Tether still dominates Stablecoins, but USDC and Dai are taking over DeFi

While tether (quotation USDT), with a market cap exceeding $ 16 billion, continues to make up the lion's share of stablecoins in circulation, two smaller rivals are outpacing it in this year's hottest crypto market, decentralized finance (DeFi) .

Based on total value blocked measured in six of the most popular DeFi protocols - Compound, Maker, Uniswap, Curve, Aave and Balancer - USD Coin (USDC) leads the stablecoin followed by dai (DAI), the native stablecoin of MakerDAO. This states a report compiled by Flipside Crypto with data collected since 19 October.

The perception of the markets

USDC and DAI have market capitalizations of $ 2,74 billion and $ 608 million, respectively. However, unlike centralized exchanges, where tether is the go-to stablecoin in dollar-based cryptocurrency operations, USDC and DAI seem to have found their niche as preferred stablecoins in decentralized exchanges.

Jeremy Allaire, co-founder of peer-to-peer payments firm Circle, attributed USDC's success at DeFi to his company's commitment to building relationships with DeFi communities.

The fact that the two companies that co-founded the Center consortium that manages the USDC, Circle and the cryptocurrency exchange Coinbase, are both financial companies registered in the United States could also have something to do with the recent upswing in the US. USDC.

According to Allaire, the USDC is preferred by institutional investors for being "safe, trustworthy and regulated". Unlike USDC, dai is a decentralized stablecoin which in theory has no centralized issuer and is resistant to censorship.

Niklas Kunkel, MakerDAO's head of backend services, said DAI's decentralization core has made it more popular than most of its competitors. He sees its decentralization as a good thing for regulators. “One advantage you have from a decentralized stablecoin is that everything is completely transparent,” Kunkel said.

Is Tether really that transparent?

Regarding stablecoin tether, several market participants are wondering if it is as transparent as the company claims. Tether has fought several lawsuits accusing her of not adequately backing her currency with guaranteed reserves.

Chief Technology Officer Paolo Ardoino defined tether as “the most stable and liquid stablecoin”. This claim is disputed by some of its competitors. "Tether is not fully backed with dollars and there is very little transparency in their reserves," said Paxos' head of strategy Walter Hessert.

“It's fine for some cryptocurrency traders because there are very liquid markets today. However, traditional investors and institutions prefer stablecoins they can trust ”.

Total stablecoin supply in the third quarter nearly doubled from the second quarter, and the total market capitalization of stablecoins also exceeded $ 20 billion at press time, according to data from CoinGecko. It is still relatively smaller than what is found in traditional finance, a fact that gives optimism to many in the stablecoin business who are hoping to cross the line.