Ethereum-based USDT has been the go-to payment method for most cryptocurrency users back when BTC was too volatile and expensive. This changed really quickly after DeFi rose to prominence as droves of traders flocked to Ethereum DEXs, constantly using up its resources to conduct their trades. This made Ethereum’s computing power scarce, pushing the blockchain to its limit and driving its average gas fee to new all-time highs.
As a result, users have to find alternative ways to transfer cryptocurrencies. Binance Smart Chain (BSC) and Tron seem to be the top alternatives due to their higher transaction capacity. BSC-USDT, unfortunately, isn’t supported in as many centralized exchanges as TRC-20 USDT. If we have to speculate, it is against their interest to do so considering that Binance is their competitor. Furthermore, BSC is also being heavily used in DeFi transactions such as liquidity mining, staking, yield farming, etc.
This leaves TRC-20 USDT as the next best viable cryptocurrency for payments by default. In addition, Tron’s blockchain also boasts high throughputs and faster confirmation times since it has less Dapp usage compared to other networks. It needs to be noted that Tether’s TRC-20 supply is centered around exchanges Binance, Huobi, and OKEx, which brings us back full circle to the case that Tron is being used mostly as a vehicle for USDT to flow in and out of centralized exchanges.
Tron-based USDT allows users to deposit USDT with a $1-$2 fee on popular exchanges as opposed to $20-$30 fees on the Ethereum blockchain. On the other hand, users could easily liquidate their crypto assets sitting on exchanges by converting them to USDT and transferring them to a wallet that supports TRC-20 USDT and is connected to their bank account. Moreover, some wallet providers and other crypto businesses use exchanges as custodians of their users’ funds.
Many users also prefer to use exchanges as their wallets, despite the advice against it by die-hard crypto proponents, which allows them to use TRC-20 USDT to pay merchants that accept USDT. In addition, exchange users can also accept payments in TRC-20-based USDT as this allows them to convert them into any other digital asset paired with Tether.