Circle's Stablecoin USD Coin (USDC) has grown in popularity on Ethereum since the collapse of FTX. USDC's ERC-20 variant now frequently reaches daily transfer volumes four to five times that recorded by major competitor Tether (USDT) on the network according to data from blockchain analytics firm Glassnode.
That’s despite the total market cap of USDT being $23 billion greater than USDC. As of Jan. 10, the difference was in USDC’s favor by a margin of four and a half times.
Both stablecoins recorded surges in transfer volumes following an infamous tweet from Binance CEO Changpeng Zhao on Nov. 6 announcing Binance would liquidate its entire FTX Token (FTT) holdings. FTX went into bankruptcy soon after.
Since then, USDC has been the preferred choice for crypto users, averaging over $12.5 billion more in transfer volume per day than USDT on Ethereum, according to Glassnode data.
It is worth noting however, most of USDT's total trading volume seems to be hosted on other networks, as the asset's total 24-hour trading volume hovered around $25 billion on Jan. 10, according to data from CoinMarketCap.
While each stablecoin is designed to trade as close to one U.S. dollar as possible and is backed by reserves held by its issuers, USDC is regarded by some in the crypto community as a potentially safer option.
Supporters point to USDC’s assets, which are backed by cash or short-term United States treasuries and its monthly audits by global accounting firm Grant Thornton.
Tether has faced criticism over several years for not providing a proper audit and being less transparent about its reserves.
The company behind USDT was fined $41 million in October 2021 by the Commodity Futures Trading Commission, which accused it of only holding sufficient reserves 27.6% of the time between 2016 and 2018 despite claiming its tokens were fully backed by fiat currencies.
Tether has been reducing the commercial paper backing its issued tokens in favor of safer alternatives, with the latest asset breakdown on Nov. 10 shows that nearly $46 billion of its reserves consist of cash, bank deposits and U.S. treasuries.
USDT briefly lost its peg to the U.S. dollar following the FTX collapse amid fears of exposure to Alameda Research and FTX, which Tether denied.
On-chain evidence suggests the two firms were attempting to short the stablecoin.
USDT had been recording transfer volumes much higher than USDCs up until May 2021, after Tether had increased the supply of the token from $8.79 billion to $61.82 billion in the previous year, representing an increase of 603%.
Despite the subsequent change in consumer preferences, Tether had referred to the growth in market capitalization as an indication of “the market’s continued trust and confidence in Tether.” It noted every token could be redeemed for U.S. dollars on a 1:1 basis.
Update Jan. 12, 9:30 am UTC: Amended the article to clarify that the data only reflected ERC-20 transaction volumes and not those on other chains