In just a few days, the so-called stablecoin terraUSD in May lost all of its value. A large cryptocurrency lender named Celsius blocked all withdrawals less than a month later, leaving numerous depositors in the dark.

The market value of all crypto assets as a whole has fallen by 70% in the last seven months, from nearly $3 trillion to about $880 billion.

It's safe to say that Crypto is having a nightmare in 2022, but things might get even worse. That's because tether, a crucial component of cryptocurrency trading, has recently come under increased scrutiny and displayed hints of vulnerability.

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Tether: what is it?

Tether and terraUSD are examples of the stablecoin subclass of cryptocurrencies. A stablecoin, unlike conventional cryptocurrencies like bitcoin, is intended to have a set value, which is typically accomplished by tying its price to another traditional currency.

iFinex, the parent firm of the cryptocurrency exchange Bitfinex, introduced Tether in 2014.

It is pegged to the US dollar, and according to iFinex, it has money on hand in the form of dollars, bonds, treasury notes, and other assets that can be used as collateral. This implies that it should be possible for anyone to swiftly and easily trade tethers for US dollars.

Tether can only maintain its worth, in fact, for as long as it keeps redeeming its tokens for $1 apiece and as long as investors continue to believe that the tokens are fully backed by liquid assets. Tether and perhaps the entire cryptocurrency market would collapse if that faith were to go.

The third most traded cryptocurrency in the world after bitcoin and ether is Tether, which is not just any stablecoin but THE stablecoin.

The majority, if not all, other digital coins are impacted by tether since stablecoins are primarily used to purchase other cryptocurrencies. In actuality, Tether lacks a blockchain of its own. Alternatively, users can use it to conduct transactions on some of the most popular blockchain platforms, including Ethereum, Tron, Algorand, Solana, Avalanche, and Polygon.

Tether is today three times bigger than terraUSD was before it crashed, with 70 billion of them in use.

Investors have taken more than $10 billion out of tether since the crypto meltdown began, in what has been called a "slow bank run." This was hastened by the terraUSD stablecoin crisis in May and the June withdrawal freeze on the Celsius Network, another virtual "bank."

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