DeFi markets have experienced remarkable expansion over the past twelve months, and stablecoin supplies have been growing at a breakneck pace. Stable assets like USDC pegged to fiat currencies like USD serve as a gateway to a world of DeFi opportunities.
USDC is 2021’s fastest growing stablecoin, and the 12th most popular crypto asset by market capitalization. USDC launched in September 2018 as a collaboration between Circle and Coinbase, with an emphasis on transparency and regulatory compliance.
Stablecoins offer a safe haven from the extreme volatility of most cryptocurrencies while making it easier than ever for traditional financial institutions to plug into the DeFi ecosystem, opening the door to millions of new crypto investors and billions in fresh liquidity.
Near-instant settlement, cross-chain compatibility, and global availability make USDC the ideal stablecoin for the DeFi industry.
How USDC Makes DeFi Possible
The availability of transparent, dollar-pegged stable assets like USDC has been instrumental to the remarkable growth of the DeFi industry. DeFi uses public blockchain infrastructure and decentralized smart contract protocols to offer financial services like lending, trading, asset management, and more at a fraction of the cost of legacy financial institutions.
The most popular cryptocurrencies, however, like Bitcoin and Ethereum, are poorly suited to facilitating these types of financial activities. Unpredictable and at times extreme volatility make it difficult to safely use non-stable crypto assets as loan collateral or to hedge risk, and can cause confusion between customers and service providers.
USDC offers a familiar format for generating and reporting financial results, alongside a transparent, regulated gateway to DeFi innovation for institutions and traders aiming to achieve the best possible returns at the lowest possible cost.
Many DeFi protocols generate yield well in excess of near-zero interest rate accounts offered by legacy banking providers, while others facilitate large-scale asset swaps and transfers at a fraction of the cost of centralized alternatives.
But none of it would be possible without a strong foundation of non-volatile assets to hedge risk and sensibly denominate results, a perfect fit for stablecoins like USDC.
USDC Is The Leading DeFi Stablecoin
Blockchain research firm Flipside Crypto tracks metrics on the most popular stablecoins in DeFi markets, where USDC is the clear favorite for protocols and users alike.
Since November 2020, USDC has far surpassed competitors like DAI or USDT as the stablecoin of choice for collateralization needs. And in March, USDC available within DeFi protocols to facilitate financial activities was greater than the next two stablecoins combined.
USDC has also become the most popular stablecoin among DeFi participants. Overall daily DeFi transactions rely on USDC more than any other stablecoin, and active DeFi users favor USDC over DAI or USDT.
USDC is the most commonly used stable asset in the DeFi space, offering traders and protocols safe and convenient access to highly liquid crypto capital markets.
And while USDT still dominates across centralized exchanges, USDC is the clear leader among decentralized exchanges and other DeFi products.
Why DeFi Users Rely on USDC
USDC has become the leading DeFi stablecoin thanks to near-instant settlement speeds, robust blockchain-backed security, and an emphasis on transparency and regulatory compliance.
Perhaps the most important measure of a quality stable asset is adherence to the pegged currency rate. Using data from Coinmarketcap, Flipside Crypto found USDC is a leader here too, experiencing the smallest deviations from the $1 USD price target of any dollar-pegged stablecoin.
USDC is issued by regulated financial institutions and fully backed by USD reserve assets, with monthly attestations provided by top-five accounting firm Grant Thornton. USDC can always be redeemed at a 1:1 ratio for the US dollar.
USDC is gaining momentum outside the DeFi sector as well, as stablecoins become increasingly popular for cross-border remittance, corporate treasury operations, and ecommerce payments and payouts.
DeFi is one of the most exciting applications of blockchain technology to date, and USDC is providing the foundation the budding industry needs to onboard even more users, protocols, and institutions in the coming years.
With a free Circle Account, you can even seamlessly transfer USDC between supported DeFi-ready chains like Ethereum, Stellar, Solana, and Algorand at no additional cost, a serious edge in the highly competitive DeFi arena. So what are you waiting for?
Learn more about how Circle products and USDC can supercharge your DeFi experience.