The circulating supply of Circle’s USD Coin (USDC) has seen a significant surge, rising 80% from its cyclical lows, as onchain activity continues to pick up momentum. According to data from Blockworks Research, as of January 2, 2025, USDC’s circulating supply is nearing $44 billion, nearly double the low of less than $24 billion seen in 2023, according to CoinGecko.
This sharp increase in supply reflects a broader shift in the stablecoin ecosystem, with USDC’s holdings becoming more evenly distributed among various blockchain networks. As users expand beyond Ethereum, the shift highlights the rising prominence of alternative layer-1 networks like Solana and Hyperliquid, alongside Ethereum’s continued dominance. Blockworks’ data analytics manager, Dan Smith, pointed out in a January 2 post on X that this shift in distribution is indicative of the growing onchain activity and the rise of decentralized applications (dApps) and tokens on networks beyond Ethereum.
This expansion and diversification in USDC’s supply are expected to continue in 2025, with analysts forecasting a potential doubling of its market capitalization in the coming year. As of now, Ethereum still holds the largest share of USDC’s supply, with approximately 65% of the stablecoin’s circulating supply residing on the Ethereum network. Solana, however, has seen impressive growth, now accounting for 10% of USDC’s total supply, while layer-2 networks like Base and Arbitrum, as well as the low-latency trading platform Hyperliquid, collectively hold around 15% of USDC’s circulating supply.
In comparison, in 2023, USDC was heavily concentrated on Ethereum, which held around 85% of the stablecoin’s circulating supply. Smith notes that the shift in supply distribution is partly due to retail traders increasingly entering the crypto market via Solana, as speculation around Solana-based memecoins and AI agent tokens has intensified. This trend is supported by the growth of decentralized finance (DeFi) on Solana, which saw its total value locked (TVL) skyrocket from about $1.5 billion in January 2024 to nearly $8.5 billion by December 2024, according to data from DefiLlama.
Stablecoin Adoption Surge Post-Trump’s Election Victory
The surge in the USDC market cap follows a broader trend in stablecoin adoption that accelerated after the U.S. presidential election. According to a December research note by Citi, the combined market capitalization of the top three stablecoins—Tether’s USDT, USDC, and Dai—grew by over $25 billion following Donald Trump’s election victory. This marked a pivotal moment for the stablecoin market, signaling increased demand for digital assets as a form of alternative finance.
Steno Research, a cryptocurrency research firm, forecasts that USDC’s circulating supply will continue to rise and could exceed $100 billion by 2025. The firm’s analysis suggests that this growth hinges largely on one key assumption: Tether, the largest stablecoin, remains unregulated in the European Union. If this scenario holds, Steno predicts that European residents will increasingly turn to USDC as an alternative to Tether’s USDT, driving further growth for Circle’s stablecoin.
The adoption of USDC and other stablecoins is particularly promising for the decentralized finance (DeFi) sector, which relies heavily on stablecoins as an entry point for new users. According to Citi, stablecoins play a crucial role in facilitating DeFi adoption, acting as an on-ramp for decentralized applications and financial services. As USDC’s supply grows, it could further fuel the DeFi ecosystem’s expansion, helping usher in a new era of decentralized finance and blockchain technology.
Grayscale, a major player in the digital asset space, has also recognized the importance of stablecoins in driving the DeFi ecosystem forward. In December 2024, Grayscale included several DeFi applications, including two based on the Solana blockchain—Ethena, Jupiter, and Jito—on its list of top 20 tokens to watch for the first quarter of 2025. These platforms are part of the growing ecosystem of DeFi applications that depend on stablecoins like USDC to facilitate liquidity and payments.
The continued expansion of USDC’s supply across various blockchains, including Ethereum, Solana, and layer-2 solutions, signals the increasing diversification of the stablecoin ecosystem. As more users and developers embrace stablecoins for DeFi applications and other decentralized use cases, the importance of USDC in the crypto ecosystem will continue to grow. This broader trend points to a future where stablecoins are not just a tool for maintaining a dollar peg but also an integral component of the decentralized financial infrastructure that is slowly replacing traditional banking and financial systems.
Author’s Opinion
The rise of USDC, alongside the increasing adoption of DeFi, paints an exciting picture for the future of digital finance. Stablecoins are providing the infrastructure for a new financial system, one that is more decentralized, accessible, and borderless than anything the world has ever seen. However, the industry must remain vigilant about regulatory risks that could impact the adoption and stability of these assets. As we move into 2025, the growth of USDC and other stablecoins will likely continue to reshape the financial landscape, but their success hinges on clear regulatory frameworks that support innovation while protecting users.
Featured image credit: Ervins Strauhmanis via Flickr
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