Circle’s USDC remains dominant in the decentralized financial economy as aftershocks from SVB collapse subside

Circle-issued USDC has maintained its status as the decentralized finance (DeFi) dominant stablecoin as the aftershocks from the collapse of its key banking partner earlier this month subside, crypto analysts told CoinDesk.

USDC has regained its stake in the DeFi protocol Curves 3pool exchange pool, a key infrastructure to support trading of stablecoins. The increase suggests pressure has eased on the token, noted Riyad Carey, research analyst at digital asset data platform Kaiko.

The pool, which has around $440 million in assets, is an important platform within the DeFi ecosystem, where crypto investors can exchange USDT, USDC and DAI stablecoins. Curve pools also act as an exit door during times of stress in crypto markets.

On March 10, USDC suffered from the sudden implosion of its reserve bank partner Silicon Valley Bank. The collapse rocked the stablecoin market, causing several tokens to temporarily deviate from the price peg, including USDC and DAI.

Anxious traders raided the pool to ditch USDC and DAI tokens and flocked to the supposed safety of the largest stablecoin, tether (USDT). During the commotion, USDT’s share fell to 2.4% of the pool’s liquidity, according to a Dune Analytics dashboard by Subin An, a data analyst for crypto fund Hashed.

Now USDC makes up 36% of assets, with DAI and USDT comprising 37% and 27% stocks respectively.

“While USDC has had some large outflows, it appears that the tide may be starting to turn in DeFi,” Carey told CoinDesk. “Curves 3pool has become more balanced, a sign that fear around USDC (and DAI) has begun to subside.”

Data shows that USDC has managed to maintain its dominant position in DeFi despite the crisis, explained Andrew Thurman, analyst at blockchain intelligence firm Nansen.

According to Nansen data, USDC remains a widely used trading pair in decentralized exchange pools, and top USDC holders include DeFi protocols, bridges, and decentralized autonomous organizations (DAOs).

Last week, decentralized lending protocol MakerDAO voted to confirm USDC as the top reserve asset for its DAI stablecoin.

“I would say that its dominance may have been removed a little bit, especially by divesting Tether, but it’s still the largest and is still systemically important,” Thurman said.

USDT, with a market capitalization of $80 billion, has reached a 22-month market share of the $132 billion stablecoin market. The token is mostly used to facilitate trading on centralized exchanges.