The cryptocurrency U (USDT) is the most important stablecoin in the world of digital assets, becoming the hard currency of the market due to its characteristic of being pegged to the US dollar. U merchants are the key lubricants in this ecosystem; they leverage keen market insights to profit from price differences, cross-platform arbitrage, and fluctuations in market supply and demand, while providing necessary liquidity to the market and building their own business models. For ordinary users, understanding how U merchants operate helps to gain a deeper understanding of the intrinsic logic and value transfer mechanisms of the digital asset market.
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In the field of digital assets, you may often hear the term "U." It actually refers to USDT, the most widely used stablecoin in the world, which has become an important trading medium in the market due to its value being pegged to the US dollar. This article will explain in detail what U is and reveal how U merchants profit from trading U.
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What is cryptocurrency U?
"U" usually refers to USDT, a stablecoin issued by Tether. A stablecoin is a type of digital asset designed to maintain a stable value. The core feature of USDT is its 1:1 pegging to the US dollar (USD), meaning that ideally, 1 USDT is equal to 1 dollar.
Due to the extreme price volatility of mainstream digital assets like Bitcoin, investors need a "safe haven" asset to temporarily store value or settle transactions. U plays this role, acting as a bridge between the volatile world of digital assets and the stable world of traditional fiat currencies, and is widely used for pricing and trading on major trading platforms.
What is cryptocurrency U? How do U merchants make money? - PHP Chinese Network
How do U merchants achieve profitability?
U merchants can be understood as market makers or intermediaries in the digital asset market, specializing in buying and selling U to provide liquidity to the market. Their profit model is not singular but a combination of various strategies, primarily focused on exploiting information asymmetry and price differences.
Core profit model: Earning the bid-ask spread
This is the most basic and primary way for U merchants to profit. They set a bid price and an ask price. For example, they might buy U from users wanting to sell at a price of 7.25 yuan and then sell it to users wanting to buy at a price of 7.30 yuan. The 0.05 yuan difference is their gross profit for each U traded. Through large-scale, high-frequency trading, small price differences can accumulate into considerable profits.
Cross-platform arbitrage (brick moving)
The price of U may have slight differences across different trading platforms or markets. Savvy U merchants closely monitor these price discrepancies, buying U on platforms where the price is lower and quickly transferring it to platforms where the price is higher to earn risk-free or low-risk profits. This operation requires high speed and execution capability.
Exploiting supply and demand fluctuations
Although U is pegged to the US dollar, its exchange rate with specific fiat currencies (like the yuan) can be affected by market supply and demand. When the market is booming and many people need U to enter, the price of U may rise slightly, creating a premium; conversely, during market panic when many people sell U to exit, the price of U may drop, creating a discount. U merchants take advantage of these short-term market sentiments and supply-demand imbalances to buy low and sell high, expanding their profit margins.
Providing large OTC (over-the-counter) trading services
For clients needing to conduct large U transactions, U merchants can offer peer-to-peer OTC trading services. In this service, U merchants typically charge a certain percentage of the transaction volume as a service fee or include a wider spread in their quotes compared to the online market to ensure their profits and cover risks.