How Is USDC Developed?

USDC is one of the stablecoins first launched in October 2018, which is the same value as Fiat Currency and backed by USD. As of now, USDC is the stablecoin with the second largest market cap after USDT. The development process of USDC is quite favorable because it is supported by many big players in the investment industry. As soon as USDC was launched, it was supported by Coinbaseer, not long after that, Binance also supported the deposit and withdrawal and listed the main USDC trading pairs.

Stablecoin has the second-largest market capitalization

USDT, USDC, BUSD, and DAI are the four stablecoins with the largest market capitalization, the highest position belongs to USDT, followed by BUSD. After three years of launch, BUSD witnessed outstanding growth especially in the period 2020 - 2021, increasing from 4 billion USD to 38 billion USD.

With more than 33 billion USD, USDC's Market Cap is the highest recorded in Ethereum, while other platforms fluctuate from 500 million to 2 billion USD, details:

• Ethereum: USDC has a market cap of 33.9 billion USD, and USDT is 28.1 billion USD.

• Solana: USDC has a market cap of 2.1 billion USD, and USDT is 1.8 billion USD.

• Avalanche: USDC has a market cap of 1.1 billion USD, and USDT is 650 million USD.

• Optimism: USDC has a market cap of $444 million, and DAI is $120 million.

• Polygon: USDC has a market cap of 940 million USD, and USDT is 660 million USD.

• Arbitrum: USDC has a market cap of 870 million USD, and USDT is 215 million USD.

• BNB Chain: USDC has a market cap of 1.2 billion USD, and BUSD is 4.75 billion USD.

Highest USDC Market Cap Recorded in Ethereum | Image source: Internet

USDC Evolution Over Time

As shared, USDC was first launched in 2018 on the Ethereum network, but only circulating on one network will limit the scope of this Stablecoin, so USDC is gradually integrated into many different Blockchains...

The special thing is that Binance – One of the largest cryptocurrency exchanges in the world does not support USDC. The explanation for this may be that Binance is afraid that the rapid growth of USDC will take away the position of BUSD. For users, USDC is seen as an alternative to USDT, especially in the US market, USDC supporters are considered equal to USDT.

USDC first launched in 2018 on the Ethereum network | Image source: Internet

Background of establishment

The plan to build Stablecoin was first announced by Circle in May 2018, and by the end of September and early October of the same year, USDC was officially launched with users of the Ethereum network. During this period, there were also many stablecoins released, the most famous ones being Terra LUNA, TUSD, etc.

Besides the positive effects, the development of stablecoins on the market still has many potential risks that make users doubt the safety and credibility of these cryptocurrencies.

The purpose of USDC is to compete with USDT. In the period 2017 - 2018, there were quite a few stablecoins born, but all were overwhelmed by USDT, accounting for more than 78% of the Stablecoin market share. Sustainability of USDT Reserves The safe place of USDT is gradually being questioned after USDT Reserves was hacked causing more than 31 million USD loss, and more than 41 million USD in Tether's fine.

USDC was built by CENTER under the participation of Circle and Coinbase, besides USDT, USDC also becomes the main competitive product between Coinbase and BUSD

The purpose of USDC is to compete with USDT | Image source: Internet

USDC Operation Model

Circle benefits from USDC through two main models:

Model 1: Circle Account, Payment, and Payments, whereby:

• Payments: Users use fiat money from the bank to change it into USDC through an e-wallet, the total amount of Fiat money used to buy USDC is deposited into the Circle Account.
• Payouts: The payment amount when returning to Circle Account, can be sent via other users' e-wallets, or sent to a bank account (supports more than 87 countries) or ACH - a form of payment in the United States.
• At that time, Circle Account becomes an intermediary to transfer money from Payment and Payments products. Due to the convenience, organizations that want to work with Circle need to create a Circle Account.

Model 2: Circle Yield

Users deposit money into Circle Yield => Total money is used to borrow Circle Bermuda and its partners => Profits are brought to Circle => Profits are sent to users.

What does USDC mean for Circle?

USDC does not generate Circle's main revenue, but from lending and bond trading, but USDC remains the core product of Circle:

Network effect: Stablecoins create more circulation demand, When demand is high, they also motivate more developers to build and integrate with USDC. This is a simple but effective flywheel to build a mesh effect. The more the community uses USDC, the more power Circle has.

Indirect Revenue: USDC creates current reserves, which are used to buy bonds that generate direct revenue for Circle. According to the latest announcement from Circle Treasury, more than 25% of the cash is currently unused, the rest is used to buy coupons, and of course, this total money comes from USDC mint users.

It is no exaggeration to say that Stablecoin is one of the tools for big guys like Circle to build their empire!