What USDC’s diminishing dominance on Ethereum means for the stablecoin
According to a new Messari report, USDC was observed to be losing traction in the stablecoin market. BUSD on the other hand, was witnessing some growth. With new coins entering the stablecoin market and the ever-growing competition, it may become difficult for USDC to maintain its standing in the market.
<p lang=«en» dir=«ltr» xml:lang=«en»>$USDC's recent loss in market share can be directly attributed to @binance announcing a plan to convert all stablecoins, into $BUSD.This major change only accounted for a 5% increase in share for Binance…what does that mean for protocol native stables looking to grow share? pic.twitter.com/eCDy754hdT
— Messari (@MessariCrypto) October 16, 2022
One indicator of things not going USDC’s way would be its dominance on Ethereum [ETH]. USDC’s dominance on the ETH network fell 5% since July. Meanwhile, BUSD’s dominance over the same network increased by the same 5% in the same time frame.
The USDC dominance, in early July 2022, had peaked and captured 44% of the Ethereum network. However, it slipped down to 39% at the time of press according to Messari. However, despite losing out on its dominance on the Ethereum network, the stablecoin managed to perform relatively well on Layer2 chains.
As can be seen from the image below, USDC grew significantly on L2 rollups, such as Arbitrum and Optimism. USDC’s dominance on the OP network stood at 58%, while on Arbitrum stood at almost 75%.
Even though there was high dominance of USDC observed on both of these protocols, one of the reasons for the growth in the protocol could be attributed to the fact that simply fewer stablecoins were used on these L2s.
Source: Messari
Taking a look at USDC’s network growth on multiple networks could also give us an insight
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