The circulating supply of Circle’s United States dollar-backed stablecoin, USD Coin (USDC), has reached a significant milestone, with data from Blockworks Research indicating an 80% increase from cyclical lows. As of January 2nd, USDC’s circulating supply is approaching $44 billion, nearly double the 2023 low of less than $24 billion, according to CoinGecko.
Growing Demand for Stablecoins
The increasing demand for stablecoins can be attributed to various factors, including growing onchain activity and the rise of alternative layer-1 networks such as Solana and Hyperliquid. Analysts expect this trend to continue, with USDC’s market capitalization potentially doubling this year.
Diversification of Networks
As users migrate beyond Ethereum, the distribution of USDC holdings has become more evenly distributed across blockchain networks. According to Blockworks data analytics manager Dan Smith:
"The shift reflects increasing onchain activity and the rise of alternative layer-1 networks such as Solana and Hyperliquid."
Breakdown of USDC Supply Distribution
As of January 2nd, approximately 65% of USDC supplies are on Ethereum, while 10% are on Solana. The remaining 25% is spread across Base and Arbitrum – both Ethereum layer 2s – as well as Hyperliquid, a layer 1 for low-latency trading.
Comparison with 2023
In 2023, USDC remained heavily concentrated on Ethereum, which held 85% of the stablecoin’s circulating supply. However, the trend has shifted in favor of diversification across multiple networks.
The Rise of Solana and Alternative Layer-1 Networks
The total value locked (TVL) on Solana surged from around $1.5 billion in January to nearly $8.5 billion by December 2024, according to data from DefiLlama. This significant increase is attributed to the growing popularity of Solana-based memecoins and AI agent tokens.
Impact on Stablecoin Market Capitalization
The combined market capitalizations of the top three stablecoins – Tether’s USDt (USDT), USDC, and Dai (DAI) – collectively grew by more than $25 billion following Donald Trump’s presidential election win in the United States. Cryptocurrency researcher Steno Research expects USDC’s circulating supply to more than double during 2025, reaching highs of around $100 billion.
Critical Assumption for Growth
This growth hinges on a critical assumption: that Tether, the largest stablecoin, remains unregulated within the European Union. If this scenario unfolds, Steno Research expects European residents to increasingly adopt USDC as an alternative to Tether’s USDT.
Accelerating Stablecoin Adoption
Accelerating stablecoin adoption is particularly bullish for decentralized finance (DeFi), as "stablecoins are the on-ramp to decentralized finance," Citi said. In December, Grayscale added several DeFi applications, including two on Solana, to its list of the top 20 tokens to watch in the first quarter of 2025.
Related Developments
- Grayscale adds AI launchpads and Solana DeFi apps to Q1 2025 top tokens
- How crypto laws are changing across the world in 2025
Conclusion
The increasing circulating supply of USDC, coupled with growing onchain activity and diversification of networks, suggests a promising future for stablecoins. Analysts expect this trend to continue, with USDC’s market capitalization potentially doubling this year.
Related Articles
- How crypto laws are changing across the world in 2025
- Grayscale adds AI launchpads and Solana DeFi apps to Q1 2025 top tokens
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