What is Tether?
Tether is a stablecoin pegged to the US Dollar. A stablecoin is a type of cryptocurrency whose value is pegged to another fiat currency like the US Dollar or to a commodity like Gold.
Tether is the first stablecoin to be created and it is the most popular stablecoin used in the ecosystem. It has the largest stablecoins by circulation and market capitalization.
Who created Tether?
Tether is controlled by Tether Holding Limited or known as Tether Limited. The CEO is JL Van Der Velde, the CFO is Giancarlo Devasini and the general counsel is Suart Hoegner.
Tether was launched by the team running Bitfinex, a major cryptocurrency exchange.
How does it work?
Tether was originally based on the Omni Layer, a transport protocol on the Bitcoin blockchain. Therefore, the original version of Tether is characterized by the inherent stability and security of the longest established blockchain network.
To accelerate adoption, in September 2017, Tether was launched on the Ethereum blockchain, as an ERC20 token. Tether’s Ethereum ERC-20 is now the most popular Tether token type.
How does Tether maintain a 1:1 USD peg?
The USDT peg is maintained via a one-to-one collateral ratio. Tether Limited claims that every USDT in circulation is 100% backed by actual fiat in their reserves. Tether published their balances in their Transparency page. Tether Limited acts as a third-party custodian for the fiat currencies backing USDT.
To understand the process of how Tether is controlled by Tether Limited, take a look at the flow of fund process below: