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Bitfinex prints more and more tether, has never burned a token

May 28, 2020

A Flipside Crypto report shows that Ethereum (ETH) based tether (USDT) tokens were never burned. The report also concluded that stablecoin is mainly used by arbitrators on centralized exchanges.

The USDT flow within a crypto ecosystem. Source: Flipside Crypto

Binance, Bitfinex and Huobi

Bitfinex prints more and more tether, has never burned a tokenBitfinex prints more and more tether, has never burned a token

The report says that Tether has so far failed to deliver stability to the DeFi space, as postulated by Paolo Ardoino, CTO of Bitfinex and Tether. Instead, the main use seems to be arbitration between exchanges:

“It is fairly clear that most of Tether is used on centralized exchanges, namely Huobi, Binance and Bitfinex. The constant back and forth between users and these exchanges reflects the fact that Tether is used primarily for arbitration purposes easily make profits by buying on one exchange and selling on another at a higher price. “

Tether users pay higher gas prices

Another interesting observation is that these referees don’t send their tokens directly from one exchange to another, but instead pull them back into their wallets. The report speculates that this may be due to a desire to control the speed of transactions. In other words, this allows users to pay higher gas rates to speed up the transfer. In the world of arbitration, time is money.

Bening’s explanation

Although Tether has recently become the third largest cryptocurrency by market cap, it remains a controversial project with numerous questions about its reserve policy. However, when it comes to why none of his Ethereum-based tokens were burned, there could be a simple explanation. The company may find it more efficient to move the tokens in and out of the treasury instead of burning and reissuing new tokens.

Cointelegraph asked Tether for a comment, but received no response at the time of publication.

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