Tether USDT smart contract - Overview
- Overview
- Schema
- List of non-ERC20 functions
- Code
- Security and Centralization Concerns
- Main points
- Summary
- Reference
Tether’s USDT is the largest stablecoin in terms of market cap (July 6, 2025). Its Ethereum version has a marketcap of $64b according to defilama.
This article explores the features, structure, and behavior of the USDT smart contract on Ethereum, focusing on security, centralization, and functionality.
USDT operates through a Solidity-based smart contract first deployed on Ethereum in 2017. While it follows the ERC-20 standard, it includes several extensions to address regulatory and operational needs.
Key Features of the USDT Smart Contract:
- Ownership Controls: The
Ownablemodule allows a designated authority to manage upgrades and token issuance. - Blacklist Mechanism: Specific addresses can be frozen or have funds removed,
- Pause/Unpause Capability: Trading and transfers can be paused in critical situations via the
Pausablefeature. - Upgradability: Through the
deprecate()function, the contract can forward all logic to a newer version - Optional Transfer Fees: A configurable fee structure is implemented, though typically unused.
- Token Supply Adjustments: The owner can
issue()orredeem()tokens, allowing the supply to be adjusted in response to off-chain actions.
USDT operates across multiple chains (Ethereum, Tron, Solana, and others), but the original Ethereum contract remains a useful reference for understanding how USDT works.
[TOC]
Overview
High-Level Overview
- Contract Name:
TetherToken - Deployed: November 2017
- Language: Solidity
^0.4.17 - ERC Standard: Implements ERC20 with custom extensions
- Design Pattern: Inherits from multiple base contracts (
Ownable,Pausable,BlackList,StandardToken) - Purpose: Mintable, burnable stablecoin backed by fiat (off-chain), with owernship controls for upgrades, blacklisting, and pausing.
Key Components and Functionality
SafeMath Library
- Prevents integer overflows/underflows.
- Uses
assert()instead ofrequire()(older Solidity style). - Common best practice for tokens at the time.
Ownable Contract
- Provides owner-only access control.
- Enables ownership transfer.
- Many sensitive operations gated behind
onlyOwner.
ERC20 Implementation
Tether->BasicToken→StandardToken- Custom fee logic added to
transferandtransferFrom - Implements
allowance,approve, etc. - Contains short address attack protection via
onlyPayloadSize(now obsolete in modern Solidity).
Fee Mechanism
- Controlled by:
basisPointsRate: fee in basis points (1 bp = 0.01%)maximumFee: upper cap on fee (hardcoded limits insetParams)
- Fees go to the
owner, not burned.
Pausable Functionality
pause()andunpause()byowner- Disables
transfer,transferFromwhen paused. - Useful for emergency halts.
Blacklist Mechanism
addBlackList,removeBlackList,destroyBlackFunds- Owner can zero out a blacklisted user’s balance and reduce total supply
- Very powerful, potentially controversial feature (centralized censorship)
Upgrade Mechanism
- If
deprecated == true, calls are forwarded to a new contract atupgradedAddress - At this time, enables seamless transition without forcing users to migrate. Now the proxy architecture is generally preferred.
transfer,balanceOf, etc. all redirect toUpgradedStandardToken
Minting & Burning
issue(uint amount)– owner can mint tokens to themselvesredeem(uint amount)– owner can burn their own tokens- No restrictions on minting other than overflow protections
Schema
Here an UML with all the contracts and inheritance.
