Tether's Stablecoin Dominance Threatened? USDC Market Share Surges, Dominating Ethereum DeFi Ecosystem
The dominant position of USDC in the Ethereum ecosystem is becoming more prominent, coupled with the launch of new products by Compound and Coinbase, the market share of USDT may fall below 50% in the coming weeks.
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USDC Market Share Continues to Rise
According to data released today by Messari researcher Ryan Watkins, the stablecoin market share of USDT on the Ethereum chain has been declining since May.
In coming weeks it is very likely USDT’s share of the stablecoin supply on Ethereum will fall below 50% for the first time.
USDC is quickly emerging as the dominant stablecoin on Ethereum in large part due to its growing role in DeFi.
— Ryan Watkins (@RyanWatkins_) June 29, 2021
Ryan Watkins even asserts that the market share of USDT on the Ethereum chain may fall below 50% in the coming weeks, primarily due to the increasingly prominent position of USDC in the Ethereum ecosystem.
Furthermore, according to Glassnode data, around 50% of the current USDC circulating supply (equivalent to approximately $12.5 billion) is held in smart contracts. Although USDC lags behind DA in terms of percentage, in terms of asset value, USDC is the most widely used stablecoin in the DeFi ecosystem. Nearly half of it is locked in decentralized lending protocols such as MakerDao, Compound, and Aave, accounting for about 23% of the USDC supply.
According to reports, the decentralized lending protocol Compound announced a partnership with Fireblocks and Circle yesterday to launch a new product called Compound Treasury, designed for Neobanks, fintech startups, and other large USD holders. This product can automatically convert fiat currency deposits into USDC and earn a 4% annualized return when deposited into the Compound protocol. On the other hand, the U.S. exchange Coinbase also announced today that it will launch a fixed annualized savings product based on USDC for retail investors. With the adoption of these partners, it can be expected that the share of USDC in DeFi will rapidly increase in the coming months.
USDC Expanding to More Blockchains
In addition to the Ethereum blockchain, USDC issuer Center is actively integrating with other blockchains. According to the latest press release from Center, the company plans to issue USDC on blockchains such as Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos, and Tron in the coming months. The company stated in the press release:
"We are excited to collaborate with the project teams and communities of the above blockchain platforms. Each team has outstanding technical capabilities that make it possible for the public and enterprises to achieve high-speed value transfer via the internet. We expect that USDC on these blockchain platforms and multi-chain protocols will further accelerate its global adoption worldwide."