USDC, a digital stablecoin of the US dollar managed by a consortium called Center, is surprisingly losing its market share. USDC is known to be the second-largest stablecoin by market capitalization. The record shows that the supply of USDC has dropped by 20% from $53.6 billion to $43.2 billion from Aug 8 to Oct 27. The other leading stablecoins, like Binance’s BUSD and Tether’s USDT, have simultaneously shown an increase of $3.41B and $1.82B, respectively.
USDC seems to be backsliding with investors after the Center’s move to ban 38 addresses linked with the Tornado Cash protocol in August. Tornado Cash is a noncustodial, decentralized platform built on the Ethereum blockchain. ETH coins and ERC-20 tokens can be deposited and withdrawn with the help of the platform’s smart contract solution, with different addresses providing privacy in their deposit and withdrawal addresses. Investors are losing interest in USDC after the steep fall in its value. Meanwhile, competing stablecoins like BUSD and USDT are gaining market share over the odds.
The crypto community decried the consortium’s decision to freeze assets held in the sanctioned addresses, and it seems that USDC holders have started redeeming their tokens. From the past week for which data is available, the net withdrawal of USDC stood at -$1.7B. Last month, Binance announced that it would delist USDP, USDC, and TUSD, to convert users’ dollar balances into its BUSD stablecoin, which would give rise to BUSD supply.