By Gabriel Joyce
Despite experiencing a notable decrease in market share on centralized exchanges (CEXs), stablecoin issuer Tether (USDT) has made headlines by achieving a staggering net profit of $4.52 billion in the first quarter. This unprecedented financial success comes amidst a challenging landscape, underscoring Tether’s resilience and continued dominance in the cryptocurrency market.
Tether’s Remarkable Financial Performance
Tether’s impressive net profit of $4.52 billion in the first quarter of the year stems primarily from its holdings in US Treasury bills, complemented by gains from investments in Bitcoin and gold. The disclosure comes from an attestation report shared with CryptoSlate, highlighting the firm’s transparency in financial reporting.
Paolo Ardoino, CEO of Tether, attributes the company’s record-breaking profit to its steadfast commitment to transparency, stability, liquidity, and responsible risk management. He underscores Tether’s financial strength and stability, as evidenced by its latest financial report.
As of March 31, 2024, Tether’s treasury portfolio surpassed $90 billion in US Treasury bills, comprising both direct and indirect holdings. This robust portfolio contributed to a surplus reserve increase of $1 billion, reaching nearly $6.3 billion, further cementing Tether’s position as a leading stablecoin issuer in the cryptocurrency market.
Surge in Equity and Maintained Reserve Backing
Alongside its impressive financial profit, Tether Group experienced a substantial surge in equity, reaching $11.37 billion, a significant increase from the $7.01 billion reported at the end of December 2023. This notable growth underscores the company’s robust financial performance and market position.
Furthermore, the disclosure reaffirms that Tether-issued stablecoins remain backed by a reserve of 90%, comprising assets such as cash and cash equivalents. This reserve ratio remains consistent with the fourth quarter of the previous year, ensuring stability and confidence in Tether’s stablecoin ecosystem.
Specifically, Tether’s token reserves stand at approximately $110.3 billion, while liabilities amount to around $104 billion. Notably, the value of assets in the reserve exceeds liabilities by over $6 billion, further bolstering Tether’s financial strength and reinforcing its commitment to maintaining a stable and reliable stablecoin infrastructure in the cryptocurrency market.
Market Share Decline Amidst Intense Competition
Despite minting a substantial $12.5 billion in new USDT tokens during the first quarter, Tether is grappling with a decline in its market share, attributed to fierce competition in the stablecoin arena.
According to data from Kaiko, Tether’s market share on centralized exchanges (CEXs) has dwindled to 69% year-to-date, reflecting a gradual erosion of its dominance.
During the first quarter, Tether faced mounting competition from alternative stablecoins such as FDUSD, which leveraged Binance’s zero-fee promotions to gain traction. Additionally, USDC, backed by Circle, witnessed a surge in its market share to 11%, indicating a growing preference for regulated alternatives among users.
Market observers have also highlighted the emergence of innovative yield-bearing stablecoins like Ethena’s USDe, posing a challenge to USDT’s dominance. Since its launch in February, USDe has experienced significant growth in trading volume, although it dipped from April’s peak of over $800 million following Ethena’s ENA airdrop. These developments underscore the evolving dynamics of the stablecoin market and the intensifying competition facing Tether in maintaining its market share amidst a growing array of alternatives.
