Stablecoins have become an integral part of the crypto space due to the convenience they offer to users. Since they are non-volatile, their popularity has risen quickly, and as a result, their total market capitalisation now exceeds $150 billion.
Tether (USDT) and USD Coin (USDC) are competing for supremacy at the top of the stablecoin food chain. Although USDT wins the duet, USDC is just behind it and is breathing on its neck.
What is USDT?
The most widely used stablecoin and most actively traded cryptocurrency is Tether (USDT). And no, there was no typo. Compared to $28 billion for Bitcoin, the USDT 24 trading volume is roughly $64 billion. The USDT rate is fixed at a 1:1 ratio to the US dollar rate. Simply put, 1 USDT is equal to $1. Generally speaking, this is the case, though there can be slight exceptions. It would be more accurate to say that USDT has a narrow target range of $1 or less per token.
The organisation that created USDT, Tether Holdings Limited, asserts that the supply of USDT in circulation is always completely guaranteed by their reserve. Tether updates the overall value of these assets every day and produces a quarterly report that breaks down its reserve assets by class.
One of the key factors contributing to USDT’s popularity is the protocol’s adaptability, which enables the use of USDT tokens on a number of different blockchains, including Ethereum, Bitcoin (through Omni), Tron, Algorand, EOS, and others. As a result, USDT is frequently utilized for payments and remittances as well as for accruing interest in DeFi protocols.
Nevertheless, some users believe Tether to be unstable despite having the highest capitalization and best liquidity among all stablecoins. The USDT issuer previously lied openly about its reserves, for which the business received numerous fines from US regulators.
What is USDC?
Stablecoin USD Coin (USDC) is produced by Circle Internet Financial Ltd, a US-based business. At the same time, the Centre consortium, established by leaders of the Circle and Coinbase cryptocurrency exchanges, is in charge of overseeing the entire operation and growth of the USDC. Similar to USDT, tiny price differences between USDC and USD are swiftly fixed thanks to arbitration.
Since the issuer of the USDC is originally particularly concerned with compliance with regulatory standards and publishes monthly reports detailing its reserves from the reputable accounting firm Grant Thornton LLP, the crypto community views the USDC as a more trustworthy and open initiative. In addition, Circle employs reputable banks to maintain its reserves and holds a state money transmitter license.
Although USDC’s circulating supply has traditionally lagged behind USDT, this difference is slowly closing. For instance, if at the start of 2020, there was a capitalisation difference of nearly 10 times, at this point, USDC’s market cap ($52 billion versus $67 billion) is only 20% smaller than USDT’s.
The USDC token can be found on a number of significant networks, including Ethereum, Solana, BSC, Algorand, and others. It is commonly used for earning in DeFi protocols as well as for quick and economical transfers. It is crucial to point out that the majority of USDC users employ DeFi lending procedures. For instance, in the lending protocols Aave, Compound, and others, USDC is the most widely used token.
USDT vs USDC: what to choose?
The USDT and USDC can be used for payments, remittances, trading, and passive income, and they have similar properties. What stablecoin best suits you will mostly depend on your objectives:
- Use USDT because it has the best liquidity if you want to convert or trade cryptocurrencies. However, it is not advised to retain sizable sums of money in it for an extended period of time.
- It is worthwhile to use a more dependable and transparent USDC stablecoin for longer-term storage.
- USDT is better appropriate for you if you want to generate a lot of interest in DeFi protocols. Although USDC is a very well-liked cryptocurrency in the DeFi community, most lending protocols provide USDT customers with a higher APY. As an illustration, compound gives 0.72% APY for USDC and 1.44% APY for USDT, whereas Aave offers 0.38% APY for USDC and 1.02% APY for USDT.
How to store USDT or USDC?
You can keep USDT or USDC in your exchange account’s wallet or in a different cryptocurrency wallet. Every centralized exchange has an integrated cryptocurrency wallet. Stablecoins can thus be kept on Binance, Kraken, ByBit, etc. If you frequently trade stablecoins, this is practical. However, having a second wallet that is independent of the exchange is a more dependable way to hold stablecoins.
There are numerous sorts of wallets, including physical, hot and cold, desktop, mobile, and web wallets. Each form has advantages and disadvantages. Use the web or mobile wallets if efficiency and convenience are top priorities. Non-custodial services, or those who do not have access to your keys, are the best option. Also take note of the platform’s user interface, available currencies, usability, and security.
Alicia Saxon, a psychology graduate from the University of Hertfordshire, has a keen interest in the fields of mental health, wellness, and lifestyle.