Tether Asserts Stablecoin Dominance Over Circle’s USDC Among Major Crypto Hacks

Tether’s dominance over Circle has been on the rise ever since Solana-based Drift Protocol spent $285 million this month, and Decentralized Finance users seem to be pushing the USDT market to record highs on Tuesday following another major hack.

Since the attackers connected in North Korea he left One of the biggest DeFi transactions this year, USDT’s market cap has grown 2.1% to nearly $188 billion, according to CoinGecko. Meanwhile, the value of USDC has increased slightly, rising 1.4% to $78.25 billion.

In Tuesday’s note, experts at the financial bank Compass Point wagered that DeFi outflows have the potential to force USDC on-chain distribution, strong enough to reduce profits from the stablecoin’s support, that is US Treasuries, to Coinbase and Circle.

“DeFi exits may allow users to download USDC or hold USDC in exchange for yield,” he wrote. “Any outcome could force CRCL and COIN to make higher profits, either through lower interest rates or lower margins.”

The analysis of the experts is based on the fact that investors “quickly removed” $ 1.5 billion in stablecoins during the lending process. Spirit after the invaders swimming expenses related to restocking protocol Kelp DAO, and used them to borrow money on the Aave platform.

Although users have seized all stablecoins since the Drift protocol was hacked, Tether’s product may have benefited from a major crisis as fears are growing, Jake Kennis, senior analyst at blockchain analytics company Nansen, said. Decrypt.

“This difference may indicate that the volume of USDT coins in the middle places provides a way to run to safety” during the DeFi crisis, especially for users who want to exit the chain quickly,” he said.

“While all stablecoins are mutually exclusive, USDT’s high concentration and large market share creates a risk that increases during times of high risk,” he added.

The success of Drift has also increased the evaluation of Circle’s performance. After attackers used Circle’s tools to move millions of dollars in crypto from one network to another, the company hit and a class action lawsuit last week for failing to stop the money.

Circle has defended its actions, with CEO Jeremy Allaire arguing that the arbitrary decision to freeze users’ money opens up a “big problem.” At the same time, Drift is he signed that it will stop supporting the stablecoin after receiving a recovery pledge from Tether.

Compass Point analysts assigned a $77 price target on Circle shares with a “Sell” rating. Shares of the stablecoin provider changed hands below $98 on Tuesday, down 8% from the previous day, according to Yahoo Finance.

Decrypt has reached out to Circle and Tether for comment.