Tether (USDT) is a token pegged to the value of one U.S dollar ($1). It’s part of an asset class known as stablecoins, which are assets pegged to the price of the underlying currency.

Tether is backed by bank reserves, assets and loans, which secure and back the USDT tokens in circulation with the equivalent amount of U.S. dollars. This in turn enables the price of a stablecoin like Tether to be pegged to one U.S dollar through a 1:1 collateralization ratio.

USDT is the third-largest cryptocurrency by market capitalization, with more than 82 billion Tether tokens currently in circulation throughout the cryptocurrency ecosystem on exchanges, in wallets and on DeFi platforms.

It was the first stablecoin to be created and remains the most widely-used stablecoin within the cryptocurrency industry thanks to its deep liquidity and favourable market reputation.

Tether is used mainly as a trading pair across exchanges like Kinesis as it provides a safe asset to take profits in and trade against assets like Bitcoin and Ethereum thanks to its stable, pegged value. 

Tether is also often used as a ‘safe-haven’ asset in times of market uncertainty and volatility and is good for converting users’ crypto holdings into a more stable asset. This helps users secure profits and means that their assets don’t have to leave the crypto ecosystem during volatile periods.

It is also used heavily across the DeFi space to earn yields, with favourable interest rates offered on dollar-based assets over legacy financial services such as banks or investment accounts.