USDT's Stalled Smart-Contract Growth on Ethereum Challenges Stablecoin Assumptions

A recent working paper from the Bank for International Settlements (BIS) sheds new light on the USDT stablecoin, revealing that its growth on Ethereum through 2024 did not come with a sustained increase in smart-contract holdings.

The study found that smart-contract accounts on Ethereum held more than 20% of the network's USDT during part of 2021 and 2022, but this share dropped to around 10% to 15% by late 2024 as issuance expanded. The researchers note that this drop is a change in proportion, not a decline in absolute balance.

The BIS authors also point out that a lower share can result when newly issued tokens accumulate outside contracts, even if the amount in contracts stays near its earlier level. They argue that the issuance growth did not bring a sustained increase in contract holdings on Ethereum or Tron.