Tether accidentally prints $5 billion USDT in “token decimals” issue
Someone accidentally blipped $4.95 billion more than they meant to into existence.
The Whale Alert Twitter account made a splash today by catching a $5 billion Tether print run. Before people could get too excited, Tether and Bitfinex CTO Paolo Ardoino confirmed that this was a mistake and that the surplus USDT had been destroyed.
It was an "issue with the token decimals," he said.
The correct amount was meant to be $50 million, from an Omni to Tron chain swap that Poloniex was conducting with the help of Tether, Poloniex said.
The "Omni to Tron chain swap" is a relatively routine procedure for moving USDT across the different blockchains it inhabits. Unlike most tokens, Tether lives on multiple blockchains, including Bitcoin via the Omni layer, Ethereum and Tron, in order to spread its large mass more evenly across multiple systems and reduce costs.
Shifting it across chains is a relatively straightforward procedure, involving minting some on a new chain and burning some on the old chain. That's what was going on here when someone evidently put the decimal point in the wrong place and created $5 billion of Internet money out of thin air, instead of $50 million.
That seems potentially problematic
The transparency of the blockchain is what makes this entire system work.
You can see on the blockchain that the $50 million was retained, while the extra $4.95 billion was destroyed, which incidentally helps put in perspective just how much money a billion dollars is. But it's also concerning that in such a pivotal part of the crypto ecosystem as Tether, it's possible to butter-finger billions of dollars into existence.
It would also be possible to do so deliberately. For all the talk of immutability and decentralisation, Tether still represents a potential central point of failure due to its position in the market and a new answer to that "how do you destroy Bitcoin?" thought experiment.
There are no actual, solid safeguards to prevent Tether from printing billions, except for the fact that people would notice it happening.
That said, the rise of other stablecoins presents a certain degree of security through diversification. While Tether printing runs still correlate with the market and give some indication of future Bitcoin prices, other stablecoins have been gradually rising up to claim some market share from Tether.
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Disclosure: The author holds BNB and BTC at the time of writing.
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