As the repercussions of its key banking partner’s collapse earlier this month subside, Circle-issued USDC has maintained its position as the dominant stablecoin of decentralised finance (DeFi).
USDC has regained some of the DeFi protocol Curve’s 3pool exchange pool, an essential infrastructure for stablecoin transactions. Riyad Carey, a research analyst at the digital asset data platform Kaiko, said that the rise shows that the token is no longer under much pressure.
The pool is a key platform in the DeFi ecosystem where investors can trade USDT, USDC, and DAI stablecoins. Its assets are worth about $440 million. In moments of market duress, curve pools also function as an evacuation door.
The reserve banking associate of USDC, Silicon Valley Bank, abruptly collapsed on March 10. Multiple currencies, including USDC and DAI, temporarily deviated from their price indexes after the market crash, which shook the stablecoin market.
Anxious traders rushed to the pool to get rid of their USDC and DAI tokens and switch to tether, the largest stablecoin, which they thought was safer. During the chaos, USDT’s share of the pool’s liquidity dropped to 2.4%, according to a Dune Analytics dashboard made by Subin An.
Now, USDC represents 36% of its total assets, while DAI and USDT represent 37% and 27%, respectively.
While USDC has experienced significant outflows, the tide may be turning in DeFi, according to Carey of CoinDesk. Curve’s 3pool has become more balanced, indicating that the fear surrounding USDC and DAI has begun to abate.
Andrew Thurman, the analyst at blockchain intelligence firm Nansen, explained that data indicates that USDC has maintained its dominant position in DeFi despite the crisis.
According to data from Nansen, USDC is still a popular trading pair in decentralised exchange networks, and the top holders of USDC include DeFi protocols, bridges, and decentralised autonomous organisations (DAOs).
The decentralised lending protocol MakerDAO confirmed USDC as the primary reserve asset for its DAI stablecoin last week.
On the $132 billion stablecoin market, the market share of USDT, which has a market capitalisation of $80 billion, has attained a 22-month peak. Primarily, the token is used to facilitate trading on centralised exchanges.