The issuer of stablecoin Tether (USDT) will discontinue its Bitcoin (BTC) Omni Layer version, citing lack of interest from users. This Bitcoin version of Tether was one of the first stablecoins ever created. The Bitcoin Cash (BCH) and Kusama (KSM) versions will also be discontinued, according to an August 17 announcement from the team.
Today #Tether announces the ending of the support of 3 blockchains $USDt: OmniLayer, BCH-SLP and Kusama.
Customers will be able to continue to redeem and swap $USDt tokens (to another of the many supported blockchains), but Tether won’t issue any new additional $USDt on those 3… https://t.co/aghLgqtSuO
— Paolo Ardoino (@paoloardoino) August 17, 2023
According to the announcement, no new Tether tokens will be issued on the Bitcoin Omni layer, Kusama, or Bitcoin Cash going forward. Redemptions will remain available for at least a year, and the company will issue further announcements before the year has passed as to how they will handle redemptions after that point.
The Bitcoin Omni Layer is a smart contract system built on top of the Bitcoin blockchain. Originally called “Mastercoin,” it was released in July, 2013, a full two years before Ethereum. Tether Omni Layer became the first stablecoin to be released on the system in October, 2014. It quickly grew to be the highest market cap stablecoin, surpassing earlier stablecoins such as BitUSD and NuBits.
In its August 17 announcement, Tether sought to acknowledge the important historical role that Tether Omni Layer played in crypto history, stating:
“We understand the significance of this decision, particularly for Omni, as it was the first transport layer that Tether used in 2014. The Omni Layer, built on top of Bitcoin, played a crucial role in Tether’s early journey, and we acknowledge the contributions and innovations the team has made to the crypto landscape.”
However, the team stated that Omni layer “faced challenges due to the lack of popular tokens and the availability of USD₮ on other blockchains.” This led exchanges to use other transport layers instead of Omni, which in turn led to a decline of USDT Omni usage and forcing the company to end its issuance.
Tether claimed that it would consider reissuing the Omni Layer version if usage of Omni picks up. They also stated that they are working on a new Bitcoin smart contract system called “RGB,” and that they plan to reissue Tether in an RGB version once it is completed, bringing Tether back to the Bitcoin blockchain.
Competition between stablecoins has been heating up in 2023, challenging Tether’s dominance. Paypal released its Paypal US Dollar (PYUSD) on August 7, and Binance listed First Digital USD (FDUSD) on July 26.