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Major Stablecoin Shakeup Underway As Tether (USDT) Loses Grip on Ethereum Dominance: Messari

Messari crypto research analyst Ryan Watkins predicts Tether (USDT) will lose its majority status as a stablecoin on the Ethereum blockchain in coming weeks.

Messari’s data shows the fall of USDT is due to the rise of USD Coin (USDC), which was developed by the Centre Consortium founded by Coinbase and Circle.


“In coming weeks it is very likely USDT’s share of the stablecoin supply on Ethereum will fall below 50% for the first time. USDC is quickly emerging as the dominant stablecoin on Ethereum in large part due to its growing role in DeFi.”

The Messari research analyst says that USDC is currently the ‘preferred stablecoin’ in decentralized finance (DeFi).

“Over 50% of the USDC supply now sit in smart contracts – equivalent to ~$12.5 billion. Although this percentage is not as high as DAI, USDC leads by a wide margin in dollar terms and has become the preferred stablecoin in DeFi for now.”

Among the roles USDC is playing, according to Watkins, is assisting in the stabilization of the largest decentralized stablecoin by market cap issued by the Ethereum-based decentralized autonomous organization MakerDAO.

“Unsurprisingly lending protocols MakerDAO, Compound, and Aave are the largest consumers of USDC, holding ~23% of the USDC supply. USDC in MakerDAO is primarily used to support the DAI peg via the Peg Stabilization Module.”


The cryptocurrency research analyst adds that on the Compound and Aave DeFi platforms, USDC is used to generate interest, and the popularity of the stablecoin will grow with the launch of Compound Treasury, a product aimed at getting institutional investors into decentralized finance.

“USDC in Compound and Aave is deposited to earn yield.”

“With the pending launch of Compound Treasury and a swath of initiatives centered around Circle’s DeFi API it is very likely this trend will continue meaning more dollar liquidity will funnel into DeFi.”

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