Since launching this January, USDT0 has paved a new path for omnichain stablecoin liquidity, bringing unified, native USDT to top blockchains like Arbitrum, Optimism, Ink, and Berachain.
Recently, Chaos Labs conducted an independent, full-spectrum risk review of USDT0. Their report is now live, and the results are in: USDT0’s design is economically secure, operationally sound, and built with some of the strongest onchain safeguards available today.
Read the full risk report here, or continue below for some key takeaways.
Key Findings
USDT0’s design enables seamless liquidity access with uncompromising capital protection. Every live USDT0 deployment is fully viewable on-chain, and USDT0’s modular protocol is embedded security across every layer of the stack.
This includes:
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Immutable messaging via LayerZero’s OApp and Endpoint libraries
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Message integrity enforced through DVNs and payload hash verification
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Real-time simulations through Chaos Labs’ Pre-Crime oracle to block risk-inducing transactions
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Proof of Reserves oracle will be implemented by Chaos Labs at a later date, and will continuously validate USDT0’s 1:1 backing
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Zero-slippage omnichain transfers across all connected chains
In terms of assessing protocol risk, Chaos Labs’ analysis covered three major areas:
Solvency Risk
USDT0’s core invariant is that its circulating supply can never exceed the amount of locked USDT on Ethereum. This is enforced via:
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A LayerZero-powered OFT design with immutable cross-chain message validation
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Dual DVN (Decentralized Verifier Network) security requiring both LayerZero and USDT0-specific verifiers to approve every mint or redemption
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A Pre-Crime Oracle will be integrated at a later date and will simulate the end state of every transaction before execution, blocking any operation that could break the peg
Liquidity Risk
USDT0 minimizes depeg risk and improves market efficiency via:
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A unified liquidity layer, where capital moves natively between supported chains—burning on the source chain and minting on the destination
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Seamless composability with DEXs, lending protocols, and stable pools without fragmentation
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A legacy mesh system that connects USDT liquidity across chains like Ethereum, Tron, and TON via Arbitrum
External Dependencies
USDT0 has no centralized issuer or custody layer. All reserves are managed by a non-custodial smart contract on Ethereum, operated by a 3-of-5 multisig governed by Everdawn Labs. The mint/burn logic is fully transparent, upgradable, and designed to be modular in order to accommodate new security frameworks, standards like ERC-7802, and evolving regulatory requirements.
USDT0 is designed to minimize off-chain dependencies by relying on fully transparent, onchain infrastructure. However, like any interoperable system, it depends on two core components to function reliably: USDT on Ethereum and the LayerZero messaging stack.
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USDT on Ethereum is held in a non-custodial smart contract (OAdapterUpgradeable), and USDT0 always maps directly to native USDT on Ethereum, unlike wrapped or bridged stablecoins.
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LayerZero’s Messaging Infrastructure enables native cross-chain token transfers through message passing rather than bridge-based liquidity, with every message (mint, burn, or transfer) verified by two independent DVNs to protect against message spoofing or unauthorized issuance.
Together, these systems ensure that USDT0’s cross-chain operations are verifiable, decentralized, and resistant to manipulation.
Think USDT0 Can Do Better?
Beyond the above risk analysis, Chaos Labs also dove into the technicalities of USDT0's core mechanics, operations, and primary use cases. Based on their findings, it’s clear that USDT0 is setting a new security bar for omnichain liquidity.
But don’t take our word for it. USDT0 maintains a live bug bounty program on Immunefi with up to $6,000,000 in rewards for critical findings. We welcome security researchers, whitehats, and contract auditors to look under the hood and receive generous rewards for flagging actionable improvements.
