The Expansion Journey of USDT: Challenges and Strategies

As a dominant stablecoin, USDT's market value has grown from $80 billion to $144 billion over the past year, an increase of 80%. Despite this, its market share has decreased from 70% to 61% as other stablecoins are also rapidly developing.

In order to maintain growth, USDT has adopted an active cross-chain expansion strategy. However, this process also faces some challenges:

1. USDT natively supports only about 12 blockchains, while it actually exists on over 80 chains. This means that a large amount of USDT relies on third-party bridges, increasing the risk.

2. The scale of bridging USDT continues to expand, with approximately 8 billion USD in USDT bridged to other chains on Ethereum alone. This poses regulatory and risk management challenges for Tether.

3. USDT dominates the Tron network with a circulation of approximately $70.9 billion, bringing massive fee revenue to Tron. This suggests that Tether may be "leaking" value to Tron.

To address these challenges, Tether has adopted both horizontal and vertical scaling strategies:

Horizontal scaling: Launching USDT0, utilizing the LayerZero OFT standard for multi-chain deployment. This simplifies cross-chain transfers and reduces costs.

Vertical scaling: Building Legacy Mesh and Plasma. The former serves as the central network connecting existing USDT deployments with USDT0, while the latter focuses on payment efficiency as a Bitcoin sidechain. Together, these two projects create a comprehensive liquidity and ecosystem hub for USDT.

Interoperability has become an important step for the expansion of stablecoins. As the blockchain ecosystem expands, stablecoin issuers need to adopt cross-chain strategies for long-term growth. Infrastructure like LayerZero is becoming a key entry point for stablecoins to achieve this goal.