (OFT) standard.
The Omnichain Fungible Token (OFT) standard allows tokens to move seamlessly across different blockchains using a “Burn & Mint” mechanism.
When a token moves from one chain to another, it is burned on the source chain and minted on the destination chain, ensuring that its total supply remains consistent.
OFT eliminates the need for wrapped tokens and centralized bridges, reducing security risks and improving efficiency. Projects like PayPal’s PYUSD and Ethena’s USDe have adopted the OFT standard to enable smooth cross-chain transfers while maintaining full functionality on all networks.
Arbitrum is an Ethereum layer 2 blockchain designed to scale the network and improve efficiency. Instead of processing every transaction directly on Ethereum, Arbitrum bundles multiple transactions together and submits them as one, reducing congestion and fees.
Read also: Tether’s AI product, Tether Data, will feature AI Bitcoin wallet assistant
As USDT comes to Arbitrum as USDT0, the initial bridged version will be replaced. The bridged version of USDT on Arbitrum was the previous version of Tether’s stablecoin, which relied on third-party bridges to move assets between Ethereum and Arbitrum
The most used stablecoins from 2014 to 2024 have been led by Tether (USDT), which consistently holds the largest market cap and trading volume. As of mid-2024, USDT dominates the stablecoin market with a market cap of over $114 billion.
At the beginning of October 2024, 109 million digital wallets held USDT, which is more than twice the number of wallets holding Bitcoin and close to the 128 million wallets holding Ethereum. Over time, USDT has become the preferred stablecoin for many crypto users.
