The Expansion Path of USDT: Strategic Layout from Horizontal to Vertical

As the market-leading stablecoin, USDT's market value has grown from $80 billion to $144 billion in the past year, an increase of 80%. Despite this, USDT's market share has dropped from 70% to 61%, mainly due to the rapid expansion of other stablecoins. To maintain its growth momentum, USDT has taken a series of bold initiatives to expand its cross-chain capabilities.

Challenges Facing USDT

Currently, USDT natively supports about 12 blockchains, but in reality, it exists on more than 80 chains. This means that most of the USDT on these chains comes from third-party bridging rather than being directly issued and managed by Tether. This reliance on third-party bridging not only increases user risk but also presents significant management challenges for Tether.

Another issue is that USDT is leaking a significant amount of value to the Tron network. 98% of the transaction fees and 99% of the transactions on Tron are driven by USDT transfers, bringing substantial revenue to Tron. This raises the question: if Tether were to launch its own blockchain, could it recapture this value?

Tether's Dual Strategy

To address these challenges, Tether has adopted a horizontal and vertical parallel expansion strategy:

Horizontal scaling:USDT0

Tether has launched a multi-chain version of USDT based on the LayerZero OFT framework, called USDT0. This allows USDT to more easily scale to other blockchains or Rollups. USDT0 uses a lock-mint mechanism, simplifying supply management across different networks while reducing the need for native support.

Vertical Scaling: Legacy Mesh and Plasma

Tether is building Legacy Mesh and the Bitcoin sidechain Plasma. Legacy Mesh serves as a central network, connecting existing USDT deployments with USDT0, aggregating liquidity through Arbitrum and facilitating cross-chain transfers. Plasma is a Bitcoin sidechain focused on payment efficiency, supporting USDT0 from the very beginning.

These two projects together create a comprehensive liquidity and ecosystem hub for USDT, enabling USDT to expand its influence in terms of liquidity and applications.

Interoperability: The Key to Stablecoin Expansion

With the continuous expansion of the blockchain ecosystem, interoperability has become a top priority in the development of stablecoins. Projects like Wyoming stablecoin (WYST) have achieved seamless use across multiple major blockchains by adopting LayerZero's OFT standard.

This trend indicates that interoperability strategies must be synchronized with issuance strategies. For stablecoins seeking greater adoption, solutions like LayerZero are becoming important gateways for cross-chain expansion, allowing issuers to efficiently enter new markets and application scenarios.