In a Tuesday note, analysts at investment bank Compass Point wagered that DeFi outflows have the potential to pressure USDC’s on-chain circulation, a dynamic that would reduce gains derived from the stablecoin’s backing, namely U.S. Treasuries, for Coinbase and Circle.
188B USDT (ATH)
“DeFi outflows may result in users offramping USDC or holding USDC on exchanges with yield sharing arrangements,” they wrote. “Either outcome will put pressure on CRCL and COIN's gross profit, via lower interest revenue or lower margins.”
Although users have snapped up both stablecoins since Drift’s protocol was plundered, Tether’s product has likely benefited from superior crisis liquidity as fears have intensified, Jake Kennis, a senior research analyst at blockchain analytics firm Nansen, told Decrypt.
“This gap may reflect that USDT’s deeper liquidity across centralized venues provides a more immediate ‘flight to safety’ path during DeFi stress events, particularly for users seeking rapid exits from on-chain positions,” he said.
“While both stablecoins remain well-collateralized, USDT’s broader exchange integration and larger existing market share create network effects that tend to compound during periods of elevated protocol risk,” he added.
Decrypt has reached out to Circle and Tether for comment.
