Stablecoin issuer Tether recently announced they will stop supporting three blockchain protocols – Kusama, Bitcoin Cash SLP, and Omni Layer. The move comes as part of Tether’s commitment to maintaining robust infrastructure for their USD₮ stablecoin.
In a press release, Tether explained that bringing USD₮ to a blockchain involves comprehensive evaluation of security, compliance, and community interest. If a chain faces declining usage and dim recovery prospects, continued support becomes inefficient and poses risks.
After careful consideration, Tether concluded that Kusama, Bitcoin Cash SLP, and Omni Layer no longer justify the effort needed to maintain them. However, they acknowledged Omni’s historical significance as the first platform used to issue USD₮ in 2014.
Tether CTO Paolo Ardoino reiterated this sentiment on Twitter, saying:
“This decision pains our hearts especially in regards to the Omni Layer, Tether $USDt initial transport layer back in 2014. Over the years, the Omni Layer faced challenges due to the lack of popular tokens and the availability of $USDt on other blockchains.”
Ardoino explained that Omni’s lack of traction led exchanges to favor alternatives like Ethereum, causing declining USD₮ usage. As a principled company, Tether felt compelled to make the difficult choice to end support.
Despite this setback, Tether remains committed to leveraging Bitcoin’s security and decentralization. They are contributing to a new Bitcoin layer 2 system called RGB that promises scalability through client-side validation.
Ardoino believes RGB will enable a new era of digital asset adoption on Bitcoin, saying:
“We firmly believe that RGB will usher in a new era for digital assets, smart contracts, and digital rights, garnering comprehensive support from major players in our industry. Once $USDt on RGB goes live, the world will witness $USDt on another super-powerful and scalable #Bitcoin layer.”
The transition process will begin immediately, with Tether ceasing to mint new tokens on the three blockchains. However, redemptions and swaps will continue as normal for at least 12 months. Tether will monitor adoption and may extend support if circumstances change.
This move highlights the difficult balancing act for stablecoin issuers. Chains that once seemed promising can lose steam over time. Yet discontinuing support inconveniences users and can appear reactionary.
Tether is attempting to strike a middle ground – phasing out issuance but maintaining redemptions. Their commitment to a gradual transition and continuing dialogue shows responsiveness to user needs.
The market will ultimately decide whether Tether’s blockchain evaluations are prudent. Still, Tether deserves credit for its transparency and communicating the reasoning behind this transition. Their emphasis on security and compliance suggests prioritizing long-term stability over short-term demands.
As stablecoins cement themselves as a permanent fixture of the crypto economy, difficult decisions like this may become more common. The onus falls on issuers to justify these shifts to avoid undermining trust. Tether’s announcement sets an example of how to phase out support responsibly, but the proof will be in how seamlessly they execute this transition.
