Stablecoin, USDC Becoming Favorite on Ethereum Network, Says Messari
Research analytics firm Messari in a new report has speculated that stablecoin, USDC may become the face of the Ethereum network with respect to Decentralized Finance (DeFi). The USD coin has experienced exponential growth since the start of 2021 beating the UDST in a race to dominance. The report further stated that USDT may be overtaken by the former as it becomes the favorite for DeFi activities on Ethereum.
The USD Coin is a token built on the Ethereum network and pegged to the US Dollar. The USDC can be exchanged for the US Dollar on a 1:1 standard. Circle, a cryptocurrency firm is behind the stablecoin. The USDC is regulated by financial authorities and likewise backed with full reserve assets. USDC is currently the second most popular stablecoin; its market cap is at $25.14 billion with a total supply of $25.15 billion.
The first three weeks after the USDC was issued, it’s trading volume skyrocketed, both centralized and decentralized exchanges. Activities on the DeFi space have contributed massively to the stablecoin. It has become the most preferred stablecoin for DeFi traders on some decentralized exchanges such as Curve, Compound and UniSwap. The stablecoin has amassed usage on other blockchains as well, including Solana and Stellar.
USDC
According to reports issued by Messari, the USDC has gulped a large part of the USDT’s market share owing to its exponential growth. Crypto Researcher Ryan Watkins posited that the supply of USDT on the Ethereum network could plunge below 50%. The USDC is an open source and smart contract-based stablecoin, thus, half of its cumulative supply now resides on smart contracts. Data from another crypto analytics firm, CoinMetrics reveals that above 40% of the total digital stablecoin supply on Ethereum is the USDC. Reports further show that the stablecoin has now become the most traded dollar-backed asset on automated market makers (AMMs).
Supply of USDT which stands at 62.7 billion has seen a decline in the past few months owing to exorbitant gas fees on the Ethereum network. A little above half of the first stablecoin is now trading on the network. On the other hand, the USDC is most traded on Compound, Aave and MakerDAO, which makes them the largest consumers of the stablecoin. The share of the three lending protocols is represented as 23%.
Coinbase Offers Users 4% APY on USDC Holdings
Meanwhile, Coinbase recently offered to reward with a 4% annual percentage yield USDC holders on the exchange. This announcement added to the growth of the stablecoin. Coinbase initially paid 1.25% to USDC holders before reducing to 0.15%. With more USDC-based projects looming, it won’t be long before the stablecoin overtakes its counterpart as regards the total supply.
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