ERC20 Tether Transactions Flip Their Omni Equivalent

Ethereum cofounder Vitalik Buterin told Bloomberg this week that the “[ETH] blockchain has been almost full for years.” ““I think it’s still good to develop …

Crypto enthusiasts have noticed that the Ethereum blockchain has come awfully close to reaching capacity due to the added transactions stemming from the Tether (USDT) network. The transaction count since mid-August shows the ERC20 version of tether has surpassed the original version that uses BTC. ERC20 tether transactions cost users more than $260,000 in the last 30 days and the over-saturation of trades is 17X larger than the infamous Crypto Kitties fiasco.

Also read: How to Create Non-Fungible Assets and Collectible Tokens With Bitcoin Cash

Tether Migrating to ETH Sparks Capacity Fears

In December 2017 during the height of the crypto bull run, the Ethereum blockchain was swamped with unique cats similar to Pusheens that could be collected and traded using the ETH network. The Crypto Kitties event prompted the creators to increase the cat birthing fee in order to incentivize miners to add birthing transactions to the chain. Fast forward to 2019 and Tether has started migrating coins from the Omni Layer network which uses the BTC chain to an ERC20 version which runs on top of the ETH chain. Tether is a $4 billion dollar network with coins spread across multiple blockchains which include BTC (Omni), ETH (ERC20), EOS, and Tron. Data pulled from the website Coin Metrics shows that the ETH-based tether transactions have surpassed the BTC-based versions this month. Today, on August 28, there are 39,000 tether transactions on the BTC network via Omni, but that number is eclipsed by the 126,000 ETH-based tether transactions. At the time of publication, there’s roughly 1.5 billion USDT minted using the ETH chain and 2.5 billion tied to the Omni Layer network.

ERC20 Tether Transactions Flip Their Omni Equivalent
USDT transaction count stemming from Omni Layer (dark green) and the USDT transaction count stemming from the Ethereum network (light green).

Since the tether transactions being used on the ETH chain have spiked significantly, the crypto community has been observing the ETH chain grow congested again. Ethereum cofounder Vitalik Buterin told Bloomberg this week that the “[ETH] blockchain has been almost full for years.” ““I think it’s still good to develop apps, but anything substantial should be developed with scalability techniques in mind, so that it can survive higher transaction fees that would come with further growing demand for Ethereum — In the longer term, Ethereum 2.0’s sharding will, of course, fix these issues,” Buterin asserted during the interview. Prominent Ethereum evangelist and founder of Mythos Ryan Sean Adams explained that every asset on Ethereum is “a future revenue source for ETH stakers.” “Tether paid 993 ETH over the last 30 days,” Adams said to further bolster his prior statement.

The fleppening just happened. Tether token on ETH now doing more daily tx then Tether token on Bitcoin Core. https://t.co/0mntDfpVS3#btc

— Crypto Mak 🌐 (@crypto__mak) August 28, 2019

For Stablecoin Use Cases Like Trading and Arbitrage, the Market Demands Faster Transactions and Lower Fees

The tether migration to Ethereum has been quite noticeable and Coin Metrics’ Nic Carter published data concerning Tether’s growth and transition to Ethereum. “USDT-ETH active addresses (the count of unique addresses that were active in the network as a recipient or originator of a ledger change) skyrocketed over the past week, jumping from 38,600 on August 19 to over 78,800 on 8/23,” the report notes.

ERC20 Tether Transactions Flip Their Omni Equivalent

“Meanwhile, USDT-OMNI active addresses continue to decline, despite two recent spikes.” The report also notes that the migration from Omni to Ethereum may have stemmed from market demand. “The primary use case for Tether is for active trading and arbitrage — For these use cases, Tether on Ethereum is faster (15-second blocks for Ethereum versus 10-minute blocks for Bitcoin) and require less fees,” the Coin Metrics’ State of the Network research explains. The report adds:

Since these characteristics are desirable for active traders, Tether issuance on Ethereum should continue to grow relative to issuance on Omni. The recent burn in Tether came solely from Tether issued on Omni.

