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Crypto Conversation: You Just Can't Keep Tether Down

This controversial stable coin has been in the cross-hairs of the feds, but it's still a hugely popular crypto player.

What’s Hot in Crypto This week?

It's Tether (USDT). Tether is by far the largest stable coin in circulation today, with a market capitalization of over $20 billion at the time of writing. It is fiat-collateralized, which means it is centrally managed just like the USD Coin (USDC), which is pegged to the dollar. 

While Tether is much more widely used, it is also known as the questionable stable coin. In the latest news, Tether was still in several legal battles with the U.S. federal government.


Flipside Crypto just released a new report that suggests USDT is taking over the decentralized finance space. Back in January, Tether was widely accepted as the stablecoin of choice for arbitrage on centralized exchanges, especially in Asia. USDC on the other hand has been all over the news for its dominance in decentralized finance.

What’s Flipside Crypto’s Take? 

USDC has indeed grown tremendously in the decentralized finance space since the beginning of the year, and seems to have lost its appeal for users of centralized exchanges -- which is not surprising considering the colossal overtaking of Tether there.

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See the chart above? Each point is an Ethereum address, and each colored line is a token transfer. The graph is annotated with labels for known exchanges and decentralized finance platforms. Each line on the graph represents two connected user addresses. Think of this line as a spring. These springs pull the addresses in different directions until they settle into an equilibrium. The more transactions between a group of addresses, the closer together they will be on the graph.

USDC backer, Circle, took decisive steps to propel the growth of USDC in decentralized finance. The USDC Bootstrap Fund supplied $3.1 million in capital to decentralized finance protocols Compound, dYdX, Uniswap, and PoolTogether. Circle has also focused heavily on mainstream adoption of USDC, through strategic partnerships with governments like Venezuela and businesses like Visa  (V) - Get Visa Inc. Class A Report.

But the USDT graph clearly shows that the amount of addresses transacting USDT on decentralized platforms (on the right side of the graph) has grown dramatically since the beginning of the year.

Note also that not many addresses are using USDT on both centralized exchanges and decentralized applications, i.e. not many lines are connecting the two clusters together. This is a trend we see in every major stablecoin: the decentralized finance space is growing on its own and decoupling with the centralized exchanges’ use-case. 

The Flipside Crypto Asset Score Tracker provides institutional and sophisticated retail investors the ability to track over 500 cryptocurrencies' fundamentals. FCAS Tracker is currently free to a select group of new users as it continues to develop the product. Visit Flipside here to gain access to Flipside Analytics.