U.S. Dollar Coin (USDC) is currently the most liquid stablecoin on centralized exchanges (CEX), with around $38 million in bids preventing a 0.1% price deviation for the asset, according to an analysis by cryptocurrency market data provider Kaiko. .
USDC’s liquidity is followed by Tether (USDT), Binance USD (BUSD), True USD (TUSD), and Dai (DAI). The data compiled by Kaiko includes a bidder depth of 0.1% for all markets that use USDC as the underlying asset.
USDC – the most liquid on CEX
Kaiko noted that while stablecoin issuers like Circle and Tether ensure that their tokens remain parity, decoupling could still occur in the spot market. This makes the stablecoin spot market crucial for price discovery.
“In theory, stablecoin issuers maintain the peg. However, depegging can still happen on the spot market, especially considering that#USDTredemptions start at $100k. Stablecoin spot markets are therefore extremely important for price discovery. This data aggregates the bid-side market depth of 0.1% of all markets that include stablecoins as underlying assets,
The latest development is significant for USDC, as USDT has been leading the pack. At the beginning of the year, USDC and DAI had very low usage on CEXs. According to Kaiko, they were mainly traded within the decentralized finance (DeFi) ecosystem.
A potential U.S. banking crisis caused USDC to lose parity with the dollar and fall 13% to below $0.88 by the end of the first quarter of 2023. However, the stablecoin has stabilized and struggled to stay within the $1 price range, according to CoinMarketCap
Coinbase Increases USDC Rewards to 4%
USDC’s dominance on CEXs can be attributed to cryptocurrency exchange Coinbase increasing its rewards for the asset to 4%. The trading platform announced in a tweet on June 15 that it would increase rewards for USDC holders from 2% to 4%, a move aimed at attracting more users and boosting its position in the market.
Meanwhile, USDT is currently the second most liquid stablecoin on centralized exchanges with around $26 million in bids and has traded below $1 this week. The asset is worth $0.99 at the time of writing, according to CoinMarketCap, due to the ongoing Curve-Aave lending saga.