USDT’s Tether is now the fourth largest crypto by market capitalization. The news was announced in a tweet from the company after achieving $20billion market cap.
Tether’s market capitalization has increased throughout the year. The pace of this increase is also accelerating. It took nearly six months, from mid-December last year to mid-May of this year, to double its capitalization from about $4 billion to more than $8 billion.
The next jump, to more than $13 billion, took place in early September. Tether has seen about half of its increase occur in the last four months.
Defi and Tether Bromance Continues
Much of Tether’s increase in market capitalization is likely due to interest in decentralized finance (DeFi). On reaching $15 billion in mid-September, BeInCrypto said DeFi projects were responsible for much of the increase.
Judging from number of transactions Aave, Compound and Solana are major drivers of interest in USDT. Users tend to use stablecoins such as Tether in DeFi projects due to lack of volatility. It may also recover misdirected funds in certain circumstances. Thus, as the DeFi market grows, the need for USDT increases accordingly.
According to DeFi Pulse, in mid-August, the (TVL) in DeFi projects was nearly $6.3 billion. Currently, the same indicator is $15.82 billion.
There are, however, a few stones in Tether’s path of growth. In August, Tether showed courage in returning a million dollars to a user.
The user accidentally transferred the money, but the company was able to blacklist the addresses to which the tokens were sent and fix the problem. What some hailed as a wonderful act also took a menacing turn.
Members of the crypto community who oppose such control mechanisms see this as a problem. From their point of view, government is in close relations with the company. As a result, such mechanisms could control other stable coins.