The underlying potential of Circle’s stablecoin USDC is seeing it swell above other dollar-backed currencies on the ETH network. Its popularity in the Ethereum decentralized finance sector (DeFi) has overshadowed Tether as well. DeFi lending platforms consume over 23 percent of the total USDC circulating supply.
In contrast, Tether supply and popularity are thinning down. The stablecoin that has been accused severally of transparency issues has over 62.7 billion units of it in circulation. Although this figure represents a 200 percent increase at the start of the year, the supply of it on the ETH network is decreasing rapidly.
Messari, an analytics firm, indicated that the supply of USDC to smart contracts is around $12.5 billion. The demand for the stablecoin is overwhelming and right now has over 40 percent of its supply sitting on the Ethereum network.
As USDC becomes the favorite of DeFi users, the circulating supply of its close rival Tether is expected to fall by 50 percent on Ethereum. Ryan Watkins predicts this scenario to occur in the coming weeks.
Why USDC’s Popularity is Growing
USDC at the start of the year trailed behind Tether’s USDT. Nevertheless, the significant fondness for the stablecoin was always seen. In effect, the dollar-pegged coin was seen as a good substitute for its controversial competition.
Tether ever since inception has only filed a transparency report once – in May 2021. However, the reverse is the case with USDC which always files in reports regularly but was late to file last month. The effect of this contributed to its growth within the year as it smashed a remarkable 1,820 percent from 1.3 billion circulating supply to 25 billion.
Also adding to its growing momentum, Coinbase revealed this week that it would be dishing out four percent interest to holders. Essentially, the goal of the stablecoin is to dominate the DeFi market and the actualization of this is not far in sight.