USD Coin (USDC) is a stablecoin that’s designed to maintain a value as close to $1 as possible. USDC was launched in September of 2018 by CENTRE, a consortium established by prominent cryptocurrency industry companies Coinbase and Circle. So far, the USD Coin price has largely stayed close to the targeted $1 peg.
USDC was initially launched on Ethereum as an ERC-20 standard token, but was later also made available on other blockchain platforms. USDC is used extensively in popular decentralized finance (DeFi) apps such as Compound and Aave, and is also accepted as collateral for Dai in the MakerDAO system.
What is the USDC stablecoin and how does it work?
USD Coin employs a traditional centralized stablecoin design, and derives its value from reserves held by its issuer. As of May 2022, Circle said that the reserves backing USDC consist entirely of “cash and short-dated U.S. government obligations”. USDC can be redeemed for USD on a 1:1 basis with the coin’s issuer. The USDC/USD exchange rate is typically very close to 1 dollar.
Each month, the issuer of USD Coin releases an attestation by accounting firm Grant Thornton LLP, showing that the issuer holds enough US dollars to back all of the circulating USDC tokens on a 1:1 basis. You can view all the attestations released so far on the official CENTRE website.
As a stablecoin, the idea behind USDC is to provide the benefits of blockchain technology (24/7, global and fast transactions) without the downside of price volatility. However, users should be aware that USDC, like most other stablecoins, is issued by a centralized entity which has the power to blacklist addresses and freeze tokens.
Here’s a quick summary of some of USDC’s most important features:
- Launched in 2018 by CENTRE
- Initially launched as an ERC-20 token on the Ethereum blockchain
- Reserve-backed stablecoin, can be converted to USD on a 1:1 basis
- Used in decentralized finance protocols and on centralized crypto exchanges
- Available on 8 blockchain platforms
USD Coin was launched after Tether’s USDT stablecoin already achieved widespread success in the cryptocurrency market. Besides USD Coin, other stablecoins also made their debut in 2018—Pax Dollar (PAX), True USD (TUSD) and Gemini Dollar (GUSD) are notable examples. The issuers of these stablecoins sought to compete with USDT by providing additional transparency about the reserves backing their stablecoins, therefore establishing more trust.
So far, USD Coin has been easily the most successful among the “class” of stablecoins launched in 2018. USDT still remains the largest stablecoin both in terms of market capitalization and trading volume, but USDC has established itself as a top 10 digital asset in terms of market cap.
USDC circulating supply
The USDC supply is dynamic, as it increases when new tokens are minted, and decreases when users redeem their USDC for USD. The USD Coin supply began seeing accelerated growth in 2020 thanks to growing demand for USDC, and USD Coin established itself as the second-largest stablecoin by market capitalization.
Since the USDC price has successfully stay very close to the targeted $1 peg, the USDC market cap chart largely mirrors the USDC circulating supply chart.
To get a better perspective on the growth of the USDC crypto, let’s check out some important milestones this stablecoin has reached throughout the years.
- 50 million: The supply of USDC first exceeded 50 million in October 2018
- 100 million: The first time that the supply of USDC exceeded 100 million was in October 2018
- 500 million: USDC hit a supply of 500 million for the first time in December 2019
- 1 billion: The first time that USDC reached a supply of 1 billion was in July 2020
- 5 billion: The supply of USDC first surpassed 5 billion in January 2021
- 10 billion: The first time that USDT hit a supply of 10 billion was in March 2021
- 50 billion: USDC reached a supply of 50 billion for the first time in February 2022
USD Coin (USDC) use cases
USD Coin is a digital currency that’s primarily used as a substitute for fiat currency on cryptocurrency exchanges. Since it functions as a token on a variety of blockchain platforms, USDC is suitable for use in decentralized protocols such as decentralized exchanges (Uniswap), money markets (Compound, Aave) and NFT marketplaces (OpenSea).
Compared to standard crypto assets like ETH, USD Coin allows users to hold an asset on the blockchain that maintains a stable value. This also makes USDC suitable for payments, as many businesses and individuals prefer to accept payments in stable assets to avoid price volatility risks associated with many cryptocurrencies.
Circle, one of the founding members of the CENTRE consortium, has created a number of products that are based on the USDC stablecoin. This includes payments infrastructure, fixed income products, an API suite, and more.
USDC is available on a variety of blockchain platforms
One of the advantages of USD Coin is that it has been issued on multiple blockchain platforms. Even though it was initially only available on Ethereum, USDC is now available on 8 different blockchains, and the list of supported blockchains is expanded relatively often. Here are the blockchain platforms that USDC is supported on:
Ethereum remains the most popular blockchain for USD Coin, and a large number of cryptocurrency exchanges and DeFi protocols accept Ethereum-based USDC. However, if the service you’re using also accepts USDC coins issued on other blockchain platforms, you can likely save on transaction fees by using a platform like Solana or Stellar. Make sure to check which blockchains the platform you’re using supports for USDC deposits and withdrawals.
You can find the USDC chart as well as up-to-date information about USD Coin markets and trading volume on CoinCodex.
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