The base contract, which is the final contract deployed on mainet is TetherToken
List of non-ERC20 functions
Here is the list of external and public functions which are not part of the ERC-20 standard interface.
| Function Signature | Description | Emits Event | Access Control | Defined In |
|---|---|---|---|---|
transferOwnership(address newOwner) |
Transfers ownership to a new address. | — | onlyOwner |
Ownable |
pause() |
Pauses the contract (disables key functions). | Pause() |
onlyOwner, whenNotPaused |
Pausable |
unpause() |
Unpauses the contract (restores functionality). | Unpause() |
onlyOwner, whenPaused |
Pausable |
getBlackListStatus(address _maker) |
Returns whether an address is blacklisted. | — | None | BlackList |
getOwner() |
Returns the contract owner. | — | None | BlackList |
addBlackList(address _evilUser) |
Adds an address to the blacklist. | AddedBlackList(address) |
onlyOwner |
BlackList |
removeBlackList(address _clearedUser) |
Removes an address from the blacklist. | RemovedBlackList(address) |
onlyOwner |
BlackList |
destroyBlackFunds(address _blackListedUser) |
Destroys funds of blacklisted address. | DestroyedBlackFunds(address, uint) |
onlyOwner |
BlackList |
deprecate(address _upgradedAddress) |
Marks contract as deprecated & sets new address. | Deprecate(address) |
onlyOwner |
TetherToken |
issue(uint amount) |
Mints new tokens to the owner. | Issue(uint) |
onlyOwner |
TetherToken |
redeem(uint amount) |
Burns tokens from owner balance. | Redeem(uint) |
onlyOwner |
TetherToken |
setParams(uint newBasisPoints, uint newMaxFee) |
Updates transfer fee rate and max fee. | Params(uint, uint) |
onlyOwner |
TetherToken |
Code
USDT is relatively small in term of code size, here a copy of the code:
Solidity version declaration
/**
*Submitted for verification at Etherscan.io on 2017-11-28
*/
pragma solidity ^0.4.17;
Utility
Safemath
- Purpose: Prevents overflow/underflow in arithmetic operations (
add,sub,mul,div). - Usage: Standard Solidity library for safe math; used by other token contracts for arithmetic safety.
/**
* @title SafeMath
* @dev Math operations with safety checks that throw on error
*/
library SafeMath {
function mul(uint256 a, uint256 b) internal pure returns (uint256) {
if (a == 0) {
return 0;
}
uint256 c = a * b;
assert(c / a == b);
return c;
}
function div(uint256 a, uint256 b) internal pure returns (uint256) {
// assert(b > 0); // Solidity automatically throws when dividing by 0
uint256 c = a / b;
// assert(a == b * c + a % b); // There is no case in which this doesn't hold
return c;
}
function sub(uint256 a, uint256 b) internal pure returns (uint256) {
assert(b <= a);
return a - b;
}
function add(uint256 a, uint256 b) internal pure returns (uint256) {
uint256 c = a + b;
assert(c >= a);
return c;
}
}
Ownable
Purpose: Adds an owner role with onlyOwner restrictions.
Key Functions: transferOwnership() allows changing the contract owner.
Usage: Used across all contracts to restrict sensitive actions to the contract owner (admin)
/**
* @title Ownable
* @dev The Ownable contract has an owner address, and provides basic authorization control
* functions, this simplifies the implementation of "user permissions".
*/
contract Ownable {
address public owner;
/**
* @dev The Ownable constructor sets the original `owner` of the contract to the sender
* account.
*/
function Ownable() public {
owner = msg.sender;
}
/**
* @dev Throws if called by any account other than the owner.
*/
modifier onlyOwner() {
require(msg.sender == owner);
_;
}
/**
* @dev Allows the current owner to transfer control of the contract to a newOwner.
* @param newOwner The address to transfer ownership to.
*/
function transferOwnership(address newOwner) public onlyOwner {
if (newOwner != address(0)) {
owner = newOwner;
}
}
}
UpgradedStandardToken is StandardToken (“interface”)
A contract which defined the main functions to implement an upgradeability system.
Purpose: Interface for upgraded token contract.
Usage: Allows the original contract to delegate calls to a newer version via upgrade path.
Functions: Proxy equivalents of transfer, transferFrom, approve for legacy compatibility.
contract UpgradedStandardToken is StandardToken{
// those methods are called by the legacy contract
// and they must ensure msg.sender to be the contract address
function transferByLegacy(address from, address to, uint value) public;
function transferFromByLegacy(address sender, address from, address spender, uint value) public;
function approveByLegacy(address from, address spender, uint value) public;
}
Transfer restriction
contract Pausable is Ownable
- Purpose: Adds emergency stop mechanism (
pause()/unpause()). - Usage: Disables transfers and sensitive functions while paused.
