Tether Hosted on Plasma Sidechain to Minimize Load on Ethereum Blockchain
Tether (USDT) stablecoin, backed by Bitfinex, is now hosted on the OMG Network, a plasma powered Ethereum sidechain rolled out on June 1 by the venture, earlier referred to as OmiseGo.
The integration signals the first time Tether made use of an Ethereum sidechain to improve its processing capability. Tether, undoubtedly, is the biggest “gas guzzler” on the Ethereum blockchain, with 8,900 ETH (~$1.84 million) being spent as fees in May, as per ETH Gas Station.
This is greater than the aggregate of the next five protocols, which also includes an alleged Ponzi scheme.
By setting aside a portion of that volume to the OMG ecosystem, Tether hopes to minimize the load on Ethereum blockchain.
Paolo Ardoino, Bitfinex’ CTO, stated that “by migrating USDT value transfers to the OMG Network we save costs, drive performance improvements and relieve pressure on the root chain network.”
According to Ardoino, the OMG-powered Tether ecosystem can be accessed via Bitfinex, permitting “traders to react faster to trading opportunities,” even though given the roll out of the network in recent times, no other exchanges have started accepting it.
Stephen McNamara, the COO of OmiseGo, revealed that talks to get OMG supported by other exchanges and wallet providers are going on.
Even though Plasma was initially claimed to be the top notch layer-two solution for achieving Ethereum scalability, crucial problems has encouraged the Ethereum community to look at Optimistic Rollups.
That brought the focus on OmiseGo and a few other ventures while working on Plasma technology. Notably, OmiseGo, rebranded as OMG Network, and its holding company Omise, rolled out mainnet beta today.
The venture seems to have compromised on several factors in order to turn it into a “More Viable Plasma.” Interestingly, the sidechain’s underlying protocol is “Proof of Authority,” with the records indicating that it is managed by a single entity. Still, it synchronizes with monitor nodes that validate the legality of the transaction.
Other reconciles include the incompetence to conduct a “mass exit” from the sidechain, which has one of the largest stumbling blocks of the initial Plasma theory, and a restricted reach where only a single chain can be built, rather than a total network.
Nevertheless, the network permits direct peg-ins of ERC-20 tokens or ETH, while supposedly minimizing fees by 66%. This may turn out to be an attractive plan as Ethereum fees continue to surge.