Tether CTO Claims USDT Stablecoin Can Boost DeFi Liquidity
Tether CTO Paolo Ardoino believes the USDT stablecoin can boost the decentralized finance ecosystem.

The chief technology officer for Tether and Bitfinex believes the USDT stablecoin can inject much-needed liquidity and stability into the emerging decentralized finance (DeFi) space.
Speaking to CoinDesk recently at the CryptoCompare Digital Asset Summit in London, Paolo Ardoino said the DeFi space faced systemic risk if it only leveraged value from the digital asset space.
"You cannot have algorithmic stablecoins relying only on the crypto-assets themselves," Ardoino said. The entire value of the DeFi space, a mass of complicated financial products, cannot be based entirely on the value of a volatile asset class without the very real possibility it could all go up in smoke at any moment, he suggested.
MakerDAO came dangerously close to an emergency shutdown earlier this month after a sudden spike in demand for dai stablecoins and activity, as users tried to shore up undercollateralized loans, created a $4 million debt bubble.
See also: Tether Stablecoin Launches on Its Seventh Blockchain
For the DeFi space to grow and attract institutional investors, it has to leverage value elsewhere in order to properly diversify risk.
"You can say anything you want about tether, [but] it's resilient," Ardoino said, adding that in his view, centralized collateral of U.S. dollars can provide a "safe set of shoulders" to the DeFi ecosystem.
Tether has already made its first foray into the DeFi space, announcing in early March it had partnered with ethereum-based lending protocol Aave.
Aave CEO Stani Kulechov told CoinDesk that integrating with tether, which he said was a popular fiat gateway for institutional investors via OTC desks, could also help to "inject liquidity into the DeFi space."
This means tether is less likely to fall from its dollar peg and can act as collateral for DeFi products with less risk that a sudden price drop sparks a surge in liquidations, he added.
See also: The DeFi ‘Flash Loan’ Attack That Changed Everything
"We need to keep evolving," Ardoino said. Tether has to look to its strengths: "If the EU launched a global stablecoin tomorrow, of course [tether] cannot compete in market cap."
Moving into DeFi allows the stablecoin provider to adapt its volatility hedging characteristics for a brand new use case.
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