ERC20 Tether Transactions Flip Their Omni Equivalent

Stablecoin Networks Using the Bitcoin Cash Network Will Benefit From Low Fees and More Capacity

Despite Tether’s move to the ETH chain, a few digital currency fans believe that there could be issues with the ERC20-styled tethers if the network grows too congested. Some skeptics and observers think tether users are paying way too much in network fees. On the bitcoin cash-oriented Reddit forum r/btc, some BCH supporters said that it would be far cheaper to host a popular stablecoin like tether on the BCH chain.

ERC20 Tether Transactions Flip Their Omni Equivalent

“Tether transactions alone pay $14,000 in transaction fees for 120,000 transactions every single day on Ethereum (a total of $57,000),” Reddit user u/eyeofpython remarked. “With a daily volume of $400,000,000 (source: SQL query on eth.events for the 23 August) — If Tether were to move to BCH, people would only pay $120 of fees in total.” On August 28, the average BCH network fee is only $0.004 per transaction, while the gas needed to push an ERC20 token is between $0.11-0.16 per transaction. Another BCH supporter wrote:

Tether should switch to SLP tokens on the Bitcoin Cash network, which never gets congested, unlike BTC and ETH.

Over the last few days, there have also been discussions as to whether ETH’s capacity can handle various apps alongside Tether. The number of transactions stemming from tether users has grown every year since the stablecoin launched and currently represents 30% of all cryptocurrency trades, rising at times to 40%. At the time of publication, tether (USDT) captures a whopping 77% of all BTC trades, 53% of ETH, and 54% of BCH trades worldwide.

ERC20 Tether Transactions Flip Their Omni Equivalent
USDT/BTC on August 28, 2019.

Tether continues to dominate, despite the fact there’s a slew of other stablecoins competing like USDC, DAI, TUSD, and USDH. Most of the stablecoin competitors use the ETH network as well, which presents another set of capacity problems for the chain. The stablecoin Honestcoin (USDH) does not use the BTC or ETH chain and is built on top of the BCH network using the Simple Ledger Protocol. USDH and its nascent network only has a $32,000 market capitalization and $173,000 in global trade volume. However, traders using stablecoins for quick swaps and arbitrage will quickly find that transaction fees at $0.004 per transaction or less are far cheaper.

What do you think about tether transactions on the ETH chain surpassing the Omni Layer-based tether transactions? Let us know what you think about this subject in the comments section below.


Image credits: Shutterstock, Coin Metrics’ State of the Network research, Crypto Compare, Coinlib.io, and Pixabay.


Are you looking for a secure way to buy Bitcoin online? Start by downloading your free Bitcoin wallet from us and then head over to our Purchase Bitcoin page where you can easily buy BTC and BCH.

Share this story:
Related

Venezuelan Pharmacy Chain Accepts Bitcoin Cash for Medicine and Products

NEWS | Jamie Redman

On August 26, a pharmacy chain in Venezuela called Farmarket revealed it now accepts cryptocurrencies through the payment provider Xpay,… read more.

Court Instructs Craig Wright to Distribute Billions to Plaintiffs

NEWS | Jamie Redman

On August 26, the self-proclaimed Bitcoin inventor, Craig Wright, was ordered by Southern District Court of Florida to distribute half… read more.

Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.

Related Posts:

  • No Related Posts

Is Tether Taking Over the Ethereum Network? Buterin Warns of Issues

This is warning issued last week by Vitalik Buterin, the co-founder of Ethereum. According to tracker Etherscan.io, utilization of the Ether network has …
TetherTether

Processing transactions in the digital token Ether on the underlying blockchain could soon be expensive for some users. This is warning issued last week by Vitalik Buterin, the co-founder of Ethereum.

According to tracker Etherscan.io, utilization of the Ether network has significantly increased to around 90%. Buterin indicated that as utilization grows, so do transaction costs, and that might deter corporate users from using Ethereum.

Tether Replacing ICOs on Ethereum Network

During the height of cryptocurrency, the digital game CryptoKitties was taking off and slowing down the Ethereum network immensely. Then, several initial coin offerings, most of which turned out to be scams, took up even more space on the network, slowing it even more. Now, most of the ICOs are gone, but a new coin has taken over the space previously occupied by them: Tether.

