Wednesday, September 27

USDC flips Tether on the Ethereum network

Circle’s USDC stablecoin has just achieved a major milestone as the second most capitalized stablecoin just flipped Tether’s USDT stablecoin in total supply on the Ethereum Network.

USDC’s current supply on the Ethereum network as of writing is 40.06 billion tokens, just ahead of USDT’s supply of 39.82 billion.

Tether has been the most popular stablecoin since 2016, after originally sharing the market with BitUSD and NuBits (USNBT) stablecoins when they launched in 2014. USDC emerged in 2018 as a more transparent and more regulated competitor to Tether, which has been under a cloud for years due to doubts over its backing.

What you should know

  • Although USDT is still the most popular stablecoin with a total supply of 78.5 billion, nearly 50% of the supply or 38.7 billion tokens, is on the Tron blockchain network. However, supplies of USDT can also be found on BSC, Solana, Huobi ECO Chain, Avalanche, Polygon, and 13 other chains or layer 2 solutions. The current total supply for USDC is approximately 45.8 billion tokens across 21 chains or layer-two solutions.
  • Doubts over Tether’s backing has caused its public image to decline over the years. Controversy has plagued the company over how the stablecoin is collateralized and how its reserve funds are managed. There have been several reports to this, including a powerful expository by Bloomberg’s Zeke Faux, titled, “Anyone Seen Tether’s Billions?”
  • The issuance of two Consolidated Reserves Reports about Tether’s financial reserves from accounting firm Moore Cayman in 2021 did little to quell the doubters. In its latest financial report, Tether revealed that it holds $30.8 billion in unspecific commercial paper in addition to other assets backing USDT.
  • Circle has been more transparent about its reserves, though not to the extent some critics demand. In August 2021, Coinbase President Emilie Choi said that the USDC reserves backing the second-largest stablecoin in the market would shift entirely to cash and US Treasury bonds. This did indeed happen in October 2021, according to an Independent Accountant’s Report done by Grant Thornton.
  • Coinbase is a close partner with Circle, a digital payment service, which helped launch USDC in October 2018. Circle is backed by Bitmain, China Everbright Bank, and eight others.

It has been supportive of efforts to solidify a regulatory framework for all stablecoins. Circle CEO, Jeremy Allaire supported a November 2021 Biden Administration proposal to treat stablecoin issuers similarly with banks. Allaire also attended a Congressional hearing with several top crypto industry leaders in December 2021 to discuss policy direction with the Financial Services Committee.

Centralized stablecoins USDT, USDC, and BUSD are currently the top three in their category, however decentralized stablecoin options have begun to proliferate. TerraUSD (UST) is the fourth largest stablecoin but is the fastest-growing since November 2021. Since then, it has surpassed Magic Internet Money (MIM) and DAI (DAI) and achieved a $10.7 billion market cap.