Data from the chain analysis firm, Flipside Crypto, reveals that members of the decentralized finance ecosystem (DeFi) are turning to the currency of USD, USDC, to interact with Bitcoin Up protocols either by earning high returns on loan protocols such as Compound and Aave. Users are also providing liquidity to liquidity groups such as Uniswap and Curve, the latter of which offers stablecoins for trading stablecoins.
Following the launch of the Curve governance token, CRV, on August 14, there was an increase in USDC chain activity. The launch of the token also helped Curve rank third in terms of blocked value, after Aave and Compound, with $1.27 billion blocked, according to DeFi Pulse.
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At Curve, liquidity providers are rewarded every time a trade is made on the exchange curve.fi. This is the result of platform fees being equally divided among participants.
In addition, these liquidity groups are also provided to loan protocols such as Compound, which allow for additional interest to be received along with the traders that the user makes.
The popularity of USDC is growing among DeFi users
USDC is a USD-backed stablecoin launched by Circle, similar to Tether’s USDT. Although Tether is by far the most popular stablecoin in all areas, including the Curve platform, USDC has established itself as a benchmark asset for the decentralized finance sector, an important gateway within the ecosystem.
After DAI, USDC is the most borrowed stablecoin in the Compound and Aave protocol. Flipside Crypto has also noticed a clear pattern in the flow of newly minted USDC, most of which pass through Coinbase and then are sent to the larger DeFi platforms.
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While the popularity of USDC is increasing, it is still far behind USDT, whose main use case is for agreements between exchanges.
USDT has a market capitalization of $13.3 billion, while USDC is almost ten times smaller at $1.3 billion. However, it is still the second largest by usage and trading volume at the time of writing, having ranked second in trading volume since May 17th. USDC has had more than $90 billion in trading volume in the chain.