If cryptocurrency were an engine, Tether (USDT) would be one of its most critical pistons. Over the past seven years, this enigmatic stablecoin has become an indispensable tool in the crypto ecosystem. It serves as a bridge for new investors, a liquidity management tool, a pricing benchmark, and a lubricant for the crypto markets, ensuring their smooth operation.
Tether’s journey is nothing short of remarkable. It started with a modest $1 billion market capitalization in 2017 when Bitcoin reached $20,000. Fast forward to today, and Tether stands as a $70 billion-plus juggernaut.
Almost every crypto exchange supports USDT trading to some extent. Despite its importance, the inner workings of the stablecoin remain shrouded in mystery. One of the long-standing questions has been about who exactly buys Tether directly from its parent company, Bitfinex. Earlier this year, Protos revealed that Alameda Research and Cumberland Global were responsible for a significant portion of Tether’s distribution into the crypto market.
Now, in our most comprehensive investigation to date, we’ve spent months cataloging and analyzing every single USDT transaction involving the token across eight different blockchains and layers. The results are eye-opening:
- Tether distributed $108.5 billion in USDT.
- It received $32.7 billion in USDT in the same period.
- The majority of USDT was sent directly to market makers and liquidity providers.
Alameda and Cumberland: Crypto’s $60 Billion Tether Kings
Market makers, entities providing liquidity to crypto exchanges, received a staggering 89.2% of all USDT, equivalent to $97 billion. Among them, Alameda Research and Cumberland Global emerged as the dominant players, accounting for around 55% of all USDT issued in recent years.
Alameda Research, led by crypto billionaire Sam Bankman-Fried, has seen remarkable success and has made significant investments in the crypto space, particularly in projects like Solana. Cumberland Global, a subsidiary of DRW, is another heavyweight in the stablecoin markets, often providing liquidity to exchanges like Binance.
But USDT’s influence doesn’t end with these giants. Other market makers, such as Heka and Jump Crypto, are making their presence felt. These entities are critical for maintaining liquidity and market stability.
In addition to market makers, Tether serves medium-sized customers like Three Arrows Capital and Delchain, which received significant amounts of USDT, further enhancing the liquidity and stability of crypto markets.
Furthermore, individual traders, such as Shilong Wang, Christopher Harborne, and TRON’s Justin Sun, have also acquired substantial amounts of Tether, illustrating the broad reach of this stablecoin.
Tether’s role in the crypto ecosystem is undeniable, but questions about its inner workings persist. While it’s the leading stablecoin, the exact details of its operations remain undisclosed. Nevertheless, it continues to facilitate liquidity, provide stability, and enable trading in the crypto markets.
In the end, Tether remains a mysterious yet crucial component of the cryptocurrency engine, powering the global crypto markets.