USD₮0: Explained

Introduction

Stablecoins have become foundational to the global digital economy, powering cross-border settlement, enabling collateralized lending, and providing liquidity across a growing universe of decentralized finance (DeFi) markets. With adoption accelerating by the day, stablecoins are now among the most widely used digital assets globally.

But the expansion of multiple different blockchain networks has introduced a new layer of complexity: fragmentation. A single stablecoin deployed across multiple chains often results in a fragmented web of wrapped, bridged, and synthetic variants, each introducing operational overhead and risk.

Tether’s USDT is a prime example. It is the most widely used stablecoin in the world, but its liquidity is spread thin across multiple blockchains and token representations. As the importance of stablecoins grows, so too does the demand for infrastructure that can support unified, cross-chain liquidity without compromise.

USD₮0 delivers exactly that. Built on the LayerZero OFT standard, it enables native omnichain functionality without relying on bridges or burn-and-mint mechanics. USD₮0 consolidates fragmented liquidity into a single canonical representation—bringing operational efficiency, composability, and reduced risk to one of the most critical layers of digital finance.

USD₮0

This January marked the launch ofUSD₮0, the omnichain deployment of USDT built on LayerZero.

USD₮0 creates a more efficient cross-chain liquidity layer and a smoother UX for builders and users alike, making it easier to transfer, integrate and use USDT tokens across different chains. It is the next step in USDT's evolution, bringing a unified liquidity network across blockchains without the need for wrapped tokens, intermediary bridges, or synthetic stablecoin representations. Once USD₮0 is deployed on-chain, it becomes natively available and interoperable across that chain’s DeFi protocols and payment infrastructures.

How USD₮0 Works

Paolo Ardoino, CEO of Tether, describes USD₮0 as a game-changing solution for seamless USDT movement across ecosystems. "By improving interoperability and reducing friction, USD₮0 enhances UX in ways that align with the broader vision of Tether. It's exciting to see this innovation emerge and tackle real market demand."

Source: DefiLlama

USD₮0 provides this solution by operating on a robust lock and mint mechanism, with a canonical supply of USDT locked on an Ethereum Mainnet smart contract and referenced across all chains. An advanced messaging layer offers a superior user experience with seamless cross-chain transfers, thereby eliminating the need for reliance on fragmented liquidity pools and bridges.

With this, USD₮0 makes it possible for USDT to reach new chains like Berachain and MegaETH. And as USD₮0 expands alongside the growing Web3 ecosystem, it is poised to bring USDT to every blockchain with its native, capital-efficient liquidity layer.

The Omnichain Fungible Token Standard

At the heart of USD₮0 is LayerZero’s Omnichain Fungible Token (OFT) standard. OFT enables token transfers across multiple blockchains using LayerZero's messaging protocol. It unifies liquidity across connected blockchains and validates transactions through a decentralized network of oracles and relayers in the following sequence:

1. USDT tokens get locked in a smart contract on Ethereum.

2. USD₮0 tokens, which reflect the locked amount, are minted on the destination chain.

3. LayerZero sends a message across the connected chains.

4. Users can then move USD₮0 across supported chains without liquidity concerns.

5. They can later redeem USD₮0 tokens by unlocking the corresponding USDT on Ethereum with a 1:1 ratio.

In short, after USDT assets are locked on Ethereum, the protocol mints USD₮0 tokens on the destination chain in a 1:1 ratio. These USD₮0 tokens represent the locked assets that users can redeem by unlocking the corresponding USDT on the Ethereum blockchain.

Through this process, OFT ensures efficient liquidity management and reduces fragmentation, complexity, and operational overhead across all connected chains. The end result is enhanced capital efficiency while maintaining compatibility with USDT.

USD₮0 In Action

The OFT standard enables efficient cross-chain transfers, but since USDT is already deployed on multiple chains beyond Ethereum, users still need a way to move liquidity between those existing USDT networks.

USD₮0’s solution to this is the Legacy Mesh—a shared, non-custodial infrastructure that connects legacy stablecoin deployments.

The Legacy Mesh is conceptualized as a hub-and-spoke architecture to route stablecoin liquidity between networks that do not natively support USD₮0, including popular chains like TON and Tron. These chains already hold large native amounts of USDT but do not support native USD₮0 minting or the OFT standard.

In this model, Arbitrum serves as the central hub with spokes like Ethereum, TON, Tron, and Ink.

