Aave Matic Market USDT
amUSDT is an interest-accruing token that represents a USDT deposit in the Aave lending market on Polygon.
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amUSDT is a large-cap asset with questionable collateral reserves. This asset depends on a centralized entity for custody services. This asset is exposed to the underlying risks of Polygon PoS bridge and Aave V2, which are protocols rated as Watch out and Average, respectively.
amUSDT is a stablecoin that consistently trades within 10bps of its peg to USD, which makes it a great store of value.
amUSDT has an uncapped supply but has inflation control or burn mechanisms in place. amUSDT is a receipt of a USDT deposit in the Aave lending protocol and accrues interest. USDT on Polygon is backed 1:1 by USDT locked in the Polygon PoS bridge on the Ethereum chain.
amUSDT is a stablecoin that consistently trades within 10bps of its peg to USD, which makes it a great store of value.
What is 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 avUSDT work?
amUSDT is a receipt of a USDT deposit in the Aave V2 protocol on Polygon 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.
Is avUSDT safe?
amUSDT is exposed to the systemic risks of the Aave lending protocol as a default in one asset market can have a contagion effect across the entire platform. 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.
How to buy USDT?
You can buy USDT on a reputable cryptocurrency exchange that lists the asset. Platforms like Binance, Coinbase, and Kraken are popular choices offering ease of use and robust security features. Sign up for an account on your chosen exchange. You'll need to provide some personal information and, in most cases, verify your identity to comply with regulatory requirements. Fund your exchange account using a bank transfer, credit card, or other cryptocurrencies, depending on the options provided by the exchange. Navigate to the trading section of the exchange, search for the USDT pair you want to trade (for example, USDT/USD or USDT/BTC), and enter the amount of USDT you wish to purchase. Review and confirm the transaction details. After purchasing, you can choose to keep your USDT in your exchange account, which is convenient for quick trading. Alternatively, for added security, especially for larger amounts or long-term holding, transfer your USDT to a personal cryptocurrency wallet.
