What Is USDT? How Tether Works, Uses & Risks

Updated 10 September 2026

USDT, commonly called Tether, is a digital token designed to track the US dollar. People use it to transfer value and hold a dollar-linked balance on supported crypto platforms. That target does not make USDT a dollar bank deposit or guarantee that every market trade will occur at exactly $1.

Already holding USDT and considering interest? Explore Ledn’s eligible USDT Growth accounts, where the lending product adds risks separate from holding the token.

How the dollar peg works

A dollar-linked token relies on its backing, issuance and redemption arrangements, and market participants’ confidence in those arrangements. On an exchange, USDT trades at the price buyers and sellers accept. Market prices can move away from the intended peg.

Tether’s transparency page publishes reserve information. Review the latest report and its date rather than assuming that all backing is cash sitting in a single bank. A reserve disclosure is also not a promise that your chosen exchange or lending provider will return your balance.

Buying USDT is not the same as direct redemption

Buying or selling through a platform and redeeming directly with an issuer are different routes. Direct access can involve eligibility, verification, minimums and fees. Many users instead sell on a secondary market, where available liquidity and pricing affect the amount received.

Before buying, identify the exit you expect to use. If your eventual expense is in a local currency, include conversion and withdrawal costs rather than treating a USDT balance as immediately spendable bank cash.

Why the network matters

USDT exists on multiple networks. A receiving platform may support only some of them. Matching the token name is not enough: check the network, deposit address and any other required instructions at both ends.

An unsupported transfer may be difficult or impossible to recover. Network transaction costs and confirmation times also differ. Do not choose a network solely because its quoted fee looks lower without confirming destination support.

Common uses for USDT

USDT can serve as a trading balance, a transfer asset or an input to a lending product. Each use adds its own operational and legal considerations. A business using stablecoins for payments still needs to consider recordkeeping, counterparties and applicable rules.

If the objective is a return, distinguish USDT interest from simply holding the token. USDT does not earn native proof-of-stake rewards; products marketed as USDT staking require closer examination of their actual mechanism.

Four risks to assess separately

• Issuer and reserve exposure: what supports the token and what rights do holders have?
• Peg and liquidity exposure: at what price could you actually sell when needed?
• Network and transfer exposure: can the intended route process the asset correctly?
• Provider exposure: what happens if the exchange, custodian or lender cannot perform?

Ledn’s USDT Growth offering addresses a lending use case, not the elimination of all four risks. Current availability, account terms and rates apply; an old blog rate is not a standing offer.

For a token-level comparison, read USDC versus USDT. For the additional decision involved in earning yield, use our stablecoin lending guide.

This article is for general information, not financial, investment, tax or legal advice. Digital assets and yield products can lose value or principal and may involve delayed access. Borrowing involves interest, fees and the risk of collateral liquidation. Eligibility and terms vary by jurisdiction and may change; the applicable agreement governs. Consult qualified advisers for your circumstances. Read Ledn’s Risk Disclosure Statement and Disclaimers.