Solana loses $1 billion in the Tether chain swap from USDT to Ethereum

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Blockchain
Solana loses $1 billion in the Tether chain swap from USDT to Ethereum

Following the bankruptcy of crypto exchange FTX, this statement comes at the wrong time for Solana, which was among the top 5 largest cryptocurrencies by market size only weeks ago. With a 25.4% decline over the last week, Solana has fallen to the 16th spot in market capitalization. Since its record high of $256, it has dropped in price to its current trading level of $13.33.

Tether exchange between Tron and Ethereum

Transferring crypto from one blockchain to another is known as a chain exchange. When demand for its stablecoins moves from one blockchain to another, Tether has a history of doing so. In the middle of 2020, for instance, Tether exchanged a total of $1 billion USDT between Tron and Ethereum twice over two months.

Solana (SOL) is a rival to Ethereum (ETH) that has smart contract functionality, much like Tron and many other similar blockchains. Since the FTX fiasco, prominent cryptocurrencies across the board have seen sell-offs, but Solana has taken a disproportionate impact.

Withdrawals halted after FTX hack

On November 12, after a claimed hacking of the FTX exchange, withdrawals were turned off, effectively taking Serum offline. Since the secret keys for the Solana DeFi project were also kept in FTX. 

The people who made it were afraid to let people use Serum for a while. The Solana Foundation, a non-profit that works to help the Solana blockchain grow, has admitted that it has $1 million in cash or similar assets stuck on the FTX exchange.

Tether (USDT) and leading stablecoin USD Coin (USDC), based on the Solana blockchain, were briefly removed from Binance, the world’s largest digital asset market, yesterday. Crypto.com, like many other exchanges, stated this week that it would stop supporting USDC and USDT on Solana.

Cryptocurrency traders rely primarily on stablecoins. It is because digital assets may be bought and sold swiftly without access to fiat currency. Their stability is assured by being tied to real-world currencies like the U.S. Dollar or the Euro. To this end, stablecoins are vital in the DeFi ecosystem.

Tether is the largest stablecoin issuer in the world, and its digital dollar tokens may be used on other blockchains. These include Ethereum, Tron, and Polygon.

When the FTX cryptocurrency exchange and associated companies collapsed earlier this month. Investors suffered huge losses in one of the year’s most widely covered crypto stories. Alameda Research, an exchange company, established by FTX CEO Sam Bankman-Fried, used the exchange’s funds for gambling purposes.

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Ifeanyi Egede

Ifeanyi Egede is an experienced and versatile writer and researcher. He has keen interest in blockchain technology, cryptocurrencies, NFTs, Web3, metaverse, fintech and emerging technologies. He has tons of published works both online and in the print media. He has close to a decade of writing experience. When he is not writing, he spends time with his lovely wife and kids.