- The Ethereum network will reduce its congestion level by integrating the OMG plasma sidechain to the stablecoin Tether (USDT).
- Tether consumed almost 9,000 ETH in transaction cost on the Ethereum blockchain during May.
In an article published on Cointelegraph the integration of the plasma sidechain of the GMO network into the stablecoin Tether was announced. This Ethereum-based sidechain was formerly known as Omisego and is expected to serve as a way to increase the performance of Tether.
In recent weeks, the Ethereum blockchain has faced increased congestion and a rise in transaction fees. Analyst Ceteris Paribus said rates on Ethereum’s network for sending a transaction have quadrupled since the end of April to 41 Gwei. This has caused Ethereum’s network to face performance problems.
Reducing the pressure on the Ethereum network
One of the main causes of this problem is the high amount of Tether in the Ethereum network. After its launch as an ERC-20 token in the Ethereum network in 2017, this blockchain has become the main support of the Tether supply with about 2.2 billion tokens.
According to the statement, Tether is one of the tokens that requires a large amount of gas. During May the stablecoin consumed around 8,900 ETH, this is equivalent to around $1.84 million in fees. In comparison, Tether consumes more in fees than the top 5 protocols in Ethereum’s DeFi sector.
The integration will not only improve the performance of the stablecoin but will also reduce the pressure on the Ethereum blockchain. In this way, the blockchain will be able to reduce its congestion levels and lower the fees for processing network transactions. The CTO of Bitfinex, Paolo Ardoino, said:
(…) by migrating USDT value transfers to the OMG Network we save costs, drive performance improvements and relieve pressure on the root chain network.
Tether is one of the most controversial coins in the crypto space. The stablecoin and its exchange, Bitfinex, are facing lawsuits for allegedly using the asset to manipulate the crypto market. Despite this, there is no consensus on a possible Tether manipulation with an impact on other cryptocurrencies. However, in recent months Whale Alert has recorded an increase in the printing of new Tether that has accompanied an increase in the price of Bitcoin, Ethereum and other altcoins.
At the time of publication, Ethereum is priced at $235.97 and in line with the general market sentiment has moved sideways (-0.94%) in the last 24 hours.