Bridge from Broxus between the Free TON and Ethereum platforms allows you to use among other things the most stable currency on the crypto market — USDT.
Stable cryptocurrency — there is a bit of bravado in this expression. Looking at rate charts, it seems that cryptocurrency volatility is its organic state. That is why stablecoins appeared, which must maintain their exchange rate constancy, which in theory is guaranteed by the security of this crypto asset with fiat money or other assets.
It was released in 2015 and gradually took over almost all the niches in the crypto market formed by it. The concept with which Tether went public was the statement that each token here is secured by one dollar in the company’s accounts.
Kings Come Out Of The Situation With No Losses
In 2017, trading on cryptocurrency exchanges already consisted of 5% USDT transactions, by 2018, it turned out that Tether had already issued 2.3 billion tokens.
This has provoked proceedings by the main U.S. exchange regulator, the Commodity Futures Trading Commission, regarding the full collateralization of the stablecoin with foreign exchange reserves in bank accounts. As a result, the company announced that from now on cryptocurrency “collateral” should be understood not only as a reserve in fiat currency in accounts but also loans received by companies related to Tether Limited.
Despite the accumulated doubts, the USDT token showed amazing reliability on the crypto market, resulting in a significant increase in its share in cryptocurrency settlements around the world. Between 2017 and the end of 2020, the share of currency transactions involving USDT increased from 5% to 70%, sometimes spiking up to 80%. At the same time, bitcoin transactions account for 15%, and other stablecoins account for only 4%. At the same time, analysts predict that Tether’s dominance in the market will continue for at least several more years.
The current position of USDT is third place in the crypto market in terms of capitalization after bitcoin and ether. The stability of the exchange rate has been a thin flat line lately. In terms of the daily trading volume, this currency already surpasses all others.
As a technology platform, Tether uses the bitcoin blockchain through the Omni Layer, Ethereum (ERC-20), TRON, EOS, Algorand, Solana, and OMG Network protocols. Near has also been added to this list, and an indirect implementation in the Free TON system is expected soon.
In Pursuit Of Stability
The stablecoin industry, despite the obvious dominance of USDT, is developing within other ecosystems as well. Its concept was also proposed in Free TON, which we wrote about.
The practical implementation of the contest work is still to come, but even before its full implementation, the Free TON platform is already quite actively involved in the work with other blockchains, which may soon result in integration with USDT as well.
Free TON Stablecoin: Technologically And In The Context Of Competition With USDT
We asked Ignat Shapkin, Free TON DeFi Alliance Spokesperson, Defi Subgovernance Jury, Warp Portfolio Manager, to evaluate the project.
We rate it as an excellent stablecoin concept with an algorithmic monetary policy, which received high scores in the DeFi Subgovernance contest. It will have a positive impact on the development of the entire Free TON ecosystem. We do not see a potential competition with USDT, because they are essentially different: USDT relies on fiat reserves, and NOT on TON Crystal, so the social consensus on them is different.
In the short to medium term, we expect a larger share of USDC/USDT usage in turnover, as TON Crystal still lacks liquidity and high volatility, which imposes certain risks on currency reserves, which reduces mass usage. In the long term, we consider it likely that native stablecoins will come to the forefront of the Free TON network.
How The Free TON↔Ethereum Bridge Works — Explains Vladislav Ponomarev, CEO Of Broxus
Recall, the bridge to Ether, built by the Broxus team, provides unlimited currency exchange between the two blockchains.
For the transfer, a wrapped token is used — a token that can be technologically different from the original, but is equivalent in value, while it can be transferred via the bridge and placed in another blockchain. When you need to exchange, for example, TON Crystal to Ether, in the Free TON blockchain your crystals for the exchange amount are blocked, for the same amount WTON twin tokens are issued, which are transferred to Ether through the bridge software, then they can be exchanged for Ether on any exchange that supports this pair.
If you own Ether or USDT, which are also available in Ethereum, you can perform the same procedure with any of these currencies. With the bridge and wrapped tokens, you can transact between these currencies without restriction. So technologically, you can freely use Tether stablecoins in Free TON.
- After launching the bridge with Ethereum, what is the data on the use of wrapped tokens? Where are the flows going?
Tokens WETH, WBTC, USDT, USDC are sent from Ether in Free TON to farm and provide liquidity to the decentralized exchange TON Swap, which operates on the principle of AMM (automated market making). The exchange has a farming program and profit sharing, as on Uniswap. From TON to ETH, the WTON/USDT pair is sent to WTON on Uniswap also for mining liquidity.
- Were there any technological difficulties, problems in the bridge’s work?
The main challenge was to develop a set of smart contracts to manage an advanced DAO from scratch, considering the additional specifics of the staking and relays slashing that carry out the routing of messages between networks.
Fortunately, they have been overcome: the contracts are being tested and can soon be expected to be released into the mainnet. An additional benefit is that infrastructure projects, such as DAOs, staking contracts, and liquidity management contracts, have been created as part of the DAO development for the bridge, which can be the foundation for the development of the community’s future products. The code will be audited and verified by millions of dollars in bridge contracts, so the risks of using it are minimal.