Thread 🧵: Is $USDC on track to flip $USDT?
We present a straightforward comparison between $USDT & $USDC
Year-to-date the market cap of $USDC has grown from $42B to $54B while the Crypto market cap fell from $3T to $1T
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Both of them have reserves in the form of fiat currencies and other assets
Reserves enable you to redeem the "digital dollars" (stablecoins) for "real dollars"
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The stablecoin market cap has grown from $1 billion to $180 billion at the peak of the market cycle
Given that all value is transferred digitally within the Crypto market, they have a very clear Product Market Fit for the Crypto market
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Ever since the entire Crypto market began plummeting, there was one coin whose market cap rose despite the FUD
And that coin is $USDC
Year-to-date, the market cap of $USDC has grown from $42B to $54B, while the Crypto market cap fell from $3T to $1T


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Despite the bullish performance of $USDC, $USDT has been the dominant stablecoin in the #Crypto market
As of now, the market cap of $USDT stands at ~$65B
It also has the competitive advantage of being the most liquid stablecoin with a staggering volume of $75B
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$USDC has a 24h volume of 'only' $9B
But that might be due to the fact that it is not being widely used in the Perpetual derivatives market
But on the flip side, the $USDT market cap fell along with the Crypto market cap from $83 billion at its peak to $65 billion

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Did you notice the bizarre situation here?
Why did "just" the market cap of $USDC increase while the rest of the crypto market, including the biggest #stablecoin, declined?
There may be compelling reasons for the smart money to move their funds into $USDC
Let's see why:
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$USDC primarily focuses on building "TRUST" by guaranteeing users that every digital dollar of $USDC can always be exchanged 1:1 for cash. ALWAYS.
@circlepay is the issuer of $USDC & maintains the reserves for $USDC
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@circlepay assures that every digital dollar of $USDC on the internet is 100% backed by cash and short-dated U.S. treasuries so that it’s always redeemable 1:1 for U.S. dollars
$USDC reserves are held in leading U.S. financial institutions, like BlackRock and BNY Mellon

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Circle’s customers can mint/redeem $USDC instantly by opening a Circle account
~20% of the reserves are held as cash in the banks, while the rest ~80% is held as 3-month Treasury Bills
Treasury bills are one of the most liquid assets in the world, with ~$600B in volume

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The $USDC reserves do not contain any other high-risk, less liquid assets such as digital assets, private equities, unsecured loans, commercial papers, or assets held with third parties that are subject to lock-ups
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@circlepay is regulated as a "licensed money transmitter" under U.S. state law
This means Circle (as a licensed money transmitter) "cannot" simply lend its reserves to some Chinese company or use it for their own business expenditures like the way CeFi companies do
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But why should we believe their financial statements?
The $USDC reserve statements are audited annually by a leading global accounting firm
Circle also publishes monthly attestations of the size and composition of the USDC reserves to verify whether $USDC is 100% backed

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@Tether_to is an offshore corporation that issues $USDT. This implies that it does not need to abide by US regulations
Tether works the same way as $USDC does but with one exception: RESERVES
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$USDT's reserves contain Cash, U.S treasury bills, Non-U.S treasury bills, Digital tokens, Secured loans, Precious metals, Commercial papers, Certificates of Deposit, etc.

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Instead of having only liquid and stable assets like $USDC, $USDT opted to diversify its reserves into risky & illiquid assets
This means that if $USDT redemptions skyrocket in a short period of time, Tether might not have enough liquid assets to meet redemptions
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But why would Tether hold risky assets in the reserves?
Simple. Yield.
80% of $USDC's treasury bills get interest (which is low) & 20% of them get close to zero interest
But Tether wants to hold risky assets to get those juicy yields to be a profitable company
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Tether also does not publish monthly attestations of their reserves, they post audits once in a while.
You will only know what assets they hold in the reserves when "they" decide to release an audit report
However, $USDC releases attestation reports every month


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Here are the risks involved in $USDT:
• Risky assets held in reserves
• Lack of regulation
• Sketchy business practices
• No monthly attestation reports of reserves
The "TRUST" in the $USDT is suppressed by all of these risks
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At the end of the day, the best fiat-backed stablecoin to hold ultimately comes from the one that finds the 'least' risky solution for these problems:
1. What assets does it hold in the reserves?
2. Can it handle high amounts of stablecoin redemptions immediately?
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If you want a monthly report on the stablecoin issuer's reserve holdings and whether they can handle 100% of the redemptions: $USDC might be a better choice
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But if you are a day trader and you want a highly liquid market to transfer your dollars immediately, then $USDT might be a better choice for you
For short-term use cases, you might be better off holding $USDT while keeping your larger investments in $USDC