USDC is the biggest stablecoin in DeFi. Learn more about it in our “What Is USDC?” guide.
- What is USDC?
- Who Created It?
- How It Works?
- What is USD Coin?
WHAT IS USDC?
USDC or US Dollar Coin is a stablecoin. A stablecoin is a cryptocurrency, the value of which is backed by a real-world asset. In this case, it is pegged to the value of $1. It claims to have a 1:1 value with the actual US dollar. Stablecoins incorporate a variety of use cases and they grow according to the trading volume and market cap. Currently, the worth of the stablecoin market is more than $180 billion, with USDC taking up $53 billion of the share, making it the second largest stablecoin in circulation. USDC is also audited by Grant Thornton, which is one of the top ten accounting firms in the world.
Generally it can take a lot of time to transfer US dollars to people and institutions when sent through banks. On the other hand, USDC offers stability and desirability of the US dollar with the speed of cryptocurrency transaction. Apart from its many uses, USDC is commonly deployed in decentralized finance (DeFi) protocols. Similarly, with the growing popularity of decentralized finance and centralized lending platforms, there comes a rise in the demand of USDC because the coins are easy for the people to conduct financial transactions without leaving the crypto ecosystem.
WHO CREATED IT?
USDC was created through a collaboration between Coinbase and Circle called CENTRE. Coinbase is the largest US based cryptocurrency exchange and Circle is a financial services firm that is backed by high profile financial institutions including Goldman Sachs. In May 2018, Circle announced USDC funded by $110 million in venture capital funding. In Sep, 2018 USDC was officially launched.
USDC is the first stablecoin to be minted by member organizations of the CENTRE Consotrium which is a membership based framework and governance scheme for the growth and development of money on the Internet. Circle was initiated in 2013 as a way to send money quickly and with ease. Circle is behind CENTRE, a Consotrium that produces frameworks and standards to improve mainstream adoption of stablecoin.
HOW IT WORKS?
USDC was first launched on the Ethereum blockchain as an ERC-20 token, but later on it expanded to certain other blockchains like Stellar, Solana, Algorand. It can be purchased on centralized as well as decentralized exchanges. Due to the less volatility of USDC stablecoins, it is an ideal source of payments and remittances. For the same reason, these stablecoins are also favored by those traders who wish to place profits made from trading in higher volatility digital assets into lower volatility digital assets without exiting the fiat.
Since USD coin runs on Ethereum, a programmable blockchain, the USD coin was created to be a form of digital money that would not be subject to wild price swings. Being an ERC-20 token, it conforms to a certain set of programmatic standards that developers must follow to have their tokens issued on Ethereum. In a way, USD stablecoin can be considered as a type of utility token because it can act as a substitute for dollars within the digital asset space. It means that the customers can use an exchange to trade it for other cryptocurrencies. It can also be used as a variety of decentralized finance protocols. Like it can be deposited in BlockFi which is a loan company that offers interest for depositing USDC.
USDC is also valued because of the assets backing it. It means that each USDC is backed by one dollar or asset with equivalent fair value, which is held in accounts with US regarded financial institutions. Circle backs each coin with cash and cash equivalents. For every new US dollar coin created there is supposed to be an equal amount of dollar assets held at Circle.
Additional benefits of stablecoins like USDC are that people with no access to traditional finance system can also be benefit from USDC in a way that they wont have to create a bank account, rather USDC users only need an internet connected device and a wallet that supports ERC-20 token.
WHAT IS USD COIN?
USD Coin is a cryptocurrency designed to maintain a constant value of $1 USD. It is held as a stable asset by crypto traders, like other stablecoins such as Tether(USDT) and DAI. USDC isn’t mined like a lot of other cryptocurrencies. It is available as Ethereum ERC 20, Algorand ASA and Solana SPL tokens that can only be purchased using US dollars on several major exchanges. The customer can also convert the USDC back into US dollars, which will in turn be wired back into their bank account.
For customers with a US dollar bank account, USDC can always be redeemed for US $1.00 giving it a stable price. Its current marketcap ranking is #5 in the world, with a live marketcap of more than $52,312,409,325 USD. It is currently the second largest stablecoin in terms of marketcap, with USDT being the largest stablecoin.
The primary concern with USDC is the fact that the Stablecoin market is filled with a huge number of competitors. These include the likes of USDT, DAI, BUSD and UST. Altough it is the second largest stablecoin in terms of marketcap, it still is quite far behind USDT, which is the largest stablecoin by marketcap. Similarly users are more and more moving towards the idea of decentralized stablecoins like UST. This may spell the end for the dominance of centralized stablecoins like USDC and USDT. Similarly it also suffers from the problems faced by Ethereum. Though it has lots of liquidity but as per the current state of the Ethereum Network, its transaction fee can be pretty high. Similarly, the fees for withdrawing USDC from exchanges can also be high.
WHERE CAN I BUY USDC?
USDC can be purchased on major crypto exchanges like KuCoin, similar to how one would buy any other cryptocurrency. You can either place a market buy or a limit buy. With a limit buy, you determine the price you’re willing to pay, and your order gets filled once the token price reaches your set limit price. If you want to get your hands on the token quickly, you can place a market order, where you agree to pay the current market price and have your order filled almost instantly. If you are interested in trading USDC, you can do so by visiting KuCoin, and Gate.io.