USDC might’ve lost a very distinct feature relative to other stablecoins, such as Tether (USDT) or algostables like DAI.
The assurance that each USD Coin stablecoin is backed by an equal number of US dollars has been removed from Coinbase. The stablecoin USD Coin launched at the beginning of the year with a simple premise: It would trade at a 1:1 rate with the US dollar. One dollar in the coin account is worth $1 in a bank account.
USDC’s Key Feature Redescribed
USD Coin started with a different idea, which subsequently helped it grow to be the world’s second-largest stablecoin with $28 billion in assets. However, it was later discovered that this was not the case when Circle (Coinbase’s partner) declared USD Coin’s assets for the first time last month.
Following an audit that showed that not all of USDC’s reserves were kept in cash, Coinbase made a significant update on the USD Coin page on its website. This was contradictory to the earlier declaration, which said that “each U.S. dollar (USD) used as collateral in an account of the Federal Reserve System (FRB) is backed by one USD in a bank account.”
When you visited the USD Coin website on Coinbase before, you were met with a message that states USDC is “backed by completely reserved assets.” The latest language specifies that USDC is backed by “one dollar or asset with equivalent fair value, which is held in accounts with US regulated financial institutions.”
USDC’s Audit Findings
The auditing company Grant Horton found that USDC’s total of $492.6 million in reserve assets, 61% of which was kept in cash and commercial paper, comprised 9% of the reserve assets. In the event that consumers attempt to redeem the stablecoin en masse, these assets may suffer losses, making them less liquid than cash. USD Coin’s reserves are audited and published by the Centre Consortium. Centre is planning on going public with a merger that would value it at $4.5 billion.
The number of users for USDC has increased considerably within the stablecoin industry, as a circulating supply of over $26 billion can be found. In some people’s eyes, USDC is seen as a less risky alternative to USDT.
How do you feel about USDC’s recent reveal? Will it affect your use of USDC?