Data researcher Ethgasstation.info reveals that in the past month, Tether has paid computers that process transactions on the Ethereum network close to $260,000 in fees. This is 17.5 times more than CryptoKitties and six times more than IDEX, the largest distributed exchange in the World. The use of Tether is on the rise in recent weeks following more coins being issued.

>> Slim Chance of Bitcoin (BTC) Hitting $20,000 USD By End of Year

Tether’s Market Cap Exceeds $4 Billion

According to CoinMarketCap, the coin’s market capitalization recently exceeded $4 billion, growing from $2.7 billion in 2018. Last month, John Griffin, a finance professor at the University of Texas, estimated that around 40% of Tether runs on the Ethereum network.

Recently, Coin Metrics indicated in what is seen as the growing popularity of the coin that it was used in 40% of all transactions on Binance and 80% of transactions on Huobi. With Tether taking up more space in the Ethereum network, then it means less space will be available for other developers.

Most crypto enthusiasts touted Etherreum to be better than Bitcoin because of its extra features. For instance, users could automate tasks as well as set autonomous corporations running themselves through software. But with this new development, some developers are avoiding Ethereum until it tweaks the network to increase capacity.

Featured image: DepositPhotos © artefacti

“Ethereum Is A Technological Dead End” That Will Ultimately “Die”: Samson Mow, CSO Blockstream

Last week, Vitalik Buterin, the co-founder of Ethereum expressed his concerns about Ethereum’s scalability saying this issue could lead to increased …
“Ethereum Is A Technological Dead End” That Will Ultimately “Die”_ Samson Mow, CSO Blockstream

Last week, Vitalik Buterin, the co-founder of Ethereum expressed his concerns about Ethereum’s scalability saying this issue could lead to increased transaction fees and therefore discourage corporate clients. The scalability issue only seems to be escalating as per data from Etherscan.io which shows that Ethereum network utilization has reached the critical 90% mark.

This revelation prompted Samson Mow, CSO of Blockstream to lambast Ethereum blockchain, referring to it as a “technological dead end”.

Ethereum Is A Technological Dead End – Mow

It is patently clear Mow has been an ardent critic of the Ethereum blockchain. In the past, he has referred to ethereum as a “science fair project” with minimal use cases and he has also said ethereum is “centralized AF”. The Blockstream CSO is now referring to ethereum as a “technological dead-end” due to its almost full network. Mow goes ahead to say that with continued use, Ethereum is doomed to inevitably die. He asserted:

“Ethereum is a technological dead end. The more it’s used, the faster it dies. Fortunately, USDT is also available on the #LiquidNetwork which is more scalable and later will allow Lightning Networks to be created for assets like Tether.”

Buterin responded to Mow stating that other blockchains like bitcoin are facing scalability issues as well, not just Ethereum. He explained:

“You do realize that Bitcoin is also “almost full” in exactly the same way ethereum is, right?”

Liquid Network, according to Buterin is a centralized system. He criticized Liquid Network by making a reference to Tim Swanson, head of market intelligence at Clearmatics. Clearmatics is a blockchain fintech company that has close ties with Ethereum Foundation and has been working on developing scalability solutions since its inception in 2015.

“I’m sure @ofnumbers will be glad to hear about your support of permissioned consortium chains!”

Despite Mow being a firm critic of ethereum, a recent draft sent to SEC shows he has invested in an ethereum token, ERC20 proposed by INX Limited. This has since sparked off harsh criticism from the community with some referring to Mow as a hypocrite.

The Culprit: Controversial Stablecoin Tether

According to a report published by Bloomberg, the jamming of the ethereum network is due to the US dollar-pegged stablecoin, Tether. In 2017, the cause of ethereum’s capacity congestion was attributed to an application developed on top of ethereum’s blockchain, CryptoKitties. At present, however, Tether is exerting 17.5 times more pressure on ethereum blockchain than CryptoKitties did back then.

Notably, close to 40% of all the Tether in circulation runs on the ethereum blockchain. Due to this clogging, Tether parted with $260,000 in the past month as fees for miners verifying transactions on Ethereum’s ledger, as per data by Ethgasstation data researcher.

ETH 2.0, The Panacea For Ethereum’s Scalability Woes – Or Not

Ethereum network is focused on ETH 2.0 (Serenity) upgrade which, for all intents and purposes, will fix Ethereum’s persistent scalability issue. This ambitious update is slated for some time in 2020 and will introduce a proof-of-stake consensus mechanism and sharding as scalability solutions.

