The global stablecoin supply now approaches $110 billion—nearly four times the volume recorded in early 2021. While this growth signals increasing adoption of digital dollar equivalents, the expansion is far from evenly distributed across major stablecoins. In a shifting landscape shaped by regulatory scrutiny, technological evolution, and changing user behavior, USDC is emerging as a key challenger to Tether (USDT), which remains the market leader but shows signs of stagnation.
The Rise of USDC and Shifting Market Dynamics
USDC, issued by Circle in partnership with Coinbase, has surged from approximately $4 billion in supply at the start of 2021 to over $26 billion today—an increase of more than 550%. Notably, its growth accelerated after the May 2021 crypto market downturn, with supply expanding by roughly 75% since May 11 alone.
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In contrast, while Tether still dominates with a total supply exceeding $64 billion, its growth has plateaued since mid-2021. More tellingly, its liquid circulating supply—a metric developed by Coin Metrics that excludes non-circulating reserves—has actually declined. This reduction indicates that significant amounts of USDT have been redeemed and returned to Tether’s treasury rather than actively traded or deployed.
This trend is especially pronounced on Ethereum, where the supply of USDT (USDT\_ETH) has seen its liquid circulation drop by about $1 billion over the past 30 days—despite no change in total issuance. This suggests reduced on-chain usage or a shift in demand toward other blockchains like Tron or Solana, where transaction fees are lower.
Changing Usage Patterns Across Time Zones
Stablecoin activity patterns also reveal geographic and behavioral shifts. Historically, USDT transactions on Ethereum were concentrated during Asian business hours (UTC 2:00–14:00), with peak activity between UTC 6:00 and 8:00—aligning closely with trading hours for financial markets in Hong Kong and London.
However, throughout 2021, this pattern shifted noticeably toward European and U.S. market hours. Several factors may explain this:
- Migration of miners and investors out of China due to regulatory crackdowns may have reduced on-chain activity in Asia.
- Increased use of alternative blockchains such as Tron and Solana for USDT transfers, where costs are lower and throughput higher.
- Growing integration of USDT\_ETH in DeFi protocols, where it serves as collateral or liquidity, altering usage timing and reducing reliance on regional trading cycles.
Meanwhile, USDC usage aligns more consistently with U.S. market hours (UTC 14:00–22:00), reflecting its strong institutional adoption and ties to American fintech infrastructure. This distribution has remained stable since 2020, underscoring USDC’s role as a preferred stablecoin for U.S.-based traders, exchanges, and decentralized applications.
Bitcoin and Ethereum, by comparison, show more evenly distributed usage across all hours—highlighting their status as truly global assets.
Operational Advantages of Stablecoins
One of the core advantages of stablecoins like USDC and USDT over traditional financial rails such as Fedwire is their 24/7 availability. Unlike legacy systems that operate only on business days and during specific hours, stablecoins run on blockchain networks that never sleep.
Chain data shows that while USDC activity peaks during weekdays—mirroring traditional financial markets—there is still measurable usage on weekends when traditional systems are offline. This continuous operation supports global commerce, cross-border remittances, and always-on decentralized finance (DeFi) platforms.
Frequently Asked Questions
Q: Why is USDC growing faster than USDT?
A: USDC benefits from greater transparency, regular audits, and strong institutional backing. Its compliance-first approach appeals to regulated entities and investors wary of regulatory risk—especially following increased scrutiny on Tether’s reserves.
Q: Is USDT losing relevance?
A: Not yet. USDT remains the most widely used stablecoin globally, particularly in Asia and on high-volume exchanges. However, its slowed growth and declining liquid supply suggest weakening momentum compared to more transparent alternatives.
Q: What does "liquid circulating supply" mean?
A: It refers to tokens actively traded or used in the market, excluding locked, reserved, or inactive holdings. A drop in liquid supply indicates reduced real-world usage or redemptions.
Q: Are stablecoins safe during market crashes?
A: Most major stablecoins like USDC and USDT have maintained their pegs even during extreme volatility. However, risks remain around reserve transparency, regulatory action, and smart contract vulnerabilities.
Q: Can stablecoins replace traditional banking rails?
A: In many cases, they already do—especially for international transfers and DeFi transactions. Their speed, low cost, and round-the-clock operation make them competitive with—and often superior to—legacy systems.
Ethereum's EIP-1559: A Game Changer for Network Economics
As stablecoins grow in importance, so too does the infrastructure they rely on. Ethereum’s upcoming London upgrade, featuring EIP-1559, represents one of the most significant changes to blockchain fee mechanics in history.
Expected to activate around August 5, 2025 (at block 12,965,000), EIP-1559 introduces a new transaction pricing model designed to improve predictability and reduce fee volatility.
How EIP-1559 Works
Currently, Ethereum uses a “first-price auction” system for gas fees. Users bid blindly on how much they’re willing to pay, often leading to overbidding during congestion. This creates unpredictable costs—especially problematic during NFT drops or flash crashes.
EIP-1559 replaces this with a base fee that is algorithmically adjusted per block based on demand:
- The base fee changes by no more than ±12.5% between blocks.
- It is burned (permanently removed from circulation) instead of being paid to miners.
- Users can add an optional tip to prioritize their transactions.
This makes fees more predictable—similar to a posted price rather than an auction. If demand exceeds capacity, the base fee rises until usage drops; if demand falls, the fee decreases.
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Impact on Ethereum Supply
By burning a portion of transaction fees, EIP-1559 introduces deflationary pressure on ETH. Under high network usage, more ETH may be burned than issued through mining rewards—resulting in negative net issuance.
For example, historical simulations suggest that if 75% of fees are burned, periods of heavy congestion could see daily ETH supply shrink rather than grow. This could make ETH increasingly attractive as a store of value—a dynamic sometimes referred to as "ultrasound money."
It's important to note that EIP-1559 does not solve scalability issues directly. High fees are ultimately a symptom of limited throughput, not inefficient pricing. Scalability will be addressed through Layer 2 solutions and Ethereum 2.0 upgrades. However, EIP-1559 significantly improves user experience by smoothing out fee spikes.
Final Thoughts
The stablecoin landscape is evolving rapidly. While Tether retains dominance by sheer volume, its growth has stalled—and signs point to declining on-chain liquidity. Meanwhile, USDC’s transparent operations and institutional alignment position it as a rising force in both centralized and decentralized finance.
Regulatory developments and central bank digital currencies (CBDCs) loom on the horizon, threatening to reshape the ecosystem further. Yet for now, stablecoins remain a cornerstone of crypto activity—facilitating trade, hedging risk, and enabling innovation in DeFi.
Understanding usage patterns, supply dynamics, and underlying infrastructure upgrades like EIP-1559 is essential for anyone navigating the future of digital finance.