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Tether Operations Limited (Tether) is the operating Tether.to, the largest stable coin provider. Tether Tokens are important to the entire crypto ecosystem, and therefore the issuance of USDt is carefully and strategically planned through the phases of Authorized, Issued, Redeemed, and Destroyed. These processes ensure that Tether has maximum security and usability.
Authorized tokens are pre-issued tokens created in large batches. This amount is determined by conversations that Tether has with clients, and it represents the anticipated demand for USDt by the parties. Tether’s private keys control the ability to issue USDt, and therefore private key security is a top priority for Tether. Batch issuance of tokens reduces how often private keys should be used. Tether has an inventory of authorized USDt, which helps Tether to meet customer demand in a timely manner. Authorized USDt is not a part of the market cap of Tether tokens. Authorized tokens are not n circulation and therefore are not backed by collateral. All USDt issued into circulation is fully supported by collateral. All authorized USDt is held within Tether’s treasury.
Issued Tether tokens are always 100% backed by Tether reserves, including traditional currency and cash equivalents, from time to time, consisting of other assets and receivables from loans that Tether makes to third parties. Thus, the market cap of USDt is completely issued tokens. Issued tokens can be had by an exchange, an individual, or an institution using USDt to transact with or store funds in a secure digital form.
Every USDt can be redeemed for US Dollars on a 1:1 basis. Destroyed USDt are those that are permanently destroyed, and they are neither in circulation nor in the Tether treasury/inventory.
Reportedly, USDt can be destroyed if Tether has more USDt tokens in it’s treasury/inventory than needed for estimated client demand after redemption takes place.
USDt can also be destroyed if, after a chain swap, there have been excess tokens that were deemed unnecessary.
Chain swaps are a net neutral process in terms of USDt issuance, where the net balance of total USDt stays the same because the tokens simply move from one blockchain to another. And, irrespective of which blockchain they are at, all USDt remains backed by the same collateral.
Users will see USDt as being issued because of chain swaps. It will be helpful to understand that the issuance of tokens does not constitute the creation of additional USDt.
At any point in time, Tether token can be identified as being in one of these four stages of the issuance cycle: authorized, issued, redeemed, or destroyed.
This issuance system safeguards important private keys in the cryptocurrency industry by providing in-demand services to Tether clients.
