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Will There Be One Stablecoin To Rule Them All?

Web3 Daily

TL;DR

  • Why has Circle's USDC market cap reduced from ~$56B last year, to ​~$26B​ today, when Tether's USDT market cap has increased to an all time high of ​$83B​?

  • While it wasn't really their fault, trust seems to be damaged from the banking collapse earlier this year.

  • Back in the world of ​fiat​, interest rates have been steadily rising. Anyone who holds their money in USDC right now is losing out on an easy 4-5% interest.

  • Lastly, as more people use USDT as their preferred stablecoin, it signals to everyone else that USDT is the best option (when in reality, they're almost identical).

Full Story

Dust off your tin foil hats, cause today we're taking a quick trip to 'Theory Land.'

The topic: why has Circle's USDC market cap reduced from ~$56B last year, to ​~$26B​ today, when Tether's USDT market cap has increased to an all time high of ​$83B​?

They're both ​stablecoins​, meaning they both do the same thing. So why is the market using them differently?

We don't know for sure, but we have some theories.

  1. Remember ​in March​ this year when Silicon Valley Bank collapsed, along with Silvergate and Signature Bank? At the time it came out that Circle had $3B stuck due to the messy banking situation which temporarily brought the value of 1USDC down to $0.87 (it should always be $1).

    Well, while it simply seems that they were unlucky with their banking partners, it left a sour taste in people's mouths. While it wasn't really their fault, trust seems to be damaged.

  2. Back in the world of ​fiat​, interest rates have been steadily rising. Anyone who holds their money in USDC right now is losing out on an easy 4-5% interest.

  3. Lastly, as more people use USDT as their preferred stablecoin, it signals to everyone else that USDT is the best option (when in reality, they're almost identical).
    Just as every teenager wants to go to see Taylor Swift live, not because her music is that great, but because everyone else is going, same goes with the choice of stablecoin.

Interestingly, Circle continues to innovate.

Last week, they ​announced​ an integration with Shopify, letting merchants enjoy "nearly free payment acceptance" when using USDC.

Plus, they announced that they were rolling out the token to ​six additional blockchains​.

In the end, will there be one stablecoin to rule them all (i.e. USDT)?

Or will Circle claw back some traction with their continued innovation?

Let's find out!