- Access: Only
ownercan pause/unpause the contract.
/**
* @title Pausable
* @dev Base contract which allows children to implement an emergency stop mechanism.
*/
contract Pausable is Ownable {
event Pause();
event Unpause();
bool public paused = false;
/**
* @dev Modifier to make a function callable only when the contract is not paused.
*/
modifier whenNotPaused() {
require(!paused);
_;
}
/**
* @dev Modifier to make a function callable only when the contract is paused.
*/
modifier whenPaused() {
require(paused);
_;
}
/**
* @dev called by the owner to pause, triggers stopped state
*/
function pause() onlyOwner whenNotPaused public {
paused = true;
Pause();
}
/**
* @dev called by the owner to unpause, returns to normal state
*/
function unpause() onlyOwner whenPaused public {
paused = false;
Unpause();
}
}
contract BlackList is Ownable, BasicToken
- Purpose: Allows the
ownerto blacklist addresses and destroy their funds. - Key Functions:
addBlackList(),removeBlackList()destroyBlackFunds()reducestotalSupplyand wipes balance.
- Criticism: This function enables censorship and fund seizure
contract BlackList is Ownable, BasicToken {
/////// Getters to allow the same blacklist to be used also by other contracts (including upgraded Tether) ///////
function getBlackListStatus(address _maker) external constant returns (bool) {
return isBlackListed[_maker];
}
function getOwner() external constant returns (address) {
return owner;
}
mapping (address => bool) public isBlackListed;
function addBlackList (address _evilUser) public onlyOwner {
isBlackListed[_evilUser] = true;
AddedBlackList(_evilUser);
}
function removeBlackList (address _clearedUser) public onlyOwner {
isBlackListed[_clearedUser] = false;
RemovedBlackList(_clearedUser);
}
function destroyBlackFunds (address _blackListedUser) public onlyOwner {
require(isBlackListed[_blackListedUser]);
uint dirtyFunds = balanceOf(_blackListedUser);
balances[_blackListedUser] = 0;
_totalSupply -= dirtyFunds;
DestroyedBlackFunds(_blackListedUser, dirtyFunds);
}
event DestroyedBlackFunds(address _blackListedUser, uint _balance);
event AddedBlackList(address _user);
event RemovedBlackList(address _user);
}
ERC-20 part
ERC20Basic
- Purpose: Simplified ERC-20 interface.
- Key Methods:
balanceOf(),transfer(),totalSupply(),Transferevent. - Usage: Base interface that all token contracts inherit from.
/**
* @title ERC20Basic
* @dev Simpler version of ERC20 interface
* @dev see https://github.com/ethereum/EIPs/issues/20
*/
contract ERC20Basic {
uint public _totalSupply;
function totalSupply() public constant returns (uint);
function balanceOf(address who) public constant returns (uint);
function transfer(address to, uint value) public;
event Transfer(address indexed from, address indexed to, uint value);
}
ERC20 is ERC20Basic
- Purpose: Full ERC-20 interface, extending
ERC20Basic. - Key Methods: Adds
approve(),transferFrom(),allowance(), andApprovalevent.
/**
* @title ERC20 interface
* @dev see https://github.com/ethereum/EIPs/issues/20
*/
contract ERC20 is ERC20Basic {
function allowance(address owner, address spender) public constant returns (uint);
function transferFrom(address from, address to, uint value) public;
function approve(address spender, uint value) public;
event Approval(address indexed owner, address indexed spender, uint value);
}
BasicToken is Ownable, ERC20Basic
Purpose: Implements ERC20Basic, provides core token logic: balances, transfer().
Features:
- Uses
SafeMathfor safe calculations. - Optional transfer fee via
basisPointsRateandmaximumFee. - Includes protection against short address attack via
onlyPayloadSizemodifier.
