iearn USDT

Who invented USDT?

USDT launched on the Ethereum mainnet in July 2014 by Brock Pierce, Craig Sellars, and Reeve Collins. Tether is one of the earliest stablecoins created that pioneered the fiat-collateralization model that is widely used today. Tether based out of Hong Kong is the sole entity responsible for creating and redeeming tokens as well as maintaining the 1:1 reserve backing.

How does yUSDT work?

yUSDT is a receipt of a USDT deposit in the Yearn protocol on Ethereum and accrues interest. USDT is backed 1:1 by USD reserves held with a licensed custodian (Tether). The process of minting USDT tokens requires a KYC registration process with Tether. After receiving approval from Tether's compliance team, the user sends USD to Tether's bank account. Tether then uses the USDT smart contract to mint an equivalent amount of USDT. Lastly, the newly created USDT is sent to the user's on-chain address, while the deposited USD is held in reserve. The process for redeeming USDT back into USD is the same but reversed.

How secure is yUSDT?

yUSDT is exposed to compounding risks as Yearn deploys the USDT across several DeFi protocols (a failure in any protocol can lead to the entire pool failing). USDT is a centralized stablecoin that relies on a proof-of-reserve system to ensure its reserve assets match its circulating supply. However, the token has faced significant controversy since its inception due to its failure to provide audited reserve attestations by an independent auditor and its reserve reports do not specify the exact underlying assets. The reserve composition of USDT is considered riskier as it consists not only of cash and cash equivalents but also other assets and receivables from loans made by Tether to third parties. Further, USDT can ""blacklist"" any of its associated addresses at will. When a USDT address is blacklisted, it can no longer receive USDT and all of the USDT controlled by the address can no longer be transferred on-chain.