This week’s Daily Mover featured asset is Tether (USDt), the most popular stablecoin in the cryptocurrency space. Tether’s USDt has stood out for being the most liquid stablecoin, and it is now available on several blockchains, including EOSIO, Liquid, Ethereum, TRON, and Omni.

Late last month, a chain swap – the process of moving USDt from one blockchain to another – was announced for a “sizeable amount.” After the announcement, Binance moved 300 million USDt on the TRON blockchain to Bitfinex, and got back 300 million USDt on Ethereum.

Why the token swap was made is not clear, but two theories prevail: one is that TRON was paying Binance a premium to keep the supply of USDt on its blockchain up, and could have stopped paying the premium this month. The other was simply growing demand for the stablecoin on ETH.

The growing yield farming trend, in which decentralized finance users interact with protocols that distribute tokens to earn rewards on top of the interest earned for lending cryptoassets on them, could explain growing demand.

The largest decentralized finance platform on Ethereum, Compound, has nearly $1 billion worth of assets locked in it. It distributes 2,880 COMP governance tokens to its users every day, amounts to around $600,000 worth of rewards on a daily basis, a significant incentive for users.

Last week, Compound approved a proposal to change how COMP is distributed, so users will earn on the dollar value of assets put in or borrowed, and not on interest earned. This could see investors flock towards stablecoin to avoid dealing with volatility.

Tether, a company that shares management with Bitfinex, has revealed it will either burn the extra USDt or retain it for future chain swaps.

Source: https://www.cryptocompare.com/email-updates/daily/2020/jul/07/