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An evaluation by crypto market data provider Kaiko indicated that USD Coin (USDC) is presently the most liquid stablecoin on centralized exchanges (CEXs), with around $38 million in bids preventing a 0.1% price fluctuation of the asset.
The liquidity of USDC is succeeded by that of Tether (USDT), Binance USD (BUSD), True USD (TUSD), and Dai (DAI). The information gathered by Kaiko encompasses the 0.1% bid-side depth across all markets utilizing USDC as a base asset.
USDC – the Most Liquid on CEXs
Kaiko observed that while stablecoin issuers such as Circle and Tether work to maintain their tokens’ parity, de-pegging can still take place in spot markets. This situation has rendered stablecoin spot markets crucial for price discovery.
“In theory, stablecoin issuers uphold their peg. Nevertheless, de-pegging can still occur in spot markets, particularly given that #USDT redemptions commence at $100k. Therefore, stablecoin spot markets are vital for price discovery. This data compiles 0.1% bid-side market depth across all markets that feature the stablecoin as a base asset,” Kaiko stated.
This recent development is noteworthy for USDC, as USDT has consistently held the top position. At the beginning of the year, USDC and DAI had minimal activity on CEXs, primarily being traded within the decentralized finance (DeFi) sector, according to Kaiko.
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As Q1 2023 drew to a close, a potential U.S. banking crisis led USDC to lose its dollar parity, resulting in a 13% decline to levels below $0.88. However, the stablecoin has since stabilized and is working to maintain its position within the $1 price range, according to data from CoinMarketCap.
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Coinbase Increases USDC Rewards to 4%
The prominence of USDC on CEXs can be linked to the crypto exchange Coinbase increasing the rewards associated with the asset to 4%. The trading platform announced in a tweet on June 15 that it is raising its incentive for USDC holders from 2% to 4%, a strategy intended to attract more users and enhance its market standing.
In the meantime, USDT, now the second most liquid stablecoin on centralized exchanges with approximately $26 million in bids, traded below the $1 price range during the week. The asset was valued at $0.99 at the time of writing, according to data from CoinMarketCap, due to the ongoing Curve-Aave loan situation.
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