In an interview with Scott Melker, host of the podcast The Wolf of All Streets, Tether CEO Paolo Ardoino touched on the significance of the USDT stablecoin on the Lightning Network. For the Italian entrepreneur and scientist, “the beauty of USDT on Lightning is that it’s the perfect pipeline for large-scale transactions.” Paraphrasing Ardoino, this means that this pipeline (USDT on Lightning) extracts and combines the convenience of a currency with a fixed price and high adoption with the speed and efficiency of the Lightning Network, a second-layer payment technology that scales Bitcoin. 

The company that created and issues the popular stablecoin announced the integration of USDT into the Bitcoin ecosystem, both on its base layer and on the Lightning Network. The announcement was made on January 30 in a joint statement by Paolo Ardoino and Elizabeth Stark, the CEO of Lightning Labs.  

In Ardoino's recent video with Scott Melker, the Tether CEO clarifies that USDT “will be available on Lightning,” implying that the Bitcoin stablecoin is still in the process of being integrated. 

The scientist leading Tether believes the difference between USDT on Lightning and “everything else” is that any other second layer on Ethereum has the same problem: a “single-action state” or shared state and a limited set of validators.  

At the programming level, a single share state is the process of allowing “many functions to access the same data so that when one function makes a change to that data, it is instantly visible to all other functions,” according to the following documentation found on GitHub. 

If you have certain stacks, you'd have one or three validators, which would be great to see, but in most cases, you have only one validator, which isn't very decentralized. In either case, every node in that second-layer system would need to subscribe to and maintain speed with the single state shared across the nodes. Each node needs to "see" everything in order to validate and be part of the network.  

Paolo Ardoino, CEO of Tether. 

In contrast, Ardoino asserts that Lightning P2P payment channels allow you to open a separate private channel with anyone and transact through that channel. They also allow you to force a client-side validator on a smart contract. The latter refers to the fact that Lightning uses smart contracts to ensure that off-chain transactions have a possible common language with Bitcoin and can be executed on its blockchain. Finally, Lightning allows you to close the channel.  

The CEO of Tether goes deeper and believes that all systems should be built in the Lightning way, because this payment method in Bitcoin does not require participants outside a channel to see what the members of the channel are doing , unlike what happens with what Ardoino attributes to the single share state.  

This “virtue” of Lightning is achieved thanks to the fact that it operates off-chain, separating it from traditional networks, where all transactions are recorded in ledgers and can be accessed in detail through Bitcoin and other cryptocurrency explorers.  

During the interview, Ardoino revealed that Tether has had a close practical and philosophical relationship with the Bitcoin network from the beginning, although the departure of Ethereum and its smart contracts forced the company to lessen this relationship.  

“Tether (USDT) started on Omni, which was a layer on top of Bitcoin. So, really, USDT was the core through the Omni Layer on top of Bitcoin. That was the original USDT, and as Bitcoiners, we started there. Unfortunately, the Omni Layer got little attention, especially after smart contracts were born,” Ardoino commented. 

USDT will be coming to Lightning using the Taproop Assets protocol. This protocol allows for issuing Bitcoin assets and transferring them over the Lightning Network for instant, high-volume transactions. 

“Taproot Assets relies on Taproot, the Bitcoin upgrade, for a new tree structure that allows developers to embed arbitrary asset metadata within an existing output. It uses Schnorr signatures for improved simplicity and scalability, and, importantly, supports multi-hop transactions via Lightning,” according to the official Lightning Network documentation. 

USDT has previously arrived on Bitcoin, specifically on August 7, 2024, via Speed ​​in the form of a wrapped token. However, this time it will officially arrive on the Lightning Network with full support for the asset.