Tether, the world’s largest stablecoin and the fourth-largest cryptocurrency by market cap announced Thursday its shift to the OMG Network for faster transactions and scalability.
Tether Shifts to OMG
As per a release, Tether said that after its shift to the OMG Network, a trustless, non-custodial, Layer-2 scaling solution for transferring value on Ethereum, the Tether (USDT) is live on the value transfer layer.
All Tether holders can now obtain the benefits of transacting on the OMG Network, one that touts itself to reduce Ethereum congestion and gas fees with improved transaction speeds. The integration will result in a reduction of confirmation times delivering faster payments while fees will be reduced without compromising on-chain security.
The rise of DeFi has, in the past few weeks, pushed the Ethereum network towards congestion and caused fees to jump as high as $60 on some transactions. However, solutions like these allow the stablecoin to operate as intended and provide a low-cost way for traders and users to transact value between wallets.
Paolo Ardoino, the CTO of Tether, said the firm is committed to driving innovation and improvements to our service to better support its customers. He added that by migrating USDT value transfers to the OMG Network, the network saves costs, drives performance improvements, and relieves pressure on the root chain network. He further noted, “this is good for Bitfinex and our customers, and the whole Ethereum ecosystem.”
Vansa Chatikavanij, CEO at OMG Network, said the network can now support thousands of transactions per second at a third of the regular costs, adding:
“We’re delighted to address these fundamental issues and drive further growth and adoption of open financial services.”
Moving forward, the release said the OMG Network will also facilitate USDT deposits and withdrawals at Bitfinex, allowing “traders to react faster to trading opportunities and take advantage of arbitrage.
Ethereum Congestion Affects Market Participants
The Ethereum blockchain is a valuable but limited resource, which, under heavy demand is vulnerable to severe network congestion.
As each block has only a finite space available to users, total transaction throughput is capped at approximately 12 transactions per second. When transaction demand exceeds that, settlement times increase and gas costs can rise significantly.
One such extreme congestion event occurred in March this year when the price of Ethereum crashed from $240 to $107, liquidating more than $10 billion from the market.
The huge spike in demand from users looking to trade in response to the volatile price swings resulted in average network waiting times rising from 15 seconds to 44 minutes.