USDC Rises: Strengthening DeFi Dominance, USDT Share May Fall Below 50%

Recently, an analyst pointed out that the supply share of USDT stablecoin on Ethereum may fall below 50% for the first time in the coming weeks. Meanwhile, USDC is rapidly becoming the dominant stablecoin on Ethereum, primarily due to its increasing importance in the Decentralized Finance (DeFi) space.

Data shows that over 50% of the USDC supply (approximately $12.5 billion) has entered smart contracts. Although this percentage is lower than DAI, in terms of USD value, USDC is far ahead. Considering that DAI's collateral also includes other assets, USDC has now become the most popular stablecoin choice in the Decentralized Finance ecosystem.

Among the main users of USDC, lending protocols such as MakerDAO, Compound, and Aave hold approximately 23% of the USDC supply. Among these protocols, MakerDAO primarily supports the price stability of DAI through its stable module, while in Compound and Aave, users deposit USDC into the protocol to earn yields.

Recently, Compound Labs announced the establishment of a new company, Compound Treasury, which collaborates with other fintech companies to allow emerging banks and fintech firms to convert US dollars into USDC. These USDC tokens will be deployed on Compound with a guaranteed interest rate of 4%. This initiative streamlines the process for traditional financial institutions to participate in Decentralized Finance, and is expected to attract more US dollar liquidity into the DeFi ecosystem.

However, with the continuous development of Decentralized Finance, the industry has begun to pay attention to the degree of reliance on centralized stablecoins. Although centralized stablecoins provide liquidity to Decentralized Finance and help avoid volatility, this is not a long-term solution.

DAI, as a decentralized stablecoin, although it only accounts for 8% of the market share, provides some insights into addressing this issue. However, it is worth noting that DAI's stabilization mechanism is increasingly reliant on USDC.

Currently, there are no other decentralized stablecoin projects that have been able to replicate the success of MakerDAO, but the industry is actively exploring various decentralized stablecoin design solutions. Some of the most innovative proposals even suggest completely breaking free from dependence on the US dollar.

Nevertheless, decentralized stablecoins represented by DAI remain one of the important cornerstones for the healthy development of the DeFi ecosystem. With technological advances and market maturation, decentralized stablecoins are likely to play an even more important role in the future DeFi ecosystem.