Reshaping the Stablecoin Landscape: The Rise of USDC, Connecting TradFi and the Encryption World

In 2021, the stablecoin market presented a new pattern. Although USDT still dominates the exchanges, USDC has gained an advantage in the DeFi sector. Data shows that USDC is becoming the preferred choice for DeFi users. At the same time, stablecoins are no longer just tools for risk reduction; they have become an important bridge for TradFi to enter the encryption and DeFi markets.

Stablecoins have always been the focus of the encryption market, playing a key role in the decentralized field, especially in trading and transfer scenarios on centralized exchanges. They help users reduce the volatility risk of crypto assets and secure returns.

In January of this year, the U.S. Treasury Department's Office of the Comptroller of the Currency permitted U.S. banks to use USD stablecoins for payments and settlements, marking an official recognition of the status of stablecoins. As the cryptocurrency market strengthens, the demand for stablecoins has surged, with the total market capitalization skyrocketing from $28 billion at the beginning of the year to $108.1 billion.

Although the market has been expecting a new stablecoin to replace USDT's leading position, USDT still dominates centralized exchanges. In May of this year, the issuer of USDT disclosed the composition of its reserves for the first time, which initially alleviated market concerns about its safety.

However, the position of USDT in the overall market has changed. Data shows that USDT's share of the total stablecoin supply has decreased from 75% at the beginning of the year to 58%, largely due to the explosive growth of the DeFi market.

In the DeFi space, for compliance and security reasons, most projects prefer to use ETH and USDC to establish trading pair liquidity pools. USDC has become the preferred stablecoin for DeFi users and projects.

Data from a leading DEX platform shows that the locked volume and trading volume of USDC far exceed that of USDT. On a certain lending platform, the deposit and loan amounts of USDC also significantly lead those of USDT. This data reflects the important position of USDC in the DeFi ecosystem.

USDC is not satisfied with the status quo and is committed to becoming the main channel for TradFi to enter the encryption and DeFi markets. USDC has always positioned itself on compliance, and its issuer has obtained regulatory licenses in multiple countries and regions. This has led to USDC being recognized by many traditional financial institutions, resulting in a significant increase in usage scenarios.

In May of this year, the issuer of USDC secured $440 million in funding, setting an industry record. Subsequently, several institutions launched savings products based on USDC, with an annual yield of about 4%. These products significantly lowered the barrier for traditional users to enter the DeFi market, and are expected to attract a large influx of funds.

Driven by the demand for DeFi and traditional finance, the supply of USDC has increased nearly 20 times since the beginning of the year, reaching $25.1 billion. In the future, USDC will also be issued on multiple blockchain networks, further expanding its advantages in the DeFi market.

Currently, the stablecoin landscape in the encryption market is becoming increasingly clear. USDT and USDC have become the dual core driving forces of the market, with USDT primarily serving centralized exchanges, while USDC aims to connect TradFi with the encryption world. Other stablecoins like DAI and BUSD also have their specific use cases and positioning.

As the encryption market matures, the role of stablecoins is becoming increasingly important. USDC has become a benchmark in this field, just as a leading exchange has become the most influential exchange in the market due to its compliance; USDC is also promoting the development of the entire industry with its compliance advantages.