Liquidity Dominance of USD Coin (USDC) :
According to an analysis conducted by crypto market data provider Kaiko, a significant shift has occurred in the realm of stablecoins. USD Coin (USDC) has emerged as the most liquid stablecoin on centralized exchanges (CEXs).
The findings highlight that bids totaling approximately $38 million for USDC play a crucial role in preventing a .1% price deviation, thereby establishing its prominent position in terms of liquidity.
Challenging the Established Order
This development marks a notable departure from the previous dominance of Tether (USDT) in the stablecoin market. In the past, users traditionally had limited usage of USDC and DAI on CEXs. Specifically, these stablecoins were primarily traded within the decentralized finance (DeFi) ecosystem.
However, with the current analysis, a significant shift has occurred. USDC has surpassed its counterparts and solidified its status as the most liquid stablecoin on CEXs.
Factors Influencing USDC Dominance
The efforts of crypto exchange Coinbase can be attributed, in part, to USDC’s rise to liquidity dominance. Moreover, the platform recently raised the rewards for holding USDC from 2% to 4%., a strategic move aimed at attracting a larger user base and bolstering its position in the market.
This increased incentive has contributed to USDC’s heightened appeal and subsequent surge in liquidity.
Challenges Faced by USDT
Meanwhile, Tether (USDT) is now positioned as the second most liquid stablecoin on CEXs with approximately $26 million in bids. Currently, it is trading below the $1 price range, at $0.99. The ongoing Curve-Aave loan saga has affected USDT, leading to a significant impact on its market valuation.
As the landscape of stablecoins continues to evolve, USDC’s newfound dominance and its ability to maintain high liquidity on CEXs indicate a shift in market dynamics.
This development highlights the increasing importance of liquidity for stablecoins and emphasizes the role of influential factors, such as exchange incentives, in shaping the stablecoin ecosystem.