The following is a direct extract from Marty’s Bent Issue #1183: “Tether was sent via the Lightning Network” Subscribe to the newsletter here.
Above is a video demonstration of the very first Tether transaction on the Lightning Network executed by Corey Phillips of Synonymous.
For those of you who don’t know, Tether is a US dollar stablecoin that lives outside the established financial system and is moved across cryptocurrency networks. Tether is centralized because it is controlled by a company that maintains a reserve of USD and other assets (including bitcoin) that are supposed to back each Tether one-to-one with a USD equivalent. The US government has been attacking Tether for years because it has successfully operated outside of the traditional system while serving users around the world. All of this to say that I would not recommend holding Tether unless absolutely necessary to complete a transaction.
That being said, there is no doubt that there is significant demand for Tether around the world as individuals seek to avoid short-term bitcoin price volatility. Many people in emerging economies don’t have the luxury of sitting back and enduring bitcoin’s rollercoaster price movements and are opting to store a portion of their holdings in stablecoins so they can hold without fear. not being able to buy what they want when they leave. spend. Many bitcoiners don’t like this fact, but it is a fact that needs to be acknowledged.
What’s interesting about Synonym’s implementation of Tether on Lightning is that it leverages the Omni Layer protocol, which is where Tether was launched. As channel fees increased in the years following the launch of Tether on Omni Layer, Tether usage migrated to other channels to take advantage of their relatively low fees and has since been playing at a hot potato game. Jump from one channel to another.
Is Synonym’s implementation of Tether on Lightning something that will push Tether usage back to the bitcoin stack, as Lightning Network currently provides low enough fees in addition to the world’s most secure ledger? We will see. In your Uncle Marty’s opinion, it would be cool to see Tether (or the general use of stablecoins) migrate to bitcoin even though he thinks the USD is failing miserably and stablecoins serve no purpose anymore than a transition mechanism that offers some volatility. cover as we transition from a fiat standard to a bitcoin standard.
If nothing else, Synonym’s efforts are pushing the boundaries of the design landscape on Lightning, which is great to see. As we said yesterday about the implementation of BIP47 in the Bitcoin SDK, it will be interesting to see how using OP_Return, which Omni Layer leverages, will create natural scalability ceilings that make this use case a temporary event in the life of bitcoins.