/**
* @title Basic token
* @dev Basic version of StandardToken, with no allowances.
*/
contract BasicToken is Ownable, ERC20Basic {
using SafeMath for uint;
mapping(address => uint) public balances;
// additional variables for use if transaction fees ever became necessary
uint public basisPointsRate = 0;
uint public maximumFee = 0;
/**
* @dev Fix for the ERC20 short address attack.
*/
modifier onlyPayloadSize(uint size) {
require(!(msg.data.length < size + 4));
_;
}
/**
* @dev transfer token for a specified address
* @param _to The address to transfer to.
* @param _value The amount to be transferred.
*/
function transfer(address _to, uint _value) public onlyPayloadSize(2 * 32) {
uint fee = (_value.mul(basisPointsRate)).div(10000);
if (fee > maximumFee) {
fee = maximumFee;
}
uint sendAmount = _value.sub(fee);
balances[msg.sender] = balances[msg.sender].sub(_value);
balances[_to] = balances[_to].add(sendAmount);
if (fee > 0) {
balances[owner] = balances[owner].add(fee);
Transfer(msg.sender, owner, fee);
}
Transfer(msg.sender, _to, sendAmount);
}
/**
* @dev Gets the balance of the specified address.
* @param _owner The address to query the the balance of.
* @return An uint representing the amount owned by the passed address.
*/
function balanceOf(address _owner) public constant returns (uint balance) {
return balances[_owner];
}
}
StandardToken is BasicToken, ERC20
- Purpose: Adds support for allowance-based transfers (
approve/transferFrom), fulfilling full ERC-20 spec. - Key Features:
allowedmapping tracks delegated spending.- Inherits from
BasicToken. - Supports unlimited allowances via
MAX_UINT.
/**
* @title Standard ERC20 token
*
* @dev Implementation of the basic standard token.
* @dev https://github.com/ethereum/EIPs/issues/20
* @dev Based oncode by FirstBlood: https://github.com/Firstbloodio/token/blob/master/smart_contract/FirstBloodToken.sol
*/
contract StandardToken is BasicToken, ERC20 {
mapping (address => mapping (address => uint)) public allowed;
uint public constant MAX_UINT = 2**256 - 1;
/**
* @dev Transfer tokens from one address to another
* @param _from address The address which you want to send tokens from
* @param _to address The address which you want to transfer to
* @param _value uint the amount of tokens to be transferred
*/
function transferFrom(address _from, address _to, uint _value) public onlyPayloadSize(3 * 32) {
var _allowance = allowed[_from][msg.sender];
// Check is not needed because sub(_allowance, _value) will already throw if this condition is not met
// if (_value > _allowance) throw;
uint fee = (_value.mul(basisPointsRate)).div(10000);
if (fee > maximumFee) {
fee = maximumFee;
}
if (_allowance < MAX_UINT) {
allowed[_from][msg.sender] = _allowance.sub(_value);
}
uint sendAmount = _value.sub(fee);
balances[_from] = balances[_from].sub(_value);
balances[_to] = balances[_to].add(sendAmount);
if (fee > 0) {
balances[owner] = balances[owner].add(fee);
Transfer(_from, owner, fee);
}
Transfer(_from, _to, sendAmount);
}
/**
* @dev Approve the passed address to spend the specified amount of tokens on behalf of msg.sender.
* @param _spender The address which will spend the funds.
* @param _value The amount of tokens to be spent.
*/
function approve(address _spender, uint _value) public onlyPayloadSize(2 * 32) {
// To change the approve amount you first have to reduce the addresses`
// allowance to zero by calling `approve(_spender, 0)` if it is not
// already 0 to mitigate the race condition described here:
// https://github.com/ethereum/EIPs/issues/20#issuecomment-263524729
require(!((_value != 0) && (allowed[msg.sender][_spender] != 0)));
allowed[msg.sender][_spender] = _value;
Approval(msg.sender, _spender, _value);
}
/**
* @dev Function to check the amount of tokens than an owner allowed to a spender.
