Stablecoin USDC Popularity Increases as Transaction Volume Surges
Stablecoin Glassnode, a blockchain analytics company, reports that USD Coin’s daily transaction volume is typically four to five times that of its primary rival Tether. USD Coin’s popularity has increased following the demise of FTX.
Despite USDT’s market capitalization being $23 billion more than USDC’s, this is the case. A four-and-a-half-fold advantage favored USDC as of January 10th. After an infamous statement from Binance CEO Changpeng Zhao on November 6 indicating that Binance will sell its complete FTX Token holdings, transaction volumes for both stablecoins increased. FTX declared bankruptcy shortly afterward.
Since then, USDC has surpassed USDT in daily transfer volume by an average of $12.5 billion, according to statistics from Glass node. While all stablecoins are meant to trade as closely as possible to one US dollar and are guaranteed by reserves held by their issuers, some in the cryptocurrency community see USDC as a potentially safer choice.
USDC’s assets are secured by cash or short-term US treasuries, and its monthly audits are conducted by the worldwide accounting firm Grant Thornton. Tether has been criticized for not delivering a full audit and for being insufficiently forthcoming about its holdings for a period of years.
The business behind USDT was penalized $41 million by the Commodity Futures Trading Commission in October 2021 for only having adequate reserves of 27.6% of the period between 2016 and 2018 while stating that their tokens were completely backed by fiat currency.
Tether has been lowering the commercial paper supporting its issued tokens in favor of safer options, with the 10th of November’s asset breakdown revealing that approximately $46 billion of its holdings comprise of cash, bank deposits, and U.S. treasuries. Following the fall of FTX, USDT momentarily broke its peg to the U.S. dollar on worries that it was tied to Alameda Research and FTX, which Tether disputed.
On-chain evidence indicates that the two companies attempted to short the stablecoin. Tether raised the supply of USDT from $8.79 billion to $61.82 billion during the last year, signifying a 603% growth. As a result, USDT had much greater transfer volumes than USDCs until May 2021.
Notwithstanding the following shift in consumer choices, Tether cited the increase in market cap as evidence of “the market’s sustained trust and faith in Tether” and stated that each token may be exchanged for one dollar.