USDC vs USDT: The Battle For Stablecoin Supremacy

Stablecoins have become an indispensable component of the cryptocurrency market, representing just over 7% of its total capitalization at the time of writing. The stablecoin market has seen remarkable growth, with its collective market capitalization reaching $224 billion USD a testament to their increasing adoption and utility.

Stablecoins have become the backbone of decentralized finance (DeFi), enabling seamless liquidity provision, trading, and yield farming, while also serving as a bridge between traditional finance and the digital economy.

The rise of stablecoins, particularly those pegged to the US Dollar like USDC and USDT, is significantly reshaping global payment systems by democratizing access to the world’s dominant reserve currency.

By leveraging blockchain technology, stablecoins enable near-instantaneous, borderless transactions at a fraction of the cost of traditional banking systems, bypassing intermediaries like SWIFT. Any amount of money can be transferred to anywhere in the world at the fraction of tradFi costs.

From a humanitarian lens individuals in regions with unstable local currencies, dollar-pegged stablecoins offer a practical means to store value and transact in a globally accepted currency without relying on physical cash or complex foreign exchange processes. This is already taking place in Venezuela and Brazil.

Understanding USDC

USDC, is a tokenized representation of the US Dollar, developed and supported by Circle, a prominent financial technology company. USDC is engineered to maintain a consistent 1:1 peg with the US Dollar.

USDC has emerged as one of the leading stablecoins in the cryptocurrency market, recently achieving an all-time high circulating supply of $56 billion USD. A significant driver of this growth has been the surge in decentralized finance (DeFi) trading volumes, particularly on the Solana blockchain. As Solana’s ecosystem matures the need for stablecoins grows, this last month has seen a 29% increase in stablecoins onboarded with USDC dominating Solana’s Stablecoin ecosystem. USDC in circulation across all chains grew by more than 78% year-over-year faster than any other large, global stablecoin. Monthly transaction volume, reached $1 trillion USD in November 2024 alone while surpassing $18 trillion USD in all-time volume.

USDC Landscape

Beyond merely issuing USDC, Circle has actively worked to expand the stablecoin’s utility and reach within the broader blockchain ecosystem. The company has integrated USDC across over 15 blockchains, including Ethereum, Solana, Base, and Aptos, enhancing its interoperability and enabling diverse applications. This multi-chain strategy has been instrumental in driving USDC’s adoption tackling the common issue of liquidity fragmentation in Defi. Ethereum captures the majority of USDC’s circulating supply at 60% dominance with the supply of USDC on Ethereum being $34 billion USD.

Additionally, Circle has forged strategic partnerships with major players in the financial and tech industries, such as Blackrock, Mastercard and Coinbase, to embed USDC into institutional funds, mainstream payment systems and trading platforms.

Understanding USDT

USDT, issued by Tether Limited, stands as the pioneering stablecoin in the cryptocurrency market, launched in 2014 as a digital representation of the US Dollar. Unlike many subsequent stablecoins, USDT quickly gained traction due to its first-mover advantage and has since become the most widely adopted stablecoin globally.

Tether’s design mirrors the 1:1 USD peg model, with the company asserting that each USDT token is backed by reserves, though the composition of these reserves has historically included not just cash but also loans and other assets.

USDT Landscape

USDT continues to dominate the stablecoin market, boasting a market capitalization of $142 billion USD at the time of writing, dwarfing its closest competitors. The landscape of USDT distribution is fascinating, with Ethereum dominating at 46.68% with $66 billion USD in circulating supply, closely followed by Tron at 43.38% with $61 billion USD.

To appreciate USDT’s dominance in stablecoins either of its two largest networks are bigger than the entire market circulation of USDC.

USDC vs USDT

While both USDC and USDT serve as US Dollar-pegged stablecoins, their operational philosophies and market perceptions diverge significantly. USDC distinguishes itself through a strong emphasis on transparency and regulatory adherence, underpinned by Circle’s commitment to monthly third-party audits and compliance with frameworks like the EU’s MiCA regulation. This makes USDC a preferred choice for risk-averse users and institutions seeking a stablecoin with clear accountability. In contrast, USDT thrives on its extensive integration across the crypto ecosystem, offering unmatched liquidity and availability on virtually every major exchange and blockchain. Tether’s approach prioritizes market penetration over regulatory clarity, as it has drawn criticism for its opaque reserve practices, while solidifying its utility for traders who value accessibility and volume over strict oversight.

These differing strengths cater to distinct audiences, with USDC appealing to compliance-focused entities and USDT dominating high-frequency trading environments.

As of February 2025 USDT has over 71% dominance over USDC.? This gap underscores Tether’s moat, driven by its long-standing presence and widespread use as the most liquid stablecoin. USDC, however, has carved out a substantial niche, fuelled by adoption in DeFi ecosystems like Solana and institutional interest in a regulated alternative. This enabled USDC to have higher growth in 2024 with its circulating supply growing more than 83% compared to USDTs 50%.

While USDC has been growing it is important to note that Tether is crypto’s most profitable crypto company, bringing in more profit than even the likes of Blackrock in all of 2023 and certain quarters of 2024. With $13.7 billion USD in profit and a team of under 200 employees it has been reported that per employee Tether makes an average of $83 million in revenue.

While USDT’s larger circulation ensures its reign in raw volume, USDC’s steady climb signals a growing preference for its trust-centric model, highlighting a competitive dynamic where scale and stability vie for supremacy.