USDC on Ethereum: why this could pose a threat to this alt

With a market cap of $ 62.75 billion at press time, Tether, or USDT, was the third most valuable crypto asset in the market. USDC, the other big stablecoin in the top 10, ranked 8th with a market cap of ~ $ 25 billion. While USDT is ~ 2.6x the valuation, USDC is slowly climbing the ladder in terms of utilization.

In this article, we have identified the latest developments that underscore how the USDC has managed to close the gap with the USDT over the past few months.

Ethereum and DeFi: How does USDC step out of the shadow of the USDT?

In the past few months, USDT’s stablecoin supply on Ethereum has plummeted, and USDC has slowly taken up more space. USDC’s growth is also due to its growing influence with DeFi assets.

Source: Glassnode

Currently, according to data, ~ 50% of USDC supply is sitting on smart contracts, which are valued at approximately ~ $ 12.5 billion. In comparison, only 20% of the USDT is currently locked under smart contracts. However, it’s important to highlight the fact that as of October 2020, USDC had nearly 58% pegged to smart contracts while USDT was only 9%. USDT tied to smart contracts has gradually increased while USDC’s situation has been much more turbulent.

In terms of DeFi assets, MakerDAO, Compound, and AAVE are USDC’s largest accumulators, holding 23% of the supply.

On the surface, this may look like a gain for USDC versus USDT, but we have to consider the situation that USDC is a fully centralized stablecoin. It is controlled by Coinbase and Circle and DeFi is not intended to be dependent on centralized entities. On this scale, USDT is also centralized, but there are fragments of decentralization within Tether, making it less centralized compared to USDC.

Is the competition real regarding USDC’s acquisition of USDT?

It’s not even close at the moment. The amount of liquidity that is put into key assets like Bitcoin, Ethereum by USDT is enormous. According to, the magnitude of the volumes flowing in and out of these assets is amazingly dominated by Tether.

ETH volumes

BTC volume

USDT is currently responsible for $ 8.85 billion of BTC trading volume, while $ 4.94 billion is associated with Ethereum. Right now there is a drastic difference between the capital flows that control USDT and USDC. USDC’s increasing stablecoin supply position in Ethereum doesn’t exactly threaten Tether’s long-term dominance.

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