Author: Shen Jianguang, Bo Jiale, Source: First Financial
Introduction
Last week, we analyzed the reasons behind Circle's successful IPO and stock price surge, with its current stock price hovering around $180, six times the IPO price. Based on Circle's profit of $157 million last year, the world's largest stablecoin company Tether, with a profit of $13 billion last year, could easily exceed a trillion-dollar valuation if it goes public. By the end of 2024, Tether has only 150 formal employees, yet generates profits comparable to Goldman Sachs, which has 45,000 employees. This article will analyze how the world's largest stablecoin company was formed.
Tether's origins are closely linked to Bitfinex, an exchange established in Hong Kong, China. Initially, Tether relied on Bitfinex's team support to maintain operational flexibility and an extremely lean staff size. Tether's conservative and cautious development strategy and approach to regulatory environments stemmed from its multiple crises and "near-bankruptcy" experiences. It wasn't until Tether performed relatively well during the 2022 Crypto Winter triggered by FTX's collapse that this cautious strategy began to change. By 2025, Tether became an industry leader through its profitability, massive scale, and relatively simple core business model.
[The translation continues in the same manner for the entire text, maintaining the specified translations for specific terms and preserving the original formatting.]In 2022, Tether faced its next challenge: the FTX collapse and Terra Luna's sharp decline triggered a massive redemption wave. USDT once depreciated to $0.95, with Tether processing $10 billion in redemptions within just a few days—an amount even traditional fiat currency banks would struggle to withstand. However, as the market value stabilized at $65 billion, the redemption wave quickly subsided. Even with Bitcoin's poor performance and competitors suffering losses during the Crypto Winter, Tether remained unscathed and even more profitable than before. One key factor was the rise in interest rates; in the first quarter of 2022, the 90-day US Treasury yield was 0.52%, rising to 4.85% a year later, with higher borrowing costs reducing Bitcoin purchases and consequently lowering trading volume. However, for stablecoin businesses, higher interest rates provided greater profit opportunities.
New Leadership Guiding Tether's Transformation
Tether recovered from a dire situation and gained significant financial strength. Tether and Bitfinex's management are pioneers in the crypto field, and more importantly, they are survivors who have weathered multiple crises. They recognized that Tether needed to change, and they themselves needed a break.
By the end of 2023, they officially handed over Tether's leadership to Chief Technology Officer Paolo Ardoino, making him the CEO. Since 2014, Ardoino has been responsible for Tether and Bitfinex's technical operations, and has controlled most of the company's daily operations since 2018. He played a crucial role in crisis management, including addressing hacker attacks and managing the company's crypto assets in a prudent and secure manner.
After being appointed CEO, Paolo set a new, more aggressive direction for Tether, beginning to more broadly utilize its financial strength. After experiencing the "worst-case scenario", Tether became stronger than ever and no longer needed to maintain its previous extremely cautious and conservative stance. Ardoino charted a new development path for the company, allowing investments in various fields including data and artificial intelligence, education, and even biotechnology.
Bitfinex and Tether also gradually separated. When Bitfinex was a market leader, maintaining their connection made sense. Tether operated as an affiliate project with Bitfinex staff participating part-time. However, as the financial trajectories of the two companies diverged, their separation became increasingly reasonable.
Under new leadership, Tether transformed into an proactive investor and partner. Tether established its first business development and investment teams, specifically dedicated to collaborating with local USDT ecosystem partners and investing in Web3 ecosystem companies. By mid-2024, Tether's business development team had grown larger than the compliance department, becoming the company's largest team.
Tether also made extensive investments in blockchain startups, payment platforms, and emerging market fintech companies (such as in Latin America and Southeast Asia). After clearly distinguishing itself from Bitfinex, Tether also established partnerships with major centralized exchanges (CEX) like Bybit and numerous regional exchanges worldwide.
In summary, Tether's ability to gain the world's largest market share stems from its advantages as a pioneer: the highest liquidity, strongest interoperability, and best interest spreads. The stablecoin business model is relatively simple: issuing fiat-pegged tokens across multiple chains while ensuring reserve fund safety and strong liquidity. Tether's cautious and defensive strategy has allowed it to withstand repeated shocks and ultimately benefit from the rise of crypto assets like Bitcoin.