Be that as it may, some developers have no trust on this upcoming upgrade being a full-proof solution to ethereum’s scaling drawback. Case in point, Jeff Dorman, chief investment officer at Arca, a cryptocurrency asset manager based in Los Angeles. Dorman told Bloomberg that this ethereum upgrade is “not a guarantee” and therefore wise to keep off any development operations on the network until the upgrade is fully implemented and proves successful:

“So the biggest implication today is simply that developers may be incentivized to wait until this transition happens before fully committing to building on ethereum. Tether isn’t helping.”

The ETH 2.0 update expected in the near-future is designed to fix the scalability issue currently experienced by the network. If it does not fix this issue as planned, a good number of developers and customers could flee the blockchain.

What’s Your Thought On This?, Let Us Know In the Comment Section Below.


Get Daily Crypto News On Facebook | Twitter | Telegram | Instagram

Related Posts:

  • No Related Posts

Zilliqa (ZIL) Price Hits $0.0080 on Top Exchanges

Zilliqa (CURRENCY:ZIL) traded up 0.2% against the dollar during the 24 hour period ending at 8:00 AM E.T. on August 28th. During the last seven …

Zilliqa logoZilliqa (CURRENCY:ZIL) traded up 0.2% against the dollar during the 24 hour period ending at 8:00 AM E.T. on August 28th. During the last seven days, Zilliqa has traded 12.6% higher against the dollar. One Zilliqa token can currently be bought for about $0.0080 or 0.00000079 BTC on cryptocurrency exchanges including OKEx, Kyber Network, Zebpay and Upbit. Zilliqa has a market capitalization of $69.61 million and $7.99 million worth of Zilliqa was traded on exchanges in the last 24 hours.

Here is how other cryptocurrencies have performed during the last 24 hours:

  • XRP (XRP) traded down 0.3% against the dollar and now trades at $0.27 or 0.00002624 BTC.
  • Tether (USDT) traded up 0.3% against the dollar and now trades at $1.00 or 0.00009833 BTC.
  • Binance Coin (BNB) traded 0.1% lower against the dollar and now trades at $25.40 or 0.00249490 BTC.
  • Bitcoin SV (BSV) traded 2% higher against the dollar and now trades at $133.10 or 0.01307192 BTC.
  • Stellar (XLM) traded down 2.3% against the dollar and now trades at $0.0679 or 0.00000666 BTC.
  • TRON (TRX) traded down 0.1% against the dollar and now trades at $0.0175 or 0.00000172 BTC.
  • Chainlink (LINK) traded 1% lower against the dollar and now trades at $2.07 or 0.00020306 BTC.
  • NEO (NEO) traded 0.6% lower against the dollar and now trades at $9.51 or 0.00093448 BTC.
  • COZ (COZ) traded up 26.7% against the dollar and now trades at $0.22 or 0.00004541 BTC.
  • Crypto.com Chain (CRO) traded 0% higher against the dollar and now trades at $0.0410 or 0.00000403 BTC.

About Zilliqa

Zilliqa’s genesis date was November 6th, 2017. Zilliqa’s total supply is 12,533,042,435 tokens and its circulating supply is 8,687,360,058 tokens. Zilliqa’s official Twitter account is @zilliqa. Zilliqa’s official website is www.zilliqa.com. The Reddit community for Zilliqa is /r/zilliqa and the currency’s Github account can be viewed here.

Zilliqa Token Trading

Zilliqa can be bought or sold on the following cryptocurrency exchanges: BitMart, Radar Relay, EtherDelta (ForkDelta), OTCBTC, Tokenomy, FCoin, DEx.top, BitForex, Ethfinex, OKEx, Kyber Network, AirSwap, Bitbns, Upbit, DragonEX, WazirX, Bithumb, Kucoin, Koinex, IDEX, Hotbit, Binance, Coinhub, Gate.io, DDEX, Zebpay, OOOBTC, BiteBTC, UEX, GOPAX, HitBTC, Korbit, Huobi and Coinone. It is usually not currently possible to buy alternative cryptocurrencies such as Zilliqa directly using US dollars. Investors seeking to trade Zilliqa should first buy Ethereum or Bitcoin using an exchange that deals in US dollars such as Coinbase, Changelly or GDAX. Investors can then use their newly-acquired Ethereum or Bitcoin to buy Zilliqa using one of the exchanges listed above.

