Leading crypto companies such as Tether are scrambling to reassure users that their products and services are free of FTX and Alameda contagion.
The world’s largest stablecoin issuer, Tether, has ensured that there are no risks from USDT on the Solana network.
On Nov. 18, Tether issued a statement that Alameda issued USDT was safe from any contagion fallout from the failed FTX exchange.
According to the Tether transparency report, Solana is the third-largest network for the stablecoin after Tron and Ethereum. There are 1.89 billion USDT on Solana, representing just under 3% of the total supply.
Tether: No Threat From Alameda
The fintech firm explained that USDT is issued on a 1:1 basis when institutional parties send dollars to Tether. This was the case with Alameda for Tether on Solana, it added:
“Those reserves are still in Tether’s possession; they are not on Alameda’s balance sheet. The collateral backing Alameda’s USDT is not on Alameda’s balance sheet.”
The only option Alameda has is to redeem the USDT and have Tether return the greenbacks.
Tether also asserts that it has no outstanding loans of the stablecoin, its reserves, or any other funds whatsoever to Alameda.
“The main problem countless other companies are facing is that they recklessly lent Alameda various assets relying on extremely illiquid collateral,” it explained. The company added that there was no leverage, which played a key role in the downfall of FTX.
It also referenced the recent suspensions of USDT and USDC deposits on Solana by Binance and OKX.
“USDT issued on Solana is the same as USDT issued on any other chain. The token simply represents a claim to $1 of Tether’s reserves and collateral.”
Solana’s native token, meanwhile, has tanked a further 5.7% on the day in a fall to $13.68 at the time of writing. SOL has now lost 56% over the past fortnight and is 95% down from its all-time high, according to CoinGecko.
Stablecoin Ecosystem Outlook
Tether remains the leading stablecoin issuer with 65.9 billion USDT giving it a market share of 45.5%. Its supply has shrunk by 21% since the beginning of May.
Circle’s USD Coin remains in second place with 44.1 billion USDC in circulation, giving it a market share of around 30%. Its supply has also declined by 21% since the beginning of July.
The third-largest stablecoin by market cap, Binance USD, has seen the opposite, with a supply increase of 30% since the beginning of July. BUSD has 22.9 billion coins circulating, giving it a market share of almost 16%.