USDT (Tether) has been the dominant stablecoin for some time now, consistently being ranked among the top cryptocurrencies in the world in terms of market capitalization. Right now, it is ranked as the 3rd biggest crypto by market cap, surpassed only by Ethereum (ETH) and Bitcoin (BTC), respectively. However, this does not mean that there aren’t viable alternative stablecoins available. These include the likes of DAI and USDC, the latter of which seems likely to ultimately replace USDT as the main stablecoin on Ethereum before long.
This is because the USDT supplies on Ethereum have been steadily decreasing, whereas the demand for USDC has been gradually growing. Furthermore, USDC has, in fact, exhibited a much larger as well as faster growth than that of USDT this year, and many investors and prominent figures in the world of decentralized finance are slowly moving away from Tether in favour of USD Coin.
USDC consumed much of USDT’s market in 2021
As per the reports provided by Messari, USDC’s demand had increased by such a massive amount that it had even managed to consume a sizable portion of USDT’s market share in 2021. Ryan Watkins, a prominent researcher, believes that within the next few weeks, USDT’s share of the overall supply of stablecoins on Ethereum could dip beneath 50%. He then stated that more than 50% of the overall USDC supply is currently sitting in smart contracts, an amount that is worth just about $12.5 billion. Of this, over 40% of USDC is currently on Ethereum.
He concluded by claiming that USDC has every chance of becoming the most dominant stablecoin today, and this is due primarily because of the aforementioned growth on both Ethereum as well as in DeFi in general.
The future is USDC
Ryan had additionally claimed that USDC is now the main dollar-pegged asset of choice that is being staked in various smart contracts within different DeFi protocols. While the percentage may not be as high as that of the DAI stablecoin, USDC nevertheless leads the charge by a significant margin in terms of the U.S dollar, and many thus believe it to be the new preferred stablecoin for now.
Moreover, the fact that Coinbase had even gone out of its way to reveal that a 4% interest would be paid by the cryptocurrency exchange on USD Coin holdings only cemented the fact that USDC may have already overtaken USDT and could be the primary stablecoin going forward.