2.1 What Is USDT?

USDT, also known as Tether, is a stablecoin pegged to the US dollar. Each USDT token is designed to maintain a value of exactly 1 US dollar. It is the largest stablecoin by market capitalization and the most widely traded cryptocurrency in the world by daily volume.

Tether was launched in 2014 by Tether Limited and has since become the backbone of crypto trading globally. On CryptoBazaar, USDT is one of the two primary assets available for peer-to-peer trading against Indian Rupees.

USDT maintains its 1:1 peg to the US dollar through a reserve-backed model. Tether Limited claims that every USDT in circulation is backed by an equivalent value of reserves, which include cash, cash equivalents, US Treasury bills, and other financial instruments.

When demand for USDT increases, Tether mints new tokens and adds equivalent reserves. When USDT is redeemed, the tokens are burned and reserves are reduced. This minting and burning mechanism helps maintain the peg.

In practice, USDT occasionally trades slightly above or below 1 USD on open markets, but arbitrage traders quickly bring the price back to parity by exploiting the difference.

USDT exists on multiple blockchain networks simultaneously. The same USDT token can be held on Ethereum, Tron, Polygon, BNB Chain, Solana, and several other networks. The value is identical regardless of the network, but transaction fees and speeds vary significantly.

On CryptoBazaar, USDT is supported on Polygon, BNB Chain, and Tron (TRC20). Polygon offers the lowest transaction fees, while Tron is the most widely used network for USDT transfers globally. BNB Chain provides a balance of low fees and broad compatibility.