Via an integration developed by LayerZero Labs, Tether – the world’s most popular stablecoin – is now available on the Stellar blockchain. While adding Stellar represents an immediate significant addition to Tether’s USDT reach, by leveraging LayerZero’s Omnichain Fungible Token (OFT) standard, in the future, extending Tether to other blockchains theoretically requires little effort.
Before Tether became available Stellar – as USDT0 tokens on 2nd September – Tether already supported several blockchain platforms, including Ethereum, Solana and Avalanche. However, leveraging OFT – a design choice taken by Stellar cross-chain technical partner Everdawn Labs – makes the task of deploying Tether on additional blockchains significantly faster, safer and cheaper. In particular, the code that handles the cross-chain movement of USDT0 remains identical whether it is based on Stellar, Ethereum, or any other blockchain.USDT0 offers another major advantage compared to other USDT implementations, where token liquidity is fragmented across different chains. For USDT0, the entire blockchain ecosystem is treated as one single liquidity pool. Notably, USDT0 maintains a single unified supply backed 1:1 by USDT.
Founded in 2021, LayerZero launched OFT the following year building on the release of its messaging protocol. More recently it has introduced its Zero blockchain and ATLAS, its “headless exchange.”
With USDT0 available on Stellar, DeFi protocols can build around an asset with more than $180 billion in market capitalization. USDT0 can be used as collateral, borrowed against, traded and put to work across yield opportunities. That creates more ways for existing USDT holders to put their capital to work on Stellar, expanding the potential pool of participants and capital to include markets where USDT is already a primary settlement asset.
For Stellar, USDT0’s implementation signals that the blockchain platform, which began life in 2014 as a fork of Ripple and focused on serving the world’s unbanked population, is now even more of a contender for institutions, FinTechs and developers evaluating networks for on-chain application deployments.
Even without USDT0, Stellar has increasingly enjoyed a reputation for reliability and utility in global payments due to sub-cent fees, increased performance with five-second transaction finality, and on/off-ramp endpoints across 170+ countries. US asset manager Franklin Templeton was an early institutional supporter of the platform, introducing its Franklin OnChain US Government Money Fund in 2021. With the introduction of smart contract functionality in early 2024, the platform began to be used for more decentralised finance (DeFi) applications and for tokenised assets.
Five years on from Franklin Templeton’s notable vote of confidence, USDT0 looks set to give Stellar another boost in the institutional space. Indeed, according to a recent Stellar blog post, “The next chapter for Stellar starts now.”
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