USDT0 is a cross-chain stablecoin announced by a joint venture between Tether and LayerZero on January 16th, 2025. Taking advantage of LayerZero's Omnichain Fungible Token (OFT) design, it is to enabled to seamlessly transfer across multiple blockchain networks without the need for bridges or swaps. It represents Tether's strategic expansion of its stablecoin ecosystem to address interoperability challenges in the cryptocurrency space. ^{[1] [2] [4]}

Overview

USDT0 was introduced as Tether's solution to the fragmentation issues in the blockchain ecosystem. Traditional stablecoins typically operate on specific blockchains, requiring users to employ bridges or swaps when transferring assets between different networks. USDT0 eliminates that need by using a messaging layer to send tokens, with USDT locked on Ethereum and equivalent USDT0 tokens minted on the target chain, allowing redemption by unlocking the corresponding USDT on Ethereum.

USDT0 employs LayerZero's OFT standard to enable seamless deployment and asset transfer across new blockchains, maintaining a 1:1 peg to USDT on Ethereum, and is currently live on Kraken’s Ink network with plans to launch on Berachain, Arbitrum, and MegaETH. USDT0 represents an evolution in Tether's product lineup, which already included USDT, the largest stablecoin by market capitalization. By introducing this cross-chain capability, Tether aims to enhance the utility and accessibility of stablecoins in the broader cryptocurrency ecosystem. ^{[1] [3] [4] [5]}

How USDT0 Works

USDT0 utilizes a lock and mint mechanism within an omnichain framework to facilitate secure and efficient cross-chain transactions while ensuring full asset backing.

1. Asset Locking: USDT is secured in a smart contract on the Ethereum Mainnet.
2. Minting on Destination Chains: Corresponding USDT0 tokens are created on the target blockchain, mirroring the locked assets on Ethereum. This 1:1 backing maintains transparency and trust.
3. Cross-Chain Transfers: An advanced messaging layer enables efficient and cost-effective transfers between supported blockchains, bypassing the need for fragmented liquidity pools and bridges, thus ensuring fast and reliable transactions.
4. Redemption: USDT0 tokens can be exchanged by unlocking the equivalent USDT on Ethereum, maintaining a secure link between the locked and minted assets. ^[8]

Role of the OFT Model

• Unified Liquidity Management: The OFT standard optimizes liquidity management across all connected chains, reducing fragmentation and enhancing capital efficiency.
• High Security: Transactions are validated through a decentralized network of oracles and relayers, ensuring integrity and minimizing risks.
• Scalability: The OFT model supports seamless integration with new blockchains, allowing USDT0 to expand into emerging ecosystems with ease.
• Efficiency: By removing the need for intermediary bridges or wrapped assets, the OFT standard simplifies operations and reduces complexity. ^[8]

Partnerships

Bitfinex

USDT0 is available for trading on Bitfinex, allowing users to deposit and withdraw the asset through Incochain and Arbitrum. This integration provides access to USDT markets on Bitfinex, one of the longest-standing cryptocurrency exchanges. ^[6]

Plasma

USDT0 is integrating with Plasma, a network designed with a strong focus on Tether's ecosystem, which supports over 141 billion USDT. This integration facilitates fast and interoperable transactions with zero fees on USDT transfers. Plasma is set to launch soon, with USDT0 playing a key role from the outset. ^[7]