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Tether’s Dominance Drops Below 80% as Audit Controversy Continues

Tether’s Dominance Drops Below 80% as Audit Controversy Continues

According to the data put together by Coinmetrics, the total value of stablecoins in circulation is close to reaching the $20 billion mark, but the share of the market-leading coin, USDT (Tether), in the total circulating supply is shrinking. The data shows that USDT now makes up about 80% of the total supply of stablecoins and most of them are those that are issued on the Tron and Ethereum networks. From the total supply, 53% of it comes from USDT-ETH whereas 20% of the total supply of USDT comes from USDT-TRX. In contrast, Markets.bitcoin.com has revealed that USDC is now making up for 13% of the total circulating supply and it boasts a market capitalization of $2.53 billion.

Published on September 25th, this latest data indicates that there is constant growth in the circulating supply of stablecoins, a trend that had also been seen in the report published by Coinmetrics in July. In that report, it was noted that the circulating supply of stablecoins in the market had almost doubled to reach the $12 billion mark. At that time, the growth had been attributed to a popular investor practice of converting their volatile cryptocurrencies into stablecoins when the market crashed, as per Coinmetrics. 

This particular practice had become quite apparent in March 2020 when the cryptocurrency market had suffered from a major crash, similar to the global stock markets. Due to a global shortage of USD, many of the panicking investors had been unable to move their money out of the cryptocurrency markets quickly enough. In this situation, converting their crypto into stablecoins came as a helpful option. According to some experts, the latest growth in stablecoin seems to be because of an increased interest in Decentralized Finance (DeFi). DeFi users apparently use these stablecoins for obtaining high returns from the numerous defi platforms. 

Meanwhile, Weiss Crypto Ratings, a stocks and crypto organization, made an unprovoked attack on USDT by claiming that its preferred coin is USDC because it undergoes proper audits. Prior to the release of data by Coinmetrics, the rating agency made a post on Twitter and said that as opposed to USDT, USDC is subjected to audits from almost five different account firms. Considering these reports, the organization said that they preferred USDC as a stablecoin because it is 100% backed. As a matter of fact, Weiss Crypto Ratings also compared Tether and USDC in another tweet.

It argued that the former is not 100% backed. The rating agency repeated the familiar allegations that have been made against the controversial vaults of Bitfinex, which cannot be publicly audited. While making a recommendation to their followers, Weiss Crypto said that it was best not to invest in Tether. Interestingly, some users on Twitter quickly reminded the rating agency that not all auditing companies can be trusted either. One user pointed out the incident of Wirecard where none of the involved account companies had reported or discovered the fraud in the first place. In the meantime, stablecoins are expected to grow due to high fees on some blockchains and the continuing defi craze.

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