Tether Launches USDT0 on Arbitrum to Improve Security, Liquidity, and Transaction Speed

Tether has officially launched USDT0 on Arbitrum to improve security, liquidity, and transaction speed. The rollout began on January 29, 2025

Stablecoin giant Tether has officially begun rolling out its new cross-chain stablecoin, USDT0, on Arbitrum. The rollout, which started on January 29, 2025, will continue till February 5. Notably, USDT0 is already live on Kraken’s Layer 2 blockchain, Ink, with plans to integrate the stablecoin on Berachain and MegaETH.

According to the announcement, USDT0 is designed to enhance interoperability between blockchains. It operates using LayerZero’s Omnichain Fungible Token (OFT) standard. The OFT standard enables tokens to move seamlessly across different chains using a “Burn & Mint” mechanism.

When a token moves from one chain to another, it is burned on the source chain and minted on the destination chain. This ensures that the total supply of the token remains consistent as it moves across chains.

The OFT standard eliminates the need for wrapped tokens and centralized bridges, which can introduce security risks and reduce efficiency. Several projects, including PayPal’s PYUSD and Ethena’s USDe, have adopted the OFT standard to enable smooth cross-chain transfers while maintaining full functionality on all networks.

Arbitrum is an Ethereum layer 2 blockchain designed to scale the network and improve efficiency. Instead of processing every transaction directly on Ethereum, Arbitrum bundles multiple transactions together and submits them as one, reducing congestion and fees.

As USDT comes to Arbitrum as USDT0, the initial bridged version will be replaced. The bridged version of USDT on Arbitrum was the previous version of Tether’s stablecoin, which relied on third-party bridges to move assets between Ethereum and Arbitrum

Among the most used stablecoins from 2014 to 2024, Tether (USDT) has consistently led the pack, boasting the largest market cap and trading volume. As of mid-2024, USDT dominates the stablecoin market with a market cap of over $114 billion.

At the beginning of October 2024, 109 million digital wallets held USDT, which is more than twice the number of wallets holding Bitcoin and close to the 128 million wallets holding Ethereum. Over time, USDT has become the preferred stablecoin for many crypto users.