About Polygon and Tether Polygon
About Tether
Tether is one of the biggest cryptocurrencies at the moment, and it barely needs any introduction. It’s the go-to stablecoin, an asset that enjoys all the functional and technical advantages of a cryptocurrency, except for its free floatation. Stablecoins are called this way because they are tied in value to an outside asset.
Tether (USDT) is tied to the American dollar in a 1:1 ratio. It’s been achieved by a combination of USD-derived assets, which comprise the underlying value of this token. It means that, basically, while all other cryptocurrencies — Bitcoin, Ethereum, Litecoin, etc. — change, grow, and fall, Tether stays the same on the market.
There isn’t a uniform blockchain for Tether, as well. It wasn’t released as part of some wider network. Instead, it is a free asset that can be used for whatever reason in a wide multitude of blockchains, including Bitcoin, Ethereum, Tron’s, Binance, and on others, as well.
About Polygon
Polygon can be considered an upgrade to the Ethereum blockchain. It’s not a separate entity, and it’s closely associated with the latter. However, it’s also independent and not controlled by Ethereum. Its main purpose is to address the scalability limitations of the ETH network, which is why the two systems are 100% compatible.
The smart contracts and projects created on Ethereum can be imported to Polygon seamlessly and without any loss of data. There isn’t any difference between the two in terms of infrastructure — the differences lay in efficiency, scalability, operations, and technical parameters.
This is achieved through a series of additional mechanisms, including:
- The proof-of-stake type of consensus, which Ethereum only started introducing in 2022.
- The Software Development Kit (SDK), which allows for the creation of custom networks parallel to the main Ethereum network. These work with enhanced efficiency and use the same security protocols.
- Polygon Bridge — a bridge created for the seamless transfer of assets between Ethereum and Polygon.
- Layer 2 — a series of solutions that improve the scalability of Ethereum operations and reduce their costs.
With these solutions, it’s possible to create decentralized apps capable of faster, more efficient growth. Moreover, they increase security, decrease transaction costs, and improve the speed of processing. Basically, Polygon is a superstructure above Ethereum’s mainnet that is more convenient and less demanding.
Polygon and ERC20
Polygon is an optional upgrade, but it’s also a fully integrated entity. It acts as an additional set of algorithms that fit the into larger Ethereum structure like a puzzle, meaning that it’s not really supposed to have separate mechanisms that distinguish it from its ‘parent’ blockchain.
For this reason, it lacks a dedicated token, its own token standard, and it’s not an independent blockchain at all. Ethereum and Ethereum-compatible tokens play a vital role in its operations. The transaction fees are paid in these currencies, and the dApps created here are also powered by them.
Polygon tells Ethereum and Ethereum-friendly tokens from anything else through the ERC20 standard. This standard makes sure a cryptocurrency is compliant with the algorithms that run the ETH blockchain. There are lots more tokens with this standard than just Ethereum.
USDT is one of the many tokens that can operate freely on Ethereum’s blockchain. It can be used to pay fees, power dApps, process DeFi transactions, etc. Tether wasn’t originally any close to ETH standard-wise, but an ERC20 version was later released specifically to use in such instances.
Tether ERC20
Tether was originally created as a BTC-based stablecoin. It means that it was from the start compatible with the Bitcoin blockchain. It was later also ported to Ethereum, and then to other networks. It didn’t have a home blockchain, instead operating as a dispersed token with high availability.
There are several key varieties of Tether with different standards in place. Since Tether doesn’t serve any specialized purpose in the crypto world, like Ethereum or TRON (their purpose is serving their home blockchains, which themselves have unique agendas). Accordingly, it can be fitted to virtually any standard.
Tether ERC20 is one of the key such standards, alongside BRC20. It’s technically equal to ETH on its own blockchain, and any amount of Tether can be converted easily from one standard to the other without any significant loss of funds. That’s incredibly convenient and allows for a great degree of compatibility between the networks.
Other cryptocurrencies can’t be used to the same extent because some of the principles ingrained in their respective standards are integral to the idea of these cryptocurrencies and their related blockchains. Tether doesn’t have this limitation, which makes it an ideal small coin accepted on many different blockchains.
Tether and Polygon
Tether can be used on Polygon without any modifications. It’s compatible with Ethereum, meaning that it’s also fully compatible with Polygon. The type of Tether used on this network is nonetheless called Tether Polygon to tell it apart from the other variations.
Tether Polygon is really identical to Tether ERC20, and users can simply transfer some amount of the latter into this system, and they’ll just be automatically rearranged into the same amount of the local sub-variety. When you want to withdraw the funds from Polygon, they’ll be transferred back into ERC20.
Needless to say, Tether could be utilized to many good ends here on Polygon. It’s mostly relevant for development purposes because a stablecoin can further enhance the scalability, which this system is so focused on. The price doesn’t change, meaning that there are no unexpected losses — an ideal fuel for continuous scaling.
