Messari: USDC becomes the “dominant” stablecoin on Ethereum

The supply of tether on Ethereum is dwindling as the demand for USD coins grows and is greater than ever.

USDC grew much faster than Tether (USDT) in 2021 and is becoming the dominant stablecoin on Ethereum thanks to its popularity in DeFi.

Research by the analysts found that the demand for USD coins has increased tremendously, consuming a large part of Tether’s market share this year.

Researcher Ryan Watkins predicts that this could lead to Tether’s share of the stablecoin supply on Ethereum falling below 50% in the coming weeks.

He added that more than half of the total USDC supply is now in smart contracts, or about $ 12.5 billion. Citing data from CoinMetrics, Messari estimates that over 40% of the stablecoin supply is on Ethereum USDC.

In the coming weeks, it is very likely that USDT’s share of the stablecoin supply on Ethereum will drop below 50% for the first time.

USDC is quickly becoming the dominant stablecoin on Ethereum, in large part due to its growing role in DeFi.

first/ pic.twitter.com/LklIUagMWj

– Ryan Watkins (@RyanWatkins_) June 29, 2021

Mr Watkins stated that the Circle stablecoin has now become the preferred USD-denominated asset in smart contracts in DeFi protocols.

“Although this percentage is not as high as that of the DAI, USDC leads by a large margin in USD and has so far been the preferred stablecoin in DeFi.”

USDC supply has grown more than 1.820% since early 2021, when only $ 1.3 billion was floating. Currently, the stablecoin supply is at a record 25 billion, according to Circle.

There are $ 62.7 billion in circulation, according to Tether’s transparency report, up around 200% since the start of the year. Of those, 30.9 billion are currently on the Ethereum network, a number that has steadily declined this year as high network fees have hampered transactions.

The researcher reports that the MakerDAO, Compound and Aave DeFi loan protocols are the largest consumers of USDC, accounting for about 23% of the total supply.

This trend is likely to continue with the upcoming launch of Compound Treasury, a new product that offers institutions 4% interest on USDC, and initiatives focused on Circle’s DeFi API, a new platform for businesses to easily run DeFi.

Earlier this week, the US crypto exchange Coinbase also announced that it would pay 4% interest on USDC holdings, which will give the stablecoin a further boost.

Synthetic

You may be interested in: