Although it has a much smaller market cap, on-chain data shows that USDC has a much greater transfer volume compared to its main competitor USDT.
Stablecoin USD Coin (USDC) has grown in popularity since the collapse of FTX and now frequently reaches daily transfer volumes four to five times that recorded by major competitor Tether (USDT) according to data from blockchain analytics firm Glassnode.
That’s despite the 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 compared to USDT per day according to Glassnode data.
Total transfer volumes for USDC (In blue) and USDT (In green) from Oct. 8 to Jan. 10. Source: Glassnode.
While each of the stablecoins 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 U.S. treasuries and its monthly audits by global accounting firm Grant Thornton.
Tether has faced criticism over a number of years for not providing a proper audit and for being less transparent about its reserves.
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The company behind USDT was fined $41 million in Oct. 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 showing 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 it was exposed 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 over the last year, representing an increase of 603%.
Market cap of USDT from May 2018 to Jan. 2022. Source: TradingView
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,” and noted every token can be redeemed for U.S. dollars on a 1:1 basis.