USDC
Market Cap: $43.7 billion, as of 26-April-2022
Contract:
Collateralization Mechanism & Detail: USDC is collateralized by centrally controlled assets, including cash and debt instruments. Details as of 20-October-2021:
92% cash, or cash equivalents
1% Corporate bonds (maturity less than or equal to 3 years)
5% Yankee CDs (maximum maturity of 13%)
2% Commercial paper (maximum maturity of 13 months)
History/Context + Risk Assessment: USDC was launched in 2018 by the Centre Consortium, founded and most prominently backed by Circle and Coinbase. The company originally purported to be backed 100% by US Dollars, and advertised itself accordingly. However, in the face of regulatory scrutiny and user-demands for clarity on how USDC was backed, the organization released a report in July of 2021 indicating that only 61% of its reserves were cash, with debt instruments such as bonds making up the balance. Following the increased transparency of USDC’s collateralization, Circle has increased their holdings of cash to over 90% and announced that they intend to operate in compliance with regulators. The stable coin has announced that it is working with regulators to become a Full Reserve Commercial Bank.
USDC’s price can also fluctuates on secondary markets (i.e. when you are not purchasing USDC from the Centre Consortium). Particularly in DeFi, USDC is a medium to move out of volatile assets without converting to fiat. If, for example, the price of bitcoin plummets and traders want to convert to USDC, the price can rise slightly.
Despite misleading consumers with prior claims that USDC is 100% US dollar or equivalent-backed, it has a better track record in transparency and security than comparable high-cap stablecoins. USDC has published audits from independent accounting firm Grant Thornton LLP certifying that they are sufficiently capitalized since October 2018.\
Last updated