Alameda Research’s Significant Role in USDT Minting
A recent revelation by Conor Grogan, a director at Coinbase, has shed light on the issuance of Tether (USDT). According to on-chain data, Alameda Research, a well-known crypto investment firm, has minted a staggering 39.55 billion USDT tokens. This amount represents a significant portion of Tether’s circulating supply, accounting for 47% of it.
Contradicting Previous Estimates and Improved Accuracy
Grogan’s findings contradict a previous estimate by Protos, which had approximated the number at around $36.7 billion. However, Grogan emphasized that he updated these figures by identifying additional wallets involved in USDT minting, providing a more accurate representation of Alameda’s contribution.
Challenges with USDT Redemption Process
Grogan’s insights have also raised questions about the redemption process for USDT. He highlighted the challenges in accurately determining redemptions, as Tether appears to coordinate off-chain burns. Unlike other cryptocurrencies that have deposit addresses, USDT redemptions involve direct transactions with Tether’s treasury, making it difficult to track.
Possible Involvement of Other Market Makers
Grogan speculates on the possibility of other market makers being involved in USDT redemptions. He suggests that if all USDT redemptions from FTX were attributed to Alameda, they would account for 3.9 billion Tether. A significant portion of these redemptions occurred during two days in May 2022 amid the Luna implosion.
Alameda Research’s Dominance in USDT Supply
This revelation aligns with a 2021 report by Protos, which highlighted the pivotal role played by market makers Alameda Research and Cumberland Global in introducing USDT into the crypto ecosystem. According to the report, these market makers received at least $60.3 billion USDT, equivalent to around 55% of all outbound volume.
Alameda Research, led by crypto billionaire Sam Bankman-Fried, is a well-known multistage crypto and fintech investment firm. The company has gained prominence in the crypto industry through its association with the FTX exchange and participation in numerous funding rounds and investments.
The report also revealed that Tether sent approximately $36.7 billion in USDT to Alameda Research, with $31.7 billion received in the past year alone.
Hot Take: Alameda Research’s Influence in USDT Minting Raises Concerns
The revelation of Alameda Research’s significant role in minting USDT tokens raises concerns about the concentration of power and control within the cryptocurrency market. With such a large portion of Tether’s circulating supply attributed to one entity, questions arise about transparency, accountability, and potential market manipulation.
As the crypto industry continues to evolve, it becomes increasingly important for regulators and participants to closely examine and address issues related to token issuance, redemption processes, and market dominance. Striking a balance between innovation and ensuring a fair and transparent marketplace will be crucial for the long-term success and stability of cryptocurrencies.
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