Stablecoin Shakeup: USD Coin Overtakes Tether on Ethereum

The stablecoin market has undergone a shakeup as USD Coin (USDC) has overtaken USD Tether (USDT) on the Ethereum blockchain.

As per the latest weekly report from Arcane Research, USDC has now become the largest stablecoin on the ETH chain, surpassing USDT.

A “stablecoin” is a type of crypto token that has its value tied to a fiat currency. Due to this fact, these coins don’t suffer from much volatility, hence their name. Though it must be mentioned that their value isn’t actually fixed, any depreciation or appreciation in fiat carry over to them by nature.

These coins can be minted on many blockchains, but the Ethereum chain has been the most popular option for it since years now.

Tether and USD Coin are two of the biggest stablecoins in the market right now. And while USDC supply has overtaken USDT on the ETH network, USDT is still the largest fiat token overall,

Here is a chart that shows how the supply of the two biggest stablecoins on Ethereum has changed over the past year:

As you can see in the above graph, USD Coin has just surpassed the supply of Tether on the Ethereum blockchain.

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Over the course of 2021, USDC’s supply grew three times faster than USDT’s. Decentralized Finance (DeFi) has been the main push behind this growth of the coin.

In USDT’s case, the driver behind its growth has been centralized exchanges and institutions. This is why the graph for Tether’s supply shows it moving up in big steps; these organizations usually mint these coins in large bursts.

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On the other hand, USD Coin’s supply curve has a more natural growth to it because of crypto traders using it for DeFi.

The report predicts that USDC will surpass USDT to become the biggest stablecoin overall in 2022 as its growth has been much faster recently.

At the time of writing, Ethereum’s price floats around $3.1k, down 3% in the last seven days. Over the past month, the crypto has lost 20% in value.

The below chart shows the trend in the price of ETH over the last five days.

Ethereum has been in consolidation for a while now, as has been most of the crypto market. At the moment, it’s unclear when the coin may be able to escape from this sideways movement.