Tether (USDT) is the most popular stablecoin by market cap and trading volume worldwide, yet not many know the difference between Tether TRC-20, and Tether ERC-20. In this article, we’ll explain all you need to know about both versions, and highlight how you can reduce your transaction costs by using the right one.
Before diving into the details, let’s set the basics straight. Tether (USDT) is a globally adopted representative of a special group of cryptocurrencies called stablecoins. Stablecoins are easy to recognize, as their valuation is usually pegged to a fiat currency, such as the USD, EUR, or CAD. This means that 1 Tether (USDT), for example, is always worth somewhere close to 1 USD. Thanks to their ability to combine the relative stability of fiat currencies with the benefits of cryptocurrencies, stablecoins like Tether (USDT) are popular for traders of all kinds.
Tether (USDT) escalated its journey on Ethereum, the global smart contract ecosystem that enables the creation of new crypto tokens based on various standards. The most popular of which is the ERC-20 standard, which lays foundational rules about crypto tokens created on Ethereum in order to make them compatible with each other. Tether (USDT) was issued on Ethereum following the ERC-20 standard in great quantity, which makes for around 50% of the total supply of the stablecoin.
Similar to Ethereum with ERC-20, Tron, another popular crypto ecosystem, has TRC-20. The two standards are almost identical, and so a hefty chunk of the total supply of Tether (USDT) was issued on Tron. Note that USDT issued on Tron is different to USDT issued on Ethereum, despite their almost perfectly matching characteristics.
Now that you are aware of what the TRC-20 and ERC-20 USDT stand for, let’s uncover why it was needed to issue Tether on different networks in the first place. The answer actually lies in Ethereum 1.0’s high transaction fees and relatively slow processing speed.
Tether (USDT) is known to be the most transacted crypto token, and when talking about millions of exchanges every day, the difference in fees between the two networks add up. With that, the balance tips towards Tron, where similar executions cost only a fraction of what those transactions would cost on the Ethereum network. This means that users who chose to send or receive through Tether TRC-20 can end up paying less transaction fees.
The upside of using Tether ERC-20 is that it can be directly exchanged for any other ERC-20 crypto token, such as Decentraland (MANA), Chainlink (LINK), or Uniswap (UNI). When dealing with Tether TRC-20, it usually takes one or two more steps to reach the same tokens, which can be both timely and costly for users.
Tether (USDT) is an exciting stablecoin that combines the novelties of crypto tokens with the relative stability of fiat currencies. Its total supply is split between different blockchains, two of the most significant are Tron and Ethereum, through the TRC-20 standard, and ERC-20 standard, respectively. Both have their pros and cons, but at the very core, Tether issued on either standard offers similar characteristics and valuation.
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