Chain analysis company data, Flipside Crypto, reveal that Members of the Decentralized Financial Ecosystem (DeFi) are turning to the USD currency, USDC, to interface with the DeFi protocols either earn high interest income in loan logs like connection and Aave. Users also provide liquidity to liquidity pools such as Uniswap and Curve, the lastor of which it offers stablecoins for trading in stablecoins.
After the start of the Curve Governance token CRVAugust 14th USDC activity in the chain increased. The token start also helped Curve take third place in terms of blocked valueAfter Aave and Compound, $ 1.27 billion was jailed, according to DeFi Pulse.
Yield Farmers are turning to USDC to earn interest in CRV. Source: Flipside Crypto
With Curve, liquidity providers receive rewards every time a trade is made on the kurve.fi exchange. This is the result of sharing the platform fees among the participants.
In addition, these liquidity pools are also attached to loan protocols such as Compound, which make it possible to get an additional interest together with the traders that the user carries out.
USDC’s popularity grows with DeFi users
USDC is a USD-backed stablecoin backed by Circle, similar to USDT from Tether. While Tether is by far the most popular stablecoin across the board, even on the Curve platform, USDC has established itself as a benchmark for the decentralized financial industry, an important access route within the ecosystem.
After DAI, USDC is the most borrowed stablecoin in the Compound and Aave protocol. Flipside Crypto has also noted a clear pattern in the newly minted USDC flow, lMost of these go through Coinbase and are then sent to the larger DeFi platforms.
USDC Net Asset Flows 12-19 August 2020 Source: Flipside Crypto
As USDC’s popularity grows, still way behind USDT, their main application is the agreements between stock exchanges.
USDT has a market capitalization of $ 13.3 billion, while USDC is almost ten times smaller at $ 1.3 billion. However, at the time of writing, it is still the second largest by usage and trading volume as it has been ranked second in trading volume since May 17th. USDC had an on-chain transaction volume of more than $ 90 billion.
Top Competitors of USD-Backed Stablecoins – Market Cap (USD). Source: Skew
USDC 2.0 could boost DeFi activity
Last week, The Center Consortium announced that with the USDC 2.0 update, transaction fees can be presented and paid in USDC. The cryptocurrency may gain even more prominence with the release of its next update, both inside and outside the DeFi context.
While transaction fees still have to be paid, The update simplifies the user experience from the perspective of a normal userBypassing the complex nature of Ethereum’s gas system and possibly Reduce the risk of network congestion and extremely high transaction costs.