The Rise of USDC: The Landscape of Stablecoins in the Ethereum Ecosystem is Quietly Changing

Recently, an industry analyst pointed out that the supply share of USDT stablecoin on the Ethereum network may fall below 50% for the first time in the coming weeks. Meanwhile, USDC is rapidly becoming the dominant stablecoin on Ethereum, largely thanks to its rising importance in the Decentralized Finance (DeFi) sector.

Data shows that over 50% of USDC supply has entered smart contracts, amounting to approximately $12.5 billion. Although this percentage is lower than DAI, in terms of dollar value, USDC is far ahead. It is worth noting that DAI's collateral also includes other assets. Currently, USDC has become the preferred stablecoin in the DeFi ecosystem.

In the main use cases of USDC, lending protocols such as MakerDAO, Compound, and Aave hold significant positions, collectively accounting for about 23% of the USDC supply. In MakerDAO, USDC primarily supports the price stability of DAI through the anchored stable module. In Compound and Aave, users deposit USDC into the protocols to earn yields.

Recently, Compound Labs announced the establishment of a new company, Compound Treasury, and collaborated with relevant institutions to allow emerging banks and fintech companies to convert USD into USDC. These USDC tokens will be deployed on Compound with a guaranteed interest rate of 4%. The launch of Compound Treasury enables USD holders to more easily access the USDC market rates of the Compound protocol while simplifying the related operational processes.

With the launch of Compound Treasury and the implementation of other related initiatives, it is expected that more USD liquidity will flow into the DeFi ecosystem. While this may dilute the yields for depositors, it is hoped to promote the widespread adoption of DeFi lending protocols and alleviate the long-standing USD liquidity shortage issues faced by these protocols.

However, with the continuous development of Decentralized Finance, the industry has begun to pay attention to its degree of dependence on centralized stablecoins. Although centralized stablecoins bring liquidity to Decentralized Finance and alleviate volatility issues, this is not a long-term solution.

In this regard, the decentralized stablecoin DAI shows certain potential, but its market share is only 8%. It is worth noting that DAI's stability mechanism is increasingly reliant on USDC. Currently, no other decentralized stablecoin projects have achieved success comparable to MakerDAO, but the industry is actively exploring various design solutions for decentralized stablecoins, some of the most innovative proposals even suggest completely breaking away from dependence on the US dollar.

Nevertheless, decentralized stablecoins represented by DAI are still one of the important cornerstones for the healthy development of the Decentralized Finance ecosystem. With the continuous evolution of the industry, the development direction and application prospects of decentralized stablecoins are worthy of ongoing attention.