* @param _owner address The address which owns the funds.
* @param _spender address The address which will spend the funds.
* @return A uint specifying the amount of tokens still available for the spender.
*/
function allowance(address _owner, address _spender) public constant returns (uint remaining) {
return allowed[_owner][_spender];
}
}
TetherToken is Pausable, StandardToken, BlackList
- Purpose: The actual token implementation — essentially an upgradeable, pausable, blacklisting, fee-supporting ERC-20 token.
- Inherits:
StandardTokenPausableBlackList
- Key Features:
issue()andredeem()to mint/burn tokens.setParams()to configure transfer fees.deprecate()enables upgrade to a new contract.- Implements conditional proxying to
upgradedAddressif deprecated. ownercan freeze blacklisted addresses or redirect the contract’s logic entirely.
contract TetherToken is Pausable, StandardToken, BlackList {
string public name;
string public symbol;
uint public decimals;
address public upgradedAddress;
bool public deprecated;
// The contract can be initialized with a number of tokens
// All the tokens are deposited to the owner address
//
// @param _balance Initial supply of the contract
// @param _name Token Name
// @param _symbol Token symbol
// @param _decimals Token decimals
function TetherToken(uint _initialSupply, string _name, string _symbol, uint _decimals) public {
_totalSupply = _initialSupply;
name = _name;
symbol = _symbol;
decimals = _decimals;
balances[owner] = _initialSupply;
deprecated = false;
}
// Forward ERC20 methods to upgraded contract if this one is deprecated
function transfer(address _to, uint _value) public whenNotPaused {
require(!isBlackListed[msg.sender]);
if (deprecated) {
return UpgradedStandardToken(upgradedAddress).transferByLegacy(msg.sender, _to, _value);
} else {
return super.transfer(_to, _value);
}
}
// Forward ERC20 methods to upgraded contract if this one is deprecated
function transferFrom(address _from, address _to, uint _value) public whenNotPaused {
require(!isBlackListed[_from]);
if (deprecated) {
return UpgradedStandardToken(upgradedAddress).transferFromByLegacy(msg.sender, _from, _to, _value);
} else {
return super.transferFrom(_from, _to, _value);
}
}
// Forward ERC20 methods to upgraded contract if this one is deprecated
function balanceOf(address who) public constant returns (uint) {
if (deprecated) {
return UpgradedStandardToken(upgradedAddress).balanceOf(who);
} else {
return super.balanceOf(who);
}
}
// Forward ERC20 methods to upgraded contract if this one is deprecated
function approve(address _spender, uint _value) public onlyPayloadSize(2 * 32) {
if (deprecated) {
return UpgradedStandardToken(upgradedAddress).approveByLegacy(msg.sender, _spender, _value);
} else {
return super.approve(_spender, _value);
}
}
// Forward ERC20 methods to upgraded contract if this one is deprecated
function allowance(address _owner, address _spender) public constant returns (uint remaining) {
if (deprecated) {
return StandardToken(upgradedAddress).allowance(_owner, _spender);
} else {
return super.allowance(_owner, _spender);
}
}
// deprecate current contract in favour of a new one
function deprecate(address _upgradedAddress) public onlyOwner {
deprecated = true;
upgradedAddress = _upgradedAddress;
Deprecate(_upgradedAddress);
}
// deprecate current contract if favour of a new one
function totalSupply() public constant returns (uint) {
if (deprecated) {
return StandardToken(upgradedAddress).totalSupply();
} else {
return _totalSupply;
}
}
// Issue a new amount of tokens
// these tokens are deposited into the owner address
//
// @param _amount Number of tokens to be issued
function issue(uint amount) public onlyOwner {
require(_totalSupply + amount > _totalSupply);
require(balances[owner] + amount > balances[owner]);
balances[owner] += amount;
_totalSupply += amount;
Issue(amount);
}
// Redeem tokens.
// These tokens are withdrawn from the owner address
// if the balance must be enough to cover the redeem
// or the call will fail.