Receive News & Updates for Zilliqa Daily – Enter your email address below to receive a concise daily summary of the latest news and updates for Zilliqa and related cryptocurrencies with MarketBeat.com’s FREE CryptoBeat newsletter.

Related Posts:

  • No Related Posts

Ethereum Blockchain Running Out of Room Again

A smart contract could, for example, be programmed to release funds if one party did or did not meet certain terms. Since it was released as an …

The world’s second-largest cryptocurrency network after Bitcoin, Ethereum, is close to capacity as scaling solutions remain unrealized and other coins rent space on the chain.

Ethereum came close to capacity once before, in 2017, when there was a brief craze for the “digital collectible” KryptoKitties.

Ethereum distinguished itself and gained market share by promising a way to amplify the “autonomous” features of Bitcoin. Where Bitcoin has basically one function, peer-to-peer “uncensorable” transacting, the team behind Ethereum envisioned the same function enhanced by “smart-contracts,” little programs sitting on top of transaction channels that could mete out or regulate funds according to specifications.

A smart contract could, for example, be programmed to release funds if one party did or did not meet certain terms.

Since it was released as an experimental technology in 2015, however, even writing fool-proof smart contracts for blockchains has proven very challenging.

Ethereum also created a portal for anyone to create and circulate a crypto token, and thousands did. Ethereum directly enabled the ICO craze of 2016 and 2017, with more than 90% of those projects either failed now or trading well below ICO price.

But as a promised scaling solution called “sharding” (transaction processing broken into batches processed by some but not all nodes) remains elusive, surviving ICO coins, and another coins roving on the network, tether, Bloomberg claims, are now crowding Ethereum once again.

When there is much demand for processing on Bitcoin or Ethereum, customers can expedite transactions by paying higher fees to miners for making their transactions a priority. Low-fee transactions wait, sometimes for hours.

Ethereum’s inventor, Vitalik Buterin, admitted the crowding problem last week in an interview with The Toronto Star.

During the interview, Buterin said crowding could be deterring business on the network:

“Scalability is a big bottleneck because the Ethereum blockchain is almost full. If you’re a bigger organization, the calculus is that if we join, it will not only be more full but we will be competing with everyone for transaction space. It’s already expensive and it will be even five times more expensive because of us. There is pressure keeping people from joining, but improvements in scalability can do a lot in improving that.”

Buterin did not single out Tethers, but according to crypto data firm CoinMetrics:

“Current (Tether) supply stands at 4.1 billion units (some units have recently been burned by the Tether Treasury), consisting of 2.54 billion issued on the Omni blockchain and 1.56 billion issued on the Ethereum blockchain. Although Tether issued on Ethereum has existed since late 2017, the number of Tether issued on it was low and was seldom used. This changed earlier this year, and the strong growth in Tether total supply can be almost all attributed to Ethereum.”

Tethers are a synthetic proxy of USD and other real-world currencies issued by a company called Tether Limited.

The coins were created to “add liquidity” to crypto trading systems and to permit arbitrage between exchanges in different parts of the world.

Tether Limited claimed until recently that every “USDT” issued was backed 1-t0-1 by equivalent US dollars held in reserve, but the company has raised suspicions and has never provided a credible audit.

The company and its sister firm, the crypto exchange Bitfinex, are now in hot water in New York for alleged commingling of funds and failure to disclose events material to investors.

According to Bloomberg:

“Tether’s use has been growing, as more of the coin has been issued. Its market capitalization recently passed $4 billion, up from $2.7 billion a year ago.”

Professor John Griffin, who teaches Finance at the University of Texas and is also a consultant with law enforcement, has correlated the issuance of tethers with market manipulation and claims 40% of all tethers circulate on Ethereum.

CoinMetrics also notes that Tether is used in 40% of transactions on Binance and 80% transactions on Huobi, two of the world’s biggest crypto trading platforms.

Related Posts:

  • No Related Posts