TetherThe world’s most popular stablecoin, reclaimed its peg at the dollarAfter more than $3B worth of tokens were removed from the system, it took just one day.

The cryptocurrency — which is meant to always be worth $1 — sunk as low as 95 centsIt failed to reach its dollar target on Thursday.

Friday’s trading of tether had stabilized at $1, relieving investors’ concerns about possible Crypto Market Contagion due to Terra’s collapse.

TerraUSDUST (or UST) is a different cryptocurrency than tether because it uses a complicated mix of code as well as a sister token named luna to stabilise its price. This was partly collateralized by billions of dollars’ worthBitcoin.

The Tether alternative is meant to be secured by cash and short-term obligations. These debts are equivalent to the amount that users deposit. These assets are kept in reserve by the company with the same name.

Tether is essentially a crypto investor’s bank account. Often, they turn to it in turbulent market times. A lot of bitcoin trading takes place in tether.

Now, Tether has an estimated $79.5 Billion in circulating supplies. That’s down from $82.9B 24 hours prior. The company that created it handled over $3B in redemptions in a matter of hours.

Quantum Economics’ CEO Mati Greenspan said that Terra had “shaken the confidence” in crypto markets trusting other stablecoins such as tether.

“The DeFi [decentralized finance]Market has a lot riding on stablecoins. If things don’t stay stable it can be catastrophic for the entire industry,” he stated.

Tether’s chief tech officer Paolo Ardoino used Twitter to calm investors and assure them about the security of their stablecoin.

“We had about $3 billion [in]”Redeemments were made and these were quickly liquidated through our bank channels,” Ardoino stated in a one-hour-long Twitter Spaces audio conversation on Thursday.

His redemption requests were as small as $100,000 up to $600 millions, he said.

Ardoino explained that Terra’s UST had a problem because of its rapid growth.

He said, “It’s all fun until you become a $10B stablecoin.” “Until you’re a $5-10 billion stablecoin and have liquidations, because you are backed with some luna, you can still absorb it, maybe even probably, by the crypto markets.”

Ardoino said, “But if we start doubling our size to $20 billion stablecoin… the market cannot absorb this type of liquidations.”

Tether’s peg to dollar has been questioned for years. Tether previously stated that all tokens it issued were supported by one dollar from a reserve.

However, after a settlement with the New York attorney general, it was revealed that Tether held a range of other assets — including commercial paper, a form of short-term, unsecured debt — to back its token.

Since its inception, Tether has been around reduced how much commercial paper it holds and says it plans to lower the amount further over time. Tether has more assets than 52% in U.S Treasury bills. The amount will increase further when Tether announces the breakdown its reserves.