The performance of Tether and USD Coin

Research analysts at Nansen, have compiled an overview of the performance of the top stablecoins over the past year, revealing that in first place is Tether and in second place is USD Coin. 

The report unveiled that stablecoin usage has largely increased in 2022, user concentration and overall growth metrics surprised analysts. 

Tether (USDT) remains the largest stablecoin by overall market capitalization and with 4 million unique addresses. Tether’s data suggested that it is used a lot, through small transactions, this turns to mean that it is the stablecoin preferred by emerging market users, rather than whales. 

In second place is Coinbase’s stablecoin, USD Coin, which together with Tether have a very large advantage over the others, in terms of capitalization and number of transactions. 

Before proceeding further, it is worth specifying that Tether has come close to a crisis in the recent period; the collapses of the Terra ecosystem and FTX have greatly affected the stablecoin. Tether suffered many losses, related to the insecurity of users, who no longer saw stablecoin as a life jacket, but rather sold it in general panic. 

Several companies took sides in this never-ending debate: Binance eliminated trading pairs in USDC and Coinbase allowed free swaps of USDT into USDC. After the events of 2022, trust is at an all-time low and transparency is becoming increasingly important. 

We are not able to have a complete view of the inner workings of the centralized entities behind the two largest stable coins, USDT and USDC, but we are able to see how users are using these tokens, which are the largest wallets, and what is happening on the blockchain. 

Despite this, Tether (USDT) has remained firmly in first place as the most used stablecoin. 

In this article, we are going to compare the two most used stablecoins, USD Coin (USDC) and Tether (USDT). Analyzing the differences and trying to figure out which is the best stablecoin to use. 

Tether (USDT) and USD Coin (USDC) in comparison

In the crypto world, the only assets that can maintain relatively solid prices are stablecoins. Tether (USDT) and USD Coin (USDC) are not the only ones in the market; there are many with various different characteristics. However, we are going to analyze the two most important ones, both by overall capitalization. 

In the last period, with the crisis touched by Tether, USD Coin took advantage to create some sort of propaganda to get stablecoin users on its side. 

In fact, the exchange platform Coinbase urged all its users to use USD Coin instead of Tether: 

“Now more than ever, stability and confidence are of utmost importance to clients. Stablecoins backed by fiat (cryptocurrencies pegged to reserve assets such as the U.S. dollar) offer clients stability and confidence during periods of volatility.

However, events in recent weeks have tested some stablecoins and we have seen a flight to safety. We believe USD Coin (USDC) is a reliable and reputable stablecoin, so we are making the transition easier: starting today we are waiving fees for global retail clients to convert USDT to USDC.”

But what do the two most popular stablecoins share?

Tether and USD Coin are both still pegged to the US dollar price, which implies that both assets are designed to be as close to the US dollar price as possible. However, both are cryptocurrencies, so the price fluctuates, although unlike the others, the fluctuations are much more stable. 

USD Coin and Tether both offer their users higher transaction speeds than traditional crypto assets. Tether and USD Coin are originally ERC-20 tokens built on the Ethereum blockchain, giving them greater versatility across the market. This is a key reason why so many different wallets support them.

How do Tether and USD Coin differ?

Although they share the high transaction speed, USDT and USDC offer two totally different block timings, depending on the token being converted. 

Although Circle has also faced some criticism, it provides more transparency than many other large stablecoins.

Which is the better of the two?

One can hardly make a concrete judgment on who is the better stablecoin. The data suggest Tether as it seems to be more capitalized and more widely used. 

However, there is the issue of transparency, which in this case puts USD Coin in a better light than Tether. 

So, for those who are more concerned with the transparency factor, USD Coin (USDC) is the most suitable. Also related to the transaction speed factor, USD Coin is much faster when it comes to TRC-20 USDC tokens. 

Both are very reliable stablecoins. Compared to the others, they dominate the market and there is no need to explain why. In the face of all factors, at a time when transparency is really important, the most advisable is USD Coin.

In addition, Nansen’s report showed that finally the general adoption of stablecoins is increasing. Even though there has been a decline in market capitalization, unique addresses are soaring.

Stablecoins are essential components of the crypto ecosystem; proper use makes transactions more reliable and more secure. The importance in the industry is that stablecoins of the caliber of Tether (USDT) and USD Coin (USDC) remain consistent, and open up to more transparency to their users, so as not to create internal issues. 

We cannot predict what 2023 will be for the two stablecoins, but if Tether does not solve the problem related to transparency, USD Coin could oust USDT from the throne. 

In 2023, USD Coin could therefore become the most widely used stablecoin in the crypto universe.