The Legacy Mesh connects:

• Native USDT via ERC-20 on Ethereum

• Native USDT via TRC-20 on Tron

• Native USDT via the TON token format on TON

• Arbitrum on the canonical USD₮0 hub

• Any chain with native USD₮0 integration

This architecture enables users to seamlessly move tokens between previously siloed networks, with USD₮0 backed by redeemable assets on both sides of the transfer. Additional chains can be integrated into the mesh over time, further strengthening the network and unifying the omnichain stablecoin experience.

Native USDT deployments already represent billions in circulating supply, and the Legacy Mesh makes all this liquidity accessible. Not all blockchains are ready to support USD₮0; therefore, the Legacy Mesh enables them to interoperate today, with the option to upgrade to a full OFT-based deployment later.

Tangible assets back transfers through the Legacy Mesh, either via direct mint/burn mechanisms or existing liquidity, which minimizes depeg risk. Soon, participants will be able to use the USD₮0 Transfer Hub to deposit USDT into the mesh and receive native USD₮0 on any supported destination chain. While the automated multihop process is still in development, manual transfers are already possible and simple to perform.

Step by Step Example:

USD₮0 docs demonstrate an example of how to move USDT from Tron to Ink.

1. Select Source and Destination Chains:

• On the USD₮0 Transfer Hub, choose Tron (USDT) as the source chain and Arbitrum (USD₮0) as the destination chain.

• Follow the prompt to connect a compatible wallet for each chain.

2. Transfer USDT to Arbitrum:

• Use the Legacy Mesh to transfer your TRC-20 USDT to Arbitrum.

3. Transfer to Final Destination:

• Once on Arbitrum, you can transfer your USD₮0 using LayerZero's OFT protocol. It burns tokens on Arbitrum and mints the same amount on Ink.

4. Use Native USD₮0:

Once received, you can lend, swap, or use USD₮0 in any compatible app or protocol, just like native USDT.

You can use this same process to move USDT from Arbitrum to any other USD₮0 chains. The Legacy Mesh has a 0.03% fee attached to each transfer, paid in USDT.

Luganodes and USD₮0

Luganodes supports USD₮0's ventures across the Web3 ecosystem to help ensure its future. USD₮0 x Luganodes is live on Hyperliquid mainnet (the high-performance execution layer for DeFi). This partnership enables USD₮0 validators to stake assets and further Luganodes' mission to power the future of on-chain finance.

Luganodes is pleased to announce our collaboration with @USDT0_to, powering the validator infrastructure on @HyperliquidX.

Through this partnership, we are providing institutional-grade infrastructure to support USDT0’s mission of unifying stablecoin liquidity across leading… https://t.co/I3fPfGC9nq pic.twitter.com/MKOrXfHN9l

— Luganodes (@luganodes) April 24, 2025

Why USD₮0 Matters

USDT operates as a cornerstone of global digital finance. However, as blockchain ecosystems proliferate, moving USDT across them becomes increasingly fragmented. This forces users and developers to rely on duplicate liquidity pools, inconsistent bridges, and unnecessarily complex backend operations.

This is exactly why USD₮0’s creation is so timely. It introduces a versatile and powerful framework that serves the needs of users, blockchain networks, and exchanges alike, streamlining how USDT is issued, transferred, and managed across chains.

For users, USD₮0 enables efficient transfers across supported blockchains by removing the need for bridges and fragmented liquidity. This simplifies the user experience, reduces risk, and unlocks broader DeFi opportunities within a unified liquidity environment.

For blockchain networks, USD₮0 delivers a standardized USDT implementation with advanced compliance features. It eliminates fragmentation across chains and supports freezing/blacklisting functionalities to help meet regulatory demands. With settlement times ranging from 30 seconds to a few minutes, it ensures fast, reliable value transfer while remaining adaptable to evolving network requirements.

For exchanges, USD₮0 provides seamless multi-chain support via permissionless contracts that require minimal integration effort. It removes the burden of float management and rebalancing, enabling easy deposits, withdrawals, and redemptions across supported networks, including Ethereum.

Conclusion

Luganodes is proud to support USD₮0’s evolution across the Web3 ecosystem. From powering live deployments to contributing infrastructure as the standard grows, we remain committed to advancing stablecoin interoperability at scale.

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 45+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.

The information herein is for general informational purposes only and does not constitute legal, business, tax, professional, financial, or investment advice. No warranties are made regarding its accuracy, correctness, completeness, or reliability. Luganodes and its affiliates disclaim all liability for any losses or damages arising from reliance on this information. Luganodes is not obligated to update or amend any content. Use of this at your own risk. For any advice, please consult a qualified professional.