Since Terra’s UST collapsed there has been a strong focus on stablecoins that are dollar-pegged. In fact, there are concerns that another de-pegging could present systematic risks to the entire crypto market. USD Coin is still a viable alternative to Terra’s UST.

• USD Coins are managed by a trusted consortium of experts.

• USDC can also be backed by dollars that are physically in reserve.

• The stablecoin can also be backed by reserve assets, including US Treasury bills.

Data Source: TradingView

Why does USD Coin stand behind Tether?

With the attributes mentioned above, USD Coin is clearly poised to be a major stablecoin. Its market cap is actually growing, especially since the collapse of Terra UST. There are signs that USDC may not be growing as fast than its market cap suggests.

For instance, USDC liquidity at Uniswap (one of the most important DEXes in the world) has fallen significantly in recent months. A platform such as Uniswap can often show high liquidity, which is a sign that a stablecoin has a lot of demand. It is concerning that USDC is falling.

We are also seeing large wallets that favor Tether. Glassnode research shows that USDC is being held by just 1% of the biggest crypto wallets. This is a significant drop in one year. This isn’t a significant concern but it does suggest that the coin is in limited supply.

Is USDC facing De-pegging risks?

At the moment, there are no indications that USDC may be at risk of being de-pegged. Investors are now on edge due to the UST collapse. However, USDC has so far managed to keep a stable dollar peg.

It is unlikely that we will see any de-pegging in the near future. One thing we can be certain of is that USDC will not soon compete with Tether.