Tether primarily makes money by earning interest on the reserve assets that back USDT, the world’s largest stablecoin. When USDT is minted, Tether receives dollars or equivalent assets and invests most of those reserves in short-term U.S. Treasury bills and other low-risk instruments. The yield generated by those reserves is the core source of Tether’s revenue.
The model is simple. USDT is meant to trade at one U.S. dollar, and Tether holds reserves intended to match every USDT in circulation 1:1. The reserves earn interest; USDT holders do not. The difference between the yield Tether earns and the cost of running the business is profit.
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What Is Tether (USDT)?
Tether is the company that issues USDT, a stablecoin pegged to the U.S. dollar. A stablecoin is a crypto asset designed to maintain a steady value against a reference asset, typically a fiat currency. USDT is the largest stablecoin by circulating supply and is widely used as a trading pair on crypto exchanges, a settlement asset for cross-border payments, and a store of value in countries with unstable local currencies.
