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As Circle’s $USDC has lost ground, Tether-issued $USDT is now the dominant stablecoin on both Ethereum and Polygon.
Tether gains dominance on Ethereum, Polygon
Regulatory FUD from the US government has helped catalyze a regime change in the world of cryptocurrency stablecoins, as $USDC has lost its dominant position to $USDT on both the Ethereum and Polygon blockchains.
The collapse of Silicon Valley Bank on March 11 certainly shook crypto holders’ faith in the stability of $USDC (at least in the very short term), as it was revealed that $USDC issuer Circle had more than $3 billion in reserves stored at the failed financial institution. $USDC suffered a large but brief decoupling and it regained the $1 value a few days later as Circle executives were able to reassure investors that the SVB collapse did not affect their ability to maintain the 1:1 support for the stablecoin .
The apparent irony is that US regulators’ statements and actions against stablecoins (especially $BUSD) have encouraged crypto holders to abandon stablecoins from US-regulated issuers (such as Paxos and Circle) in favor of issuers such as Tether that are not subject to US regulations. .
According to DefiLlama, $USDC lost its dominant position on Ethereum to $USDT on March 18, a week after the SVB debacle. $USDc had led the multitude of stablecoins on Ethereum since early 2022. However, $USDT rose to the top spot as it benefited from investors switching out of $USD and since December 2022, $BUSD.
The narrative of Polygon is different, but has the same result: $USDT has surpassed $USDC as the dominant stablecoin on the Ethereum sidechain.
The wrinkle in the story, however, is that $BUSD’s market share on Polygon was never significant; $USDC had always been the dominant stablecoin on Polygon; and $USDT’s ascension came at the expense of $USDC and $DAI.
Perhaps most importantly, $USDT outperformed $USDC on Polygon on March 2, according to DefiLlama, more than a week before SVB’s failure accelerated the abandonment of $USDC.
Overall, $USDT has strengthened its grip on the entire USD stablecoin market, increasing its share of stablecoin holdings on all blockchains from less than 50% to nearly 60% since the beginning of the year.
The Tether-issued stablecoin accounts for nearly all of the stablecoin holdings on Tron and is quickly gaining even more ground on the BNB Chain as $BUSD is phased out.
One area where $USDC has maintained its advantage over $USDT is on the rapidly growing Arbitrum blockchain, where $USDC has 63% of the stablecoin market.
What is Ethereum:
Ethereum is an open source, distributed computing platform based on blockchain technology that can execute smart contracts – that is, the terms written in the contract will be executed transparently, automatically when the previous conditions are met, and no one can interfere. At the same time, Ethereum also allows developers to build decentralized applications (DApps) and decentralized autonomous organizations (DAOs).
Find more about Ethereum here:
Website | Twitter | Documentation | White Paper | Reddit | Discord | Youtube | GitHub | Ethereum Foundation Blog |
What is polygon:
Polygon is a “sidechain” scaling solution that runs alongside the Ethereum blockchain – allowing for fast transactions and low fees. MATIC is the network’s native cryptocurrency, used for fees, stakes and more. The effectiveness of Polygon as an alternative to Ethereum has seen existing projects such as Aave and Curve adopt its chain.
For more on Polygon:
Website | Twitter | GitHub | Reddit | YouTube
