Tether, the company behind USDT, has solidified its position as a dominant force in the global stablecoin market. With annual profits reaching $13 billion from U.S. Treasury interest alone, it stands as one of the most profitable fintech companies worldwide. However, a closer examination of its business model reveals a significant gap: while Tether captures substantial value from issuing and managing USDT, it does not fully benefit from the on-chain economic activity it generates.
On Ethereum, USDT transactions contribute nearly $100,000 in daily gas fees, accounting for over 6% of the network’s total fee consumption. But the real story unfolds on the Tron blockchain. Recent on-chain data indicates that USDT transfers and gas usage make up more than 98% of Tron’s activity, meaning the network’s vibrancy is largely sustained by USDT.
Each USDT transfer on Tron incurs a fee ranging from $0.3 to $8. In more concrete terms, Tron’s daily on-chain revenue exceeds $2.1 million, translating to an annualized income of $770 million. The majority of this revenue stems from high-frequency USDT transactions. With 2.46 million daily transactions on Tron, the average fee per transaction is approximately $0.85, aligning closely with USDT’s typical on-chain costs. Tron’s market capitalization now surpasses $25 billion, and its consistent on-chain revenue places it among the top blockchains.
This scenario represents a classic case of "value capture." USDT’s issuance and brand recognition drive massive user traffic and industry-wide demand for stability, yet the associated on-chain fees and ecosystem benefits are largely captured by the underlying infrastructure rather than Tether itself. This dynamic not only limits Tether’s strategic influence in future payment and settlement networks but also leaves it vulnerable to emerging threats, such as Tron’s in-house stablecoin initiatives or potential user migration.
If Tether remains content as a "super mint" for stablecoins without exerting control over the underlying infrastructure, its long-term growth potential will be constrained.
This is why Tether is aggressively investing in its proprietary blockchain ecosystem. By developing a dedicated network, Tether aims to reclaim the substantial fee revenue and ecosystem benefits currently flowing to platforms like Ethereum and Tron. Moreover, it seeks to establish a closed-loop system for B2B payments, compliant settlements, and industry collaboration.
Compounding these motivations, Tron is taking steps to reduce its reliance on USDT. Recently, Tron launched the Trump family’s USD1 stablecoin. Justin Sun, Tron’s founder, serves as an advisor to the Trump family’s DeFi project and is a major holder of TRUMP tokens. These intertwined relationships suggest Tron may gradually decrease its dependence on USDT issuance and usage in the coming years.
From a cost perspective, Tron’s advantage as a stablecoin settlement network is also diminishing. Without purchasing and burning TRX, transaction fees on Tron now exceed those on the Bitcoin network and are higher than on Ethereum mainnet, Aptos, and BNB Chain. This is concerning for USDT, especially when compared to alternatives like Base Network, where transferring USDC costs as little as $0.000409. Circle’s Circle Paymaster feature even allows users to pay gas fees in USDC on Arbitrum and Base.
These trends and competitive pressures are forcing Tether to swiftly adapt its business strategy.
Plasma: A Strategic Response to Market Dynamics
Tether’s first major move was quietly supporting a new blockchain called Plasma in late 2024.
Initial announcements and funding rounds saw investments from Bitfinex (Tether’s parent company), Peter Thiel’s Founders Fund, Framework, and other capital providers, totaling $24 million. An additional $3.5 million in external funding was raised, catapulting Plasma’s valuation to $500 million within just two months.
Plasma uses the Bitcoin mainnet as its final settlement layer, inheriting the security of the UTXO model while maintaining EVM compatibility at the execution level. Most importantly, all on-chain transactions can be conducted using USDT for gas fees, making USDT transfers entirely free.
This "zero fee" value proposition resonated strongly with users. When Plasma released allocations for its governance token, XPL, and allowed users to deposit liquidity, the initial $500 million quota was filled within minutes. An additional $500 million cap was exhausted in under 30 minutes. Some users even paid over $100,000 in Ethereum gas fees to secure early access, highlighting the market’s appetite for a feeless stablecoin chain.
Beyond its technical architecture, Plasma introduces two additional features. The first is native privacy: while transactions are public by default, users can enable a shielding option to conceal addresses and amounts. For audit or compliance purposes, selective disclosure remains possible. The second feature is Bitcoin liquidity: through permissionless bridges, Plasma enables seamless integration of native BTC, allowing for low-slippage swaps and BTC-collateralized stablecoin loans within the same environment.
These developments align with Tether’s recent accumulation of Bitcoin. Plasma’s team and Bitfinex partners have long been advocates of Bitcoin. At the 2025 Bitcoin Conference, Tether CEO Paolo Ardoino emphasized the company’s commitment, stating, "Bitcoin is our Wukong, our friend." Earlier in the year, Tether announced it would become a major shareholder in Twenty One Capital, a Nasdaq-listed company resembling MicroStrategy, focused on Bitcoin treasury management.
Tether invested $458.7 million to acquire additional BTC, transferring 37,000 Bitcoin to new addresses to bolster Twenty One Capital’s reserves. Combined, Tether and Twenty One Capital now hold approximately 137,000 BTC, making them the third-largest corporate Bitcoin holder globally, behind only MicroStrategy and MARA Holdings.
By consolidating USDT’s $150 billion liquidity across multiple networks into a unified settlement layer, Tether aims to centralize transactions, exchanges, and redemptions within its own ecosystem. At its testnet launch, Plasma is projected to rank as the ninth-largest blockchain by stablecoin liquidity, with a total value of $1 billion.
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Frequently Asked Questions
What is Tether’s primary revenue source?
Tether generates most of its revenue from interest earned on U.S. Treasury holdings backing USDT. Its annual profits are estimated at $13 billion, making it one of the most profitable companies in the fintech sector.
Why is Tron significant for USDT?
Tron handles over 98% of all USDT transactions, contributing significantly to its on-chain activity and revenue. However, Tether does not directly benefit from the gas fees generated by these transactions.
How does Plasma benefit USDT users?
Plasma allows users to conduct transactions with USDT without paying gas fees. It also offers enhanced privacy features and seamless Bitcoin integration, creating a more efficient and user-friendly ecosystem.
What is Tether’s relationship with Bitcoin?
Tether has aggressively accumulated Bitcoin, holding approximately 137,000 BTC through its subsidiary Twenty One Capital. This strategic move aligns with its goal of integrating Bitcoin into its broader financial ecosystem.
Is Tron reducing its reliance on USDT?
Yes, Tron’s launch of the USD1 stablecoin and its close ties with the Trump family suggest a gradual shift away from dependence on USDT for on-chain activity and revenue.
How does Plasma compare to other blockchains in terms of fees?
Plasma offers feeless transactions for USDT users, a significant advantage over networks like Tron, Ethereum, and Bitcoin, where gas fees can be substantial.