Stablecoin legislation can unlock a whole series of new competitors for Circle and are unlocking USDC Stablecoin In the US, but in the field of decentralized finances, or Defi, it is unlikely that a serious rival will appear at any time soon, according to analysts from Investment Bank Compass Point.
Although Tether’s USDT Is King in emerging markets, Circle’s USDC Stablecoin is a dominant presence about the growing number of decentralized exchanges, lending protocols of the crypto industry, and other Defi institutions, wrote analyst Ed Engel and Joe Flynn in a Wednesday memorandum.
Circle would debut on Thursday at the New York Stock Exchange, targeting A valuation of $ 6.9 billion, based on a first public offer for $ 31 per share. A clear advantage to support that appreciation, compass analysts wrote, is the widespread use of USDC in Defi.
“USDC is the most traded Activum about decentralized changes,” they wrote. “In fact, over in Most Defi applications, USDC is the most used stablecoin. “
Stablecoins are digital assets linked to the price of a Fiat -Maluta, such as the US dollar. In the context of Crypto, they often use traders as a way to exclude winnings or mail -computer for loans; However, its use has grown on fields such as payments and transfers.
In the past year, trade volumes have increased on decentralized trade fairs compared to centralized trade fairs, accounting for 26% of daily trade volumes earlier this month, or $ 14 billion, of 8% a year ago, according to Crypto Data Provider Messari.
Defi activity is focused on networks such as Ethereum And Solanabut circle circle from USDC over at least 40 different networks, according to Messari. To achieve this, Compass Point analysts wrote that “Circle has programmed a customized version” from the Stablecoin in many chains that use its own technology.
With the function, users can exchange USDC over chains with limited costs, while avoiding hackrisks related to so -called bridges, they added. Bridges often work by keeping a token in reserve on one network, while they spend an equivalent on the other, making them a go-to-target white for bad actors because they often hold a large amount of funds in one place in the chain.
The analysts noted that PayPal’s Pyusd Stablecoin had a buzzy debut last year, but failed to get a grip. The company tried to grow the market share of Pyusd by offering “non -durable revenues on Defi protocols”, but the supply remains below $ 1 billion to this day.
Even as Defi’s dominant stablecoin, USDC is confronted with disadvantages, including the sensitivity of the STABLecoin supply for market conditions, the analysts wrote.
Circle’s income is largely derived from revenue assets such as American treasury that support the Stablecoin, which means that a drawing in the range of USDC can have an adverse effect on the financial data of the company. Because more than a quarter of USDC’s range is in Defi applications, the general health of the Altcoin market is the key to maintaining current cash flows, the analysts added.
“When Altcoins gathered, Defi usually increases, which leads to more demand for USDC,” they wrote. “However, the lagging Altcoin prices can slow down the growth of the USDC, even after the Stabile legislation has expired.”
Published by James Rubin