Tether - Stablecoin Innovation, Regulation, and Mainstream Potential with Paolo Ardoino

About this Episode

This week we dive into Tether, a stablecoin playing an important role in disrupting the legacy financial system, recently announced to be launching on Polkadot.

Joe Petrowski, (Technical Integrations Lead, Web3 Foundation) speaks with Paolo Ardoino, CTO of Bitfinex and Tether. They discuss stablecoin trends, regulation and compliance with central banks, CBDCs (Central Bank Digital Currencies), the likelihood of central banks running on public blockchains such as Polkadot and Ethereum, achieving blockchain interoperability through common goods, and the upcoming launch of Tether on Polkadot.

Highlights:
00:39 - Intro to Ardoino and Tether
06:38 - The issue of crypto arbitrage
08:57 - Stability by matching a dollar to the pace of Bitcoin
11:01 - Boom and innovation in the stablecoin sector
12:20 - The risks of decentralized stablecoins
13:30 - Achieving purchasing power stability
14:49 - The scope for non-US stablecoins
16:15 - Tether Gold, the precious-metal-backed stablecoin
20:34 - Individual assets vs. a managed basket of currencies
22:48 - Regulation and scrutiny from central banks
27:35 - Blockchain for central banks
28:40 - Tether’s criteria to deploy on a blockchain
30:15 - Common goods for blockchain interoperability
35:07 - Resilience through multiple blockchain support
36:49 - Tether to launch on Polkadot and Kusama

Links:
Paolo Ardoino on Twitter
Tether on Twitter
Grenache
Ampleforth website

Ardoino’s reading list:
Eric S. Raymond, The Cathedral and the Bazaar

Key Quotes:
“I believe that you can not really understand as a CTO, all the nuances and complexities of your platform, if you stop coding”

“the reason why our team decided to create Tether was to solve one problem I’m sure you are familiar with, that is crypto Arbitrage”

“Why don’t we create a dollar that moves at the same pace as Bitcoin”

“I would stay pure and not allow centralized stablecoins…. Crypto backed stablecoins are a very good value add to the sector, but I would prefer or would have preferred to not have decentralized stablecoins and centralized stablecoins.”

“If you are using technology and the banking network, you have to respect the same standards, there is no other way around. That is why Tether has the function to freeze funds in order to cooperate with law enforcement. We do it quite openly, and we communicate when we do. Also, we did that to help many projects. There was an exchange hacked six months ago and we helped them to freeze thirty million dollars worth of Tether. There were many DEFI projects that were hacked and we worked with law enforcement to freeze those funds. That is what is happening in the banking world if someone steals funds from your bank account, the bank has the right to freeze your funds if you have stolen funds. We had to replicate the same functionalities in our centralized stablecoins. That is something that the decentralized coins don’t have and don’t need because they don’t use the banking system, we do, and we have to respect that.”

“The idea that central banks will issue directly on Ethereum or Omni or Polkadot is quite realistic.”

“You give more freedom to your users, you will gain traction.”

“Supporting multiple blockchains makes the entire infrastructure resilient.”