USDC stablecoin just joined the Flipside Data Cooperative, which means its on-chain data is now available for anyone to access publicly. Above is a preview of USDC net asset flows from August 12th-19th, 2020.
The Majority of USDC Activity is Happening in DeFi
There is a clear pattern in the flow of USDC: newly minted tokens go straight to Coinbase, and then to users who mostly send them to Decentralized Exchanges and DeFi platforms.
The reason newly minted tokens go straight to Coinbase is because Coinbase is a member of the Centre Consortium which manages and backs the stablecoin.
Compared to other major stablecoin Tether (USDT), USDC is much more present on decentralized exchanges and applications, which means it is inherently stickier than Tether, which is used more for centralized exchange arbitrage.
USDC is especially attractive for businesses and financial institutions looking to integrate blockchain technology because Circle provides platform services and APIs that make it easier to integrate.
August 14th: Yield Farmers turn to USDC to earn CRV Interest
Curve Finance is a decentralized exchange for trading of stable pairs. By focusing only on mean-reverting trading pairs, Curve has the advantage of being able to offer low slippage, and little-to-no impermanent loss.
On August 14th, Curve launched its governance token, CRV, which rewards users who provide liquidity to the Curve pools. Since users need stablecoins to earn interest on Curve, and considering USDC’s favorable positioning towards DeFi applications, it follows that users bought the token to participate in Curve.
Accordingly, USDC’s on-chain data reveals a spike in activity on August 14th, when Curve launched its governance token CRV. The launch in fact propelled Curve to third place in terms of total value locked, and the DEX currently has $1.24 billion locked according to DeFi Pulse.
USDC 2.0 is Likely to Boost DeFi Activity
Earlier this month, Centre announced a major upgrade to USDC that will allow services that offer the token to pay transaction fees for their users, or present and deduct the fees in USDC. This brings the user experience closer to resembling existing mobile payment apps, where customers can send and receive USDC payments on a peer-to-peer basis solely using USDC.
These advancements come at a time when USDC, the fastest-growing regulated stablecoin, has seen unprecedented adoption, surpassing $1.4 billion in market capitalization and more than $90 billion in on-chain transaction volume.