In June 2023, Tether selected Kava Chain as its exclusive hub to bring USDt, the world's most popular stablecoin, to the Cosmos ecosystem. For the first time in its history, the Cosmos Ecosystem now has access to USDt natively issued on Kava Chain.
Introducing a universally adopted and secure stablecoin like USDt can address some of the inherent limitations of the Cosmos ecosystem, such as fragmented liquidity and excessive volatility. This allows developers to build more robust and efficient applications, and users to access more stable and liquid assets, boosting the growth and adoption of both the Cosmos and Ethereum ecosystems.
In this article, we unpack some of the technical details of Cosmos-native USDt and how it integrates with Kava Chain’s interoperable platform.
Tether's USDt, issued on the Kava Chain, interoperates with the Ethereum and Cosmos ecosystems. It can be converted to both the Cosmos ICS20 token standard using the Cosmos SDK and the IBC protocol, and Ethereum’s ERC20 token standard with Kava Chain EVM.
While ERC20 and ICS20 are both fungible token standards, the former is for managing tokens on the Ethereum blockchain, and the latter facilitates token transfers between different Cosmos appchains. This conversion process is enabled by the IBC protocol and Kava Chain’s ‘internal bridge’ feature (more on how it works below).
Kava Chain 14th release included the ‘internal bridge’ to streamline the conversion of tokens between distinct blockchain frameworks. The ‘internal bridge’ enables the transformation of Cosmos IBC tokens into ERC20 tokens and vice versa, making them adaptable to the Ethereum Virtual Machine (EVM) environment. The internal bridge is integrated directly into the blockchain giving it tighter access control and restrictions and ensuring a secure environment for token conversions.
Here’s how the transformation works (see the Kava Chain 14 technical deep dive for more information):
When converting USDt on the Kava Chain EVM into an IBC token, there's a shift in its representation within wallets. After the conversion, the USDt will no longer be visible in the MetaMask wallet, which is primarily used for EVM tokens. Instead, it will appear in the Keplr wallet, which is designed for IBC tokens.
The contract address for USDt on Kava Chain is: 0x919C1c267BC06a7039e03fcc2eF738525769109c
For those looking to deposit or withdraw ERC20 USDt, there are a few platforms available depending on your risk tolerance and trust requirements:
The Inter-Blockchain Communication (IBC) protocol enables the transfer of IBC USDt (ICS20 tokens) to other Cosmos appchains such as Osmosis, Injective, and Cronos.
Post-transfer, USDt will automatically appear in the Keplr wallet where you custody and manage it. Once transferred to another IBC appchain, the USDt balance will shift in your Keplr wallet from the Kava Chain chain to the destination appchain.
When on an EVM dApp, you can use Metamask to custody Cosmos-native USDt, here’s how to add it:
1. Navigate to 'Import Tokens'.
2. Input the USDt contract address: 0x919C1c267BC06a7039e03fcc2eF738525769109c. The symbol and decimals will auto-populate.
3. Click on ‘Add Custom Token’, and USDt will appear in your wallet.
The introduction of Cosmos-native USDt is a major milestone for the Cosmos ecosystem. It brings the world's most popular stablecoin to a network that is known for its interoperability and scalability. This will allow developers to build more robust and efficient applications, and users to access more stable and liquid assets. It also makes it easier for users to access USDt on Cosmos and Kava Chain and opens up new possibilities for DeFi dApps.
As the Cosmos ecosystem continues to grow, so too will the demand for stablecoins like USDt. Cosmos-native USDt is well-positioned to meet this demand, and it is poised to play a major role in the growth of the Cosmos ecosystem.
Join Kava Chain Rise USDt to earn rewards on your USDt today!