Tether (USDT) has now launched on Hermez Network, an Ethereum scalability solution based on the zk rollup concept. Rollups provide a way to batch or “roll up” transactions to lighten the load on the Ethereum network.
The key to update packages is the concept of data availability, which means that the status data of the rollup is always fully available on-chain. In practice, this means that the Ethereum network knows the token balances of all user accounts on the Hermez rollup after each transaction, and this knowledge can be used to quickly withdraw money and distribute it among their new owners in case of outages.
Zk rollups can be thought of as separate “blockchains” that depend entirely on the Layer One network for security. Using zk-SNARKs, the Hermez rollup regularly publishes evidence to the Ethereum network verifying its correctness. Due to the brevity of SNARKs, the underlying data can be nearly arbitrarily large, while the evidence remains constant in size. This makes it perfect for scalability applications, as the Ethereum network can conclusively prove that the network works as intended with only a fraction of the data processed by the rollup itself.
By launching USDT on Hermez, Tether hopes to ease pressure on Ethereum gas fees, where the Tether contract consistently ranks among the highest gas users. With token transfer fees consistently staying above $ 10 on Ethereum – with exchanges increasing their withdrawal fees in response – the market has diversified significantly in terms of using Tether.
Tether on Tron’s network has achieved parity with Ethereum in terms of value transferred – a significant achievement for Tron and a concern for Ethereum supporters. Undoubtedly, the main contributing factor to Tron’s rise is the support of a number of exchanges such as Binance, Huobi, OKEx and many others traditionally associated with Asian and Asian traders. Whatever users think of Tron, few can argue with its low rates and significant adoption.
Hermez offers an Ethereum-native alternative to Tron, although it adds to OMG Network’s Plasma, which doesn’t seem to have gained significant traction so far. Hermez is currently accessible using MetaMask, binding to the user’s Ethereum wallet. Transactions on the network require the execution of a deposit transaction from the Ethereum backbone, after which the funds become available on the rollup. However, without a significant number of possible destinations for the funds, Hermez risks being stifled by competition from other side-chains and layer-one networks.
The Hermez team is fully aware of this predicament and is working towards integration with as many exchanges as possible, but it remains to be seen if their efforts will succeed.