Brief
- Compass analysts believe that the USDC centered market share is unlikely to decline while Wall Street companies enter the space.
- The USDC is based on proprietary technology which facilitates the movement of assets between networks, while casting a wider net than most transmitters.
- The concentration of the USDC in DEFI applications could however have drawbacks, including a sensitivity to market conditions which could affect the finances of the company.
Stable legislation can unlock a multitude of new competitors for Circle and its USDC Stablecoin In the United States, but in the field of decentralized finance, or DEFI, it is unlikely that a serious rival emerges from any time, according to Investment Bank Compass analysts.
Although Tether usdt Is king on the emerging markets, the stablecoin USDC of Circle has a dominant presence through the growing number of decentralized exchanges of the crypto industry, the loan protocols and other DEFI parameters, wrote analyst Ed Engel and Joe Flynn in a note on Wednesday.
Circle was to make its debut on the New York Stock Exchange on Thursday, targeting An assessment of $ 6.9 billion, based on an initial public offer at $ 31 per share. A distinct advantage supporting this evaluation, wrote the analysts of Compass, is a generalized use of the USDC in DEFI.
“The USDC is the most negotiated asset on decentralized changes,” they wrote. “In fact, through Most DEFI applications, USDC is the most commonly used stable. »»
Stablecoins are digital assets fixed at the price of a fiduciary currency, such as the US dollar. In the context of crypto, traders often use them as a way to lock earnings or guarantees after loans; However, their use has increased in areas such as payments and funding.
In the past year, negotiation volumes on decentralized scholarships have increased compared to centralized scholarships, representing 26% of daily negotiation volumes earlier this month, or 14 billion dollars, compared to 8% a year ago, according to the Crypto data provider Messari.
Defi activity has become concentrated on networks such as Ethereum And SolaraBut the circle emits a USDC on at least 40 different networks, according to Messari. To achieve this, Compass Point analysts wrote that “Circle has programmed a tailor -made version” of the stablecoin through many channels, taking advantage of owner technology.
The functionality allows users to exchange USDC on chains with limited costs while avoiding hacking risks associated with so-called bridges, they added. Bridges often work by holding a token on a network on a network, while emitting an equivalent on another, which makes it an essential target for bad players, because they often hold a large amount of funds in a chain location.
Analysts noted that Pyusd’s Stablecoin de Paypal made its debut last year but failed to gain ground. The company has attempted to develop the Pyusd market share by offering “unsustainable yields on DEFI protocols”, but its supply remains less than $ 1 billion to date.
Even as a dominant Stablecoin of DEFI, USDC faces drawbacks, including the sensitivity of the supply of stablecoin to market conditions, analysts wrote.
Circle’s income is largely derived from assets bearing the yield such as US Treasury Bonnes supporting its stablecoin, which means that a withdrawal of the USDC supply could harm the company’s finances. Given that more than a quarter of the USDC supply is in DEFI applications, the overall health of the Altcoin market is essential to support current cash flows, analysts added.
“When altcoins rally, the DEFI yields generally increase, leading to greater USDC demand,” they wrote. “However, late Altcoin prices could slow the growth of the USDC, even after adoption by stablescoin legislation.”
Edited by James Rubin
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