The circulating supply of Circle’s United States dollar-backed stablecoin, USD Coin (USDC), has seen a notable rise in recent months. According to data from Blockworks Research, this growth is attributed to increased onchain activity as users migrate across different blockchain networks. As of January 2, the circulating supply of USDC approaches $44 billion, marking nearly double its 2023 low of just under $24 billion, as reported by CoinGecko.
Diversifying Networks
The shift in USDC’s distribution reflects a growing emphasis on alternative blockchain networks. While a significant portion of the stablecoin remains concentrated on Ethereum, there has been a noticeable divergence with users increasingly moving their holdings to Solana, Hyperliquid, and layer-2 networks like Base and Arbitrum. This diversification not only aligns with the growing onchain activity but also underscores the rising adoption of these networks for low-latency trading applications.
In 2023, USDC’s concentration on Ethereum was at its highest point, holding approximately 85% of the stablecoin’s supply. This shift is partly attributed to the increasing preference among retail traders for platforms like Solana, driven by heightened speculation around Solana-based memecoins and AI agent tokens. According to Grayscale’s December research note, the total value locked on Solana surged from around $1.5 billion in January to nearly $8.5 billion by December 2024.
Onboarding Users
The surge in stablecoin market capitalization following Donald Trump’s presidential election victory in the United States is a notable precursor to USDC’s growth trajectory. As noted by Citi in its December research note, the combined market capitalizations of the top three stablecoins—Tether (USDtUSDT), USDC, and DaiDAI—experienced a sharp increase, collectively growing by more than $25 billion. This phenomenon has further fueled the adoption of USDC as a widely accepted form of stable cryptocurrency.
Looking ahead, Steno Research predicts that USDC’s circulating supply could exceed $100 billion by the end of 2025. This growth hinges on the continued assumption that Tether remains unregulated within the European Union. If this scenario unfolds, users in Europe are expected to increasingly adopt USDC as an alternative to Tether’s USDT.
The Impact on DeFi
The acceleration in stablecoin adoption is particularly bullish for the decentralized finance (DeFi) ecosystem. As noted by Citi, stablecoins serve as a foundational component of DeFi, enabling users to access and participate in decentralized financial applications without significant capital outlay. In December 2024, Grayscale expanded its list of top 20 tokens to watch in Q1 2025, including several DeFi applications on Solana such as Ethena, Jupiter, and Jito.
Key Takeaways
- Circulating Supply Growth: USDC’s circulating supply has surged due to increased onchain activity and diversification across blockchain networks.
- Network Shift: A significant portion of USDC is now held on alternative layer-1 networks like Solana, Hyperliquid, Base, and Arbitrum.
- Market Dynamics: The surge in stablecoin market capitalization following the U.S. election highlights broader trends in DeFi adoption.
- Future Outlook: Steno Research projects that USDC’s circulating supply could more than double by early 2025.
In conclusion, the growth of USDC’s circulating supply is a multifaceted phenomenon driven by technological advancements in blockchain networks, increased user adoption, and the broader DeFi ecosystem. As these trends continue to evolve, USDC stands poised to play an increasingly significant role in the stablecoin market.
