Tether on OMG network goes live this week. This is an important feature to free up Ethereum layer 1 blockchain until sharding arrives. This move could slash Ethereum blockchain congestion by up to 15%. Tether (USDT) initially announced their plans to integrate with the Omisego (OMG) network around the end of May month. They are true to their words and now helping decongest layer 1 by moving into layer 2 solutions.
Why is Tether on OMG important?
The Ethereum blockchain is a valuable resource but it is limited by a severe network congestion. The problem with decentralization is you don’t decide to shut scams off if they spam the network with really small value transactions that are of no use. You just find a way to disincentive those bad actors. Under heavy demand, Ethereum blockchain is vulnerable to severe network congestion.
In addition, each block has only a finite space available to users. So, total transactions limit is currently at around 12 Transactions per second (TPS). With heavy usage, there is a demand for more than 12 TPS. So, settlement times increase and you need to pay higher gas costs to have your transactions included in the current block. Miners also use this to their advantage and keep the network clog to gain more in fees.
The number one reason for the ETH gas price increase is because of Tether exchange between users P2P, users and exchanges and exchanges to exchanges transfer. If meaningful amount of Tether transfers shifts to second layer OMG, it will reduce ETH fees for everyone to interact with the Ethereum blockchain.
Plasma Layer 2 Scaling Solution
OmiseGo Network, with its headquarters in Thailand (Bangkok), was introduced in the year 2017 through an Initial Coin Offering (ICO). It offers a remittance platform to the users. OMG Network is a Layer 2 payment platform that works on Ethereum blockchain and it can process a huge number of transactions in just a second through its Plasma solution.
Plasma Layer 2 scaling solution helps OMG network to process 1000+ transactions in a single block on the Ethereum chain. Additionally, it helps network gas fee to remain cheaper and takes less time to execute. This make it ideal for small transactions.
We are thrilled to declare the inauguration for Tether on OMG that easily supports 1000+ transactions per second at one third cost of a similar transaction on Ethereum
– Vansa Chatikavanij, OMG Network CEO
Ethgasstation.info states, Ethereum generated a total amount of $6.4 million via Tether’s transaction fees, in the last 30 days. Uniswap pips Tether to have the pole position generating a transaction fees of $7 million on the Ethereum network.
On another note, OMG network wants to make it smooth for arbitrage transaction opportunities for expert traders. They have enabled withdrawals and deposits of USDT in Bitfinex. Easy funds access will go a long way in allowing people to take advantage of pricing arbitrage opportunities.
It’s a good news that Tether is doing its part to help unclog the Ethereum blockchain. Hopefully, Ethereum solves the scaling problem through Sharding and gas fee problem through EIP-1559 soon.
OMG Network, being a Layer 2 non custodial scaling solution, helps make Tether transactions faster and cheaper through its Plasma solution. Tether is the stable coin with the biggest market cap and is integrated on Ethereum, Liquid, EOS, Algorand, Omni layer and Tron.