Tether, the company behind USDT, is preparing to issue a stablecoin natively to Bitcoin by using the RGB protocol version v0.11.1. Powered by the UTEXO software lab, USDT is set to return to the chain where it was first launched in 2014 with the Omni-Mastercoin Layer.
UTEXO, the company leading the commercial issuance, has established itself as the issuer and distributor of this Bitcoin-native USDT in partnership with Tether. “Finally, after eight years of development—if not—we the company launched USDT on top of Bitcoin with strong support from Tether,” said Viktor Ihnatiuk, founder of UTEXO, in an exclusive interview with Bitcoin Magazine.
The RGB protocol combines its novel client-side authentication with the Lightning network for fast, private settlements, while strengthening the security of Bitcoin’s UTXO model. Users can expect to be able to manage USDT in native Bitcoin addresses as well as send and receive it over the lightning network with compatible wallets.
The RGB protocol in Bitcoin also offers important privacy features to USDT users as a property benefit from Bitcoin’s UTXO model, which establishes new addresses for every transaction compared to the account-based address that is often reused in EVM blockchains such as Tron, Ethereum or Solana. Address reuse is the number one flaw in onchain privacy, yet many altcoins have built their links to reuse addresses, despite the risks it poses to users. RGB’s integration with the lightning network further protects user privacy by moving USDT through an offchain payments network, leaving few marks on the public blockchain. The deep integration with Tether also means that there are fewer middlemen that charge extra or collect data.
In the article, Vktor emphasized that, “We built Utexo so that USDT can move to Bitcoin the way money should move: instantly, privately, without being surprised at the cost. Our partners integrate our API and can move USDT to the most open network ever built, with full control of the cost structure.”
UTEO vs TRON
UTEXO emerged from a joint venture involving Viktor’s Boosty Venture Studio, Fulgur Ventures, and Tether Investments. The goal was straightforward: to bring RGB to the mainnet after years of delay under previous development teams. The protocol has been in development since at least 2016, but failed to be ready for the 2017 bull market, giving the TRON blockchain dominance over USDT volume and usage across the developing world, a dominance it still retains.
UTEXO is directly building the “last mile” of software needed to widely use USDT in the Bitcoin ecosystem, including a software development kit, APIs, middle-level protocols, UI design work and a mint bridge that is live today at mint.utexo.com. This bridge allows users to transfer USDT to popular blockchains with “low fixed fees” and no middlemen due to its direct integration with Tether as the main mint. The RGB protocol layer was developed by Bitfinex R&D Strategist Federico Tenga.
“Right now if you want to exchange USDT with Bitcoin you need to pay a high fee for all these wallets that charge you one percent of the wallet fee and a variable provider fee of one percent to merge, and you have one percent of slippage, so you pay three percent, and you also wait forever until the exchange happens” Viktor told Bitcoin Magazine, adding that; “With USDT and Bitcoin on the lightning, for the first time you have two main assets on one chain, you can exchange quickly without any slippage. You can exchange the fixed USDT to Bitcoin and back to the chain. The price is almost the same as the Binance markets.”
Networks like Tron are primarily used to transfer USDT and add additional fees, exchange commissions and friction to the user experience. They require a different type of address, and payments are made through assets such as TRX, which are often used to transfer stablecoins. Since most of the volume of money in the crypto market is concentrated in Bitcoin and Tether, having to buy an altcoin just to pay the money ends up feeling like red tape.
Bitcoin, like the USDT payment instruments, also comes with blockchain levels of security that other chains cannot provide. While USDT will always be centralized to Tether as an entity, rails can add risk, for example, in the event of a conflicting fork or major bugs are found in blockchain systems. Bitcoin, being the oldest and most conservative blockchain, brings a quality assurance of sorts unmatched by other chains.
RGB traces its roots to a single use by Peter Todd back in 2014 and was formalized in 2016 by Giacomo Zucco and Riccardo Casatta. The acronym RGB, originally derived from “Riccardo Giacomo Bitcoin,” was later renamed “Really Good Bitcoin”. Tether tested the protocol early but faced delays with the previous team. If RGB were to be shipped on schedule around 2019, the stablecoin space and the wider DeFi industry might have evolved differently from Bitcoin’s UTXO model instead of Ethereum’s account-based system.
As such, converting USDT to Bitcoin is UTEXO’s primary motivation. Viktor did not comment on the matter: “For the first time in eight or nine years, the USDT is coming home.
USDT to Bitcoin via RGB is expected to launch within weeks, possibly this July, with wallets such as Tether Wallet among others announcing support, and global exchanges announcing integration.
