Ethereum has been fracing a transaction fee problem over recent weeks. According to ETH Gas Station, a data site tracking the cost of Ethereum transactions, the cost of gas has reached 100 Gwei, though this was as high as 350 Gwei last week. Transactions now are 900 percent more expensive than they were at the start of the year.
It is debated what exactly is catalyzing this spike in fees. But a key driver, many say, is Tether’s USDT.
Last year, the Tether company began to migrate much of the USDT supply from the Bitcoin-based Omni Network to Ethereum. Now, the vast majority of the stablecoin is based on Ethereum. And as a result, ETH Gas Station reports that the USDT transactors have spent $6.39 million worth of ETH to send transactions over the past 30 days.
The stress that USDT puts on the Ethereum blockchain, though, may soon be lifted with the introduction of USDT on the OMG Network.
Analysts say that this transition could kill the prospects of so-called “ETH killers,” blockchains attempting to usurp the primacy that Ethereum has built in the smart contract and token space.
How USDT moving to Ethereum-based OMG Network will end “ETH killers”
It was just announced that OMG Network (formerly known as OmiseGo), will soon get its own implementation of Tether (USDT), first on Bitfinex.
OMG Network is a non-custodial, second-layer scaling solution for the Ethereum network that reduces transaction costs while increasing potential throughput and efficiency.
“OMG Network, a trustless, non-custodial, Layer-2 scaling solution for transferring value on Ethereum, is delighted to announce that users will be able to withdraw and deposit Tether (USDt) to Bitfinex via its value transfer layer, helping reduce Ethereum congestion and gas fees with improved transaction speeds,” an announcement from the project read.
According to Ryan Sean Adams of Mythos Capital, USDT’s move to migrate to an Ethereum-based scaling solution will only crush the potential of so-called “ETH killers.”
“Tether moving its stablecoin settlement to OMG layer 2 is hugely bullish Ethereum. And bearish ETH killers. It means ETH killers aren’t competing w/ Ethereum. They’re competing w/ Ethereum’s layer 2s. Competing against something that’s already integrated & secured by Ethereum.”
Tether moving its stablecoin settlement to OMG layer 2 is hugely bullish Ethereum
And bearish ETH killers
It means ETH killers aren’t competing w/ Ethereum
They’re competing w/ Ethereum’s layer 2s
Competing against something that’s already integrated & secured by Ethereum 😬
— Ryan Sean Adams – rsa.eth 🏴 (@RyanSAdams) August 20, 2020
It isn’t clear, though, to what extent this OMG-based USDT will be adopted, especially if these coins cannot be used on decentralized finance protocols.
OMG surges on Tether news
OMG has reacted positively to the Tether news. Extremely positively.
According to CryptoSlate data, the asset is up 66 percent in the past 24 hours, making it the best-performing crypto asset in the top 100. This gain comes in spite of a 30 percent retracement from the local highs, as holders liquidated their coins at those high prices.
The Ethereum-based token is now the 23rd largest cryptocurrency in circulation, passing a number of its rivals during the recent move to the upside.