Circulation Grows Through Solana, Ethereum Layer 2s

Circle USDC has seen a major resurgence as its total circulating supply increased by 80% from the 2023 lows.

As revealed by Blockwork’s data analytics manager Dan Smith, the stablecoin’s supply has reached nearly $44 billion as of January 2, 2025. The latest figure represents a sharp increase from its 2023 low of less than $24 billion.

USDC Blockchain Diversity Expands

The latest data reveals that Ethereum continues to dominate with 65% of USDC supply. However, other blockchains, including Solana and Base, hold 10% and 7% of their supply, respectively. Hyperliquid and Arbitrum followed suit, capturing 5% and 3% of the growing USDC supply share, respectively.

This diversification also contrasts with the period in 2023 when Ethereum accounted for 85% of the supply. The shift appears to be driven by retail traders migrating to a cheaper alternative, Solana, for speculative trading with meme coins and AI agent tokens.

Additionally, the rise of Layer 1 networks such as Hyperliquid, designed for low-latency trading, and Ethereum Layer 2 solutions such as Base and Arbitrum, evidenced the evolution of crypto user preferences.

This aligns with statistics published by Circle’s Peter Schroeder, which revealed that USDC adoption in Ethereum Layer 2 solutions will skyrocket in 2024, with a jump in supply of $1.9 billion to 8.1 billion dollars. Base led the growth with a 26x increase, followed by a 4x increase in Arbitrum.

The Ethereum Dencun update in March further increased scalability and reduced transaction fees below $0.01. Meanwhile, the USDC’s total transaction volume exceeded $15 trillion for the year. Solana started 2024 as the leader in USDC transactions, but saw a decline in activity due to reduced use of MEV bots by market makers. On the other hand, Base’s momentum grew steadily, resulting in transaction volumes during the last four months of the year. By the end of the year, USDC had recorded more than 100 million unique transactions.

USDC rebounds

USDC is currently trailing Tether (USDT), which dominates the market by market capitalization. USDC and USDT almost reached parity in 2022, but the former declined, coinciding with the collapse of Silicon Valley Bank (SVB), where Circle held reserves.

The loss of the dollar peg was triggered when the fintech firm revealed that $3.3 billion (roughly 8% of its reserves) was at risk. However, market confidence was restored when the USDC reset its four-day peg.

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