Tether’s UNYIELDING Grip: USDT Dominates Stablecoin Market Despite Rising Competition, Nansen Reveals
The world of stablecoins is heating up with new players constantly entering the arena. However, one name consistently stands out: Tether. Despite increased competition from rivals like Circle’s USDC and emerging tokens such as Ethena’s USDe, data indicates Tether (USDT) remains firmly in control of the stablecoin market.
Tether (USDT) Maintains Market Dominance
According to a recent report from Web3 research firm Nansen, Tether (USDT) continues to hold the lion’s share of the US dollar-pegged stablecoin market. As of April 25, Nansen’s analysis shows Tether commanding roughly 66% of the total stablecoin market share. This is significantly higher than its closest competitor, USDC, which holds approximately 28%.
Here’s a quick look at the market share breakdown per Nansen’s report:
- Tether (USDT): ~66%
- USDC (USDC): ~28%
- Ethena (USDe): Just over 2%
Nansen anticipates Tether’s lead will persist, even as competitors demonstrate faster growth rates in certain periods.
Why Tether’s Lead Endures, According to Nansen
Nansen’s report highlights several factors contributing to Tether’s sustained dominance. Tether stands out as a primary driver of onchain activity. The firm notes that Tether boasts nearly three times the user base of Uniswap and facilitates over 50% more transactions than the next most active application. This widespread usage underscores its fundamental role in the crypto ecosystem.
Furthermore, Tether is the most profitable stablecoin issuer. The company generates substantial revenue by investing the fiat currency reserves backing USDT into highly liquid, yield-generating instruments, such as US Treasury bills. Nansen reported Tether’s profits nearing $14 billion in 2024.
Nansen suggests that users prioritize liquidity and stability over earning yield directly from their stablecoin holdings. The report states, “Given the growth of USDT and USDC, the users are clearly expressing that they do not necessarily care about the yield as they are forgoing it to Tether and Circle – they simply want access to the most liquid and ‘stable’/ least-likely-to-depeg stablecoin out there.” This indicates that the primary use case for many is seamless value transfer and storage, where USDT excels due to its ubiquity.
The Competitive Stablecoin Market Landscape
While Tether holds the top spot, the stablecoin market is undeniably competitive. USDC has experienced accelerated growth since November, benefiting from a more favorable regulatory climate in the United States following the election. Nansen’s report notes that Circle’s US-regulated stablecoin has become particularly appealing to institutions seeking regulatory clarity.
However, USDC now faces increasing pressure from major traditional financial institutions entering the space. Companies like Fidelity, PayPal (with PYUSD), and various banks are launching or exploring their own stablecoin products, rapidly gaining traction. Payment processor Stripe also recently signaled plans for a new stablecoin offering after acquiring the stablecoin platform Bridge.
Despite its smaller market share, Ethena’s yield-bearing USDe stablecoin is considered competitive moving forward, partly due to its deep integrations across centralized exchanges (CEXs) and decentralized finance (DeFi) protocols. Since its launch in 2024, USDe has offered an attractive average annualized yield of approximately 19%.
Nansen’s Outlook: A ‘Winner-Takes-Most’ Dynamic
Despite the emergence of new stablecoins and the growth of competitors like USDC, Nansen’s analysis leads them to believe the market will ultimately trend towards a ‘winner-takes-most’ dynamic. Tether’s established network effects, liquidity, and integration across countless platforms give it a significant advantage that competitors will find challenging to overcome in the short term.
In conclusion, while the stablecoin space is seeing innovation and increased participation from various players, Tether (USDT) maintains its dominant position. Nansen’s data highlights Tether’s substantial market share, high user activity, profitability, and user preference for liquidity and stability as key factors solidifying its lead. The competitive landscape is evolving with USDC’s growth and traditional finance entries, but Nansen’s report suggests Tether is well-positioned to retain its status as the market leader for the foreseeable future.