// @param _amount Number of tokens to be issued
function redeem(uint amount) public onlyOwner {
require(_totalSupply >= amount);
require(balances[owner] >= amount);
_totalSupply -= amount;
balances[owner] -= amount;
Redeem(amount);
}
function setParams(uint newBasisPoints, uint newMaxFee) public onlyOwner {
// Ensure transparency by hardcoding limit beyond which fees can never be added
require(newBasisPoints < 20);
require(newMaxFee < 50);
basisPointsRate = newBasisPoints;
maximumFee = newMaxFee.mul(10**decimals);
Params(basisPointsRate, maximumFee);
}
// Called when new token are issued
event Issue(uint amount);
// Called when tokens are redeemed
event Redeem(uint amount);
// Called when contract is deprecated
event Deprecate(address newAddress);
// Called if contract ever adds fees
event Params(uint feeBasisPoints, uint maxFee);
}
Security and Centralization Concerns
Centralization risk
USDT is a centralized stablecoin as shown in the following table:
| Feature | Centralization Risk? | Notes |
|---|---|---|
pause() |
☑ | ☑Owner can halt all transfers |
blacklist & destroyBlackFunds |
☑ | ☑Owner can confiscate user funds |
issue() / redeem() |
☑ | ☑Mint and burn at will by owner |
deprecated upgrade path |
☑ | ☑Users can’t opt out of upgrade |
fees |
☑ | ☑Can be changed within limits by owner |
Protection
Fix for ERC20 Short Address Attack” — No Longer Needed
What was it?
Early Solidity versions (before ~0.5.0) had a problem where malformed transaction payloads (i.e., too short) could be interpreted incorrectly. This was called the short address attack, particularly relevant to transfer(address,uint) functions.
The Fix:
onlyPayloadSize(uint size) {
require(msg.data.length >= size + 4);
_;
}
This ensured the correct number of bytes were passed in.
Why it’s no longer needed:
- Solidity ≥ 0.5.0 introduced ABI decoding with strict size checks, automatically reverting if the input data length is incorrect.
- This makes
onlyPayloadSize()obsolete in modern Solidity versions. - The compiler also adds checks behind the scenes during external function calls.
Use of SafeMath Library — Optional in Solidity ≥ 0.8.0
What was it?
SafeMath was used to prevent integer overflow and underflow (e.g., a + b exceeding uint256 limits).
SafeMath usage:
using SafeMath for uint256;
uint256 c = a.add(b);
Why it’s no longer needed:
- Solidity 0.8.0 and above includes built-in overflow/underflow checks.
- So operations like
a + b,a - b, anda * bautomatically revert on overflow/underflow. - This makes
SafeMathredundant nowadays
Summary Table
| Old Practice | Why It Was Needed | Why It’s Now Obsolete |
|---|---|---|
onlyPayloadSize() |
Prevent short address attack in old Solidity | Solidity ≥0.5.0 has built-in input length checks |
SafeMath |
Prevent overflows/underflows | Solidity ≥0.8.0 has native overflow protection |
Main points
- Full-featured ERC20 with:
- Fee support
- Emergency pause
- Upgradeability
- Mint/burn
- Modular and extensible code
- Built-in blacklist & security controls for issuer
Propreties
- Owner has sweeping power (mint, freeze, confiscate, halt)
- Security mechanisms (like short address attack prevention) are outdated
- Obsolete Solidity version (v0.4.x lacks modern language features like
revert()andsafe constructors) - No use of events in critical areas like
transferin upgraded contract - Deprecation relies on trust in
upgradedAddressimplementation
Summary
This is a classic example of a custodial/centralized stablecoin with:
- Centralized control over minting, upgrades, and user balances.
- A practical, but trust-heavy implementation.
- Solidity code presents a reasonable structure for 2017, but not aligned with modern solidity code
Reference
- USDT mainet contract address: 0xdac17f958d2ee523a2206206994597c13d831ec7
- ChatGPT for the analyse