Key takeaways
- USDC closes Ethereum stablecoin market gap on Tether
- Half of USDC circulating supply locked in Smart Contracts
- Tether reserves on Ethereum reducing due to high network fees
The report suggested that the reason for USDC growth is due to its popularity in DeFi. The DeFi boom in the past 12 months has resulted in more users buying USDC as they look to take advantage of yield farming and liquidity mining opportunities. It also noted that more than half of the total USDC in circulation is locked in Smart Contracts, highlighting its growing importance in DeFi.
This increase in demand has seen USDC reduce Tether's market share, which could have major consequences for the stablecoin market. The report cited data from CoinMetrics and suggested that about 40% of the total stablecoin on Ethereum is in USDC.
Blockchain Researcher Ryan Watkins in a tweet, suggested that Tether’s market share in the Ethereum stablecoin market could fall below 50% before the end of the year. He also stated that although the total amount of USDC staked in smart contracts was not as high as DAI. It is turning to the stablecoin of preference for staking in smart contracts.
The total supply of USDC is around $25 billion, which is an increase of over 1600% from January 2021 when there was only $1.3billion in circulation. Tether has also grown by 200% during this period but has witnessed a decline in the Ethereum blockchain.
This is primarily due to the well-documented high network fees on the Ethereum blockchain, with many moving their USDT to TRC-20 and BEP20 networks. USDC growth has also been spurred by recent news from crypto exchange giant Coinbase which revealed that it would pay 4% interest on USDC holdings.
Do you think USDC can overtake USDC as the leading stablecoin in the crypto market?
