USDC has grown much faster than Tether (USDT) in 2021 and is emerging as the dominant stablecoin on Ethereum thanks to its popularity on DeFi according to Messari.
Research by the analytics firm revealed that the demand for USD Coin has grown so much that it has consumed a large chunk of Tether’s market share this year.
Researcher Ryan Watkins predicted that in the coming weeks, this could result in Tether’s share of stablecoin supply on Ethereum falling below 50%.
He added that more than half of USDC’s total supply is now in smart contracts, which is equivalent to around $ 12.5 billion. Citing data from CoinMetrics, Messari estimates that over 40% of the stablecoin supply on Ethereum is USDC.
In the coming weeks, it is highly likely that USDT’s share of the stablecoin supply on Ethereum will drop below 50% for the first time.
USDC is rapidly emerging as the dominant stablecoin on Ethereum, largely due to its growing role in DeFi.
– Ryan Watkins (@RyanWatkins_) June 29, 2021
Watkins stated that the Circle stablecoin has now become the preferred dollar-linked asset in smart contracts on DeFi protocols.
“Although this percentage is not as high as DAI, the USDC leads by a wide margin in dollar terms and has become the preferred stablecoin in DeFi for now.”
USDC’s supply has increased by more than 1,820% since early 2021, when there were only 1.3 billion in circulation. Currently, the supply of the stablecoin is at a record 25 billion according to Circle.
Related: Circle enables seamless USDC-USD transfers, providing a bridge from banks to DeFi
According to the transparency of Tether report, there are 62.7 billion USDT in circulation, an increase of about 200% from the beginning of the year. Of that total, 30.9 billion are currently on the Ethereum network, a figure that has been dropping regularly this year as high network fees have hampered transactions.
The researcher reported that the DeFi MakerDAO, Compound and Aave lending protocols are the largest consumers of USDC, with about 23% of the total supply.
He added that the trend is likely to continue with the pending launch of Compound Treasury, a new product offering a 4% interest in USDC to institutions, and initiatives focused on Circle’s DeFi API, a new platform to facilitate operations of DeFi for business.
Earlier this week, US cryptocurrency exchange Coinbase also announced that it would pay 4% interest on USDC holdings, adding further momentum to the stablecoin.