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USDC vs USDT: Best Stablecoin

USDC vs USDT: Best Stablecoin

Dylan Matthews
Fact Checked
Oct 7, 2022

USDC and USDT are two of the most popular stablecoins in the cryptocurrency ecosystem. They help users interact with Web3, DeFi, and other applications on the blockchain without having to deal with the volatility of other crypto tokens like Ethereum and Bitcoin.

Given the recent crash of the UST stablecoin by Terra Labs, there have been many concerns and questions raised around existing stablecoins. In this guide, we aim to help you decide which stablecoin is most secure out of USDC vs USDT.

Table of Contents

Platform Highlights

What is USDC?

USDC is a stablecoin that was created in 2018 by Circle in conjunction with Coinbase. USDC is safe and regulated in the United States, and is fully backed 1:1 by cash and short-dated US government bonds. It is the safest and most reliable stablecoin that has not lost its peg or deviated from $1 since its inception.

USDC is the best stablecoin for users of DeFi because it provides the best yields and compatibility with major applications like AAVE, Compound, Solend, Trader Joe, Yearn Finance, and many others.

Circle USDC
Mint USDC via Circle.

What is USDT?

USDT is another stablecoin that was first developed and issued by Tether Limited out of Hong Kong. Tether is the most entrenched stablecoin on futures trading platforms like Binance and FTX and generally is the better option for uses looking to use centralized exchanges.

One issue regarding USDT is that it has only been partially audited and were late to provide transparent data around its reserves. While Tether (USDT) has been a safe and secure stablecoin, caution is advised.

USDT vs USDC
Mint Tether (USDT) via Tether.

USDC vs USDT: Adoption

When deciding which stablecoin is best, you must consider which has the widest adoption on DeFi and CeFi applications. Both USDC and Tether (USDT) have the highest market capitalization out of any stablecoin in the digital asset market. This means that they are nearly equally compatible with major lending applications in DeFi and CeFi.

Both USDC and USDT are equally available on all blockchain networks such as Ethereum, Solana, Avalanche, Tron, Binance Smart Chain, and many others. That means that both tokens can be used to deposit on major platforms like AAVE or Compound to earn interest.

That said, USDC is available on slightly more Decentralized Finance applications than USDT, so it is the superior stablecoin in that sense.

BUSD vs USDC vs USDT
USDT vs USDC vs BUSD adoption via Defillama.

Security and Regulation

USDC and USDT start to distinguish themselves when you look at their regulatory history and the transparency concerning their cash reserves. USDC has been the gold-standard in transparency because they receive regular audits in the United States from top-tier firms.

On the other hand, Tether (USDT) have had a troubled history with regulators due to their reluctance to provide transparent reports up until very recently. With this in mind, we firmly believe that USDC by Circle is the safer stablecoin compared to USDT.

USDC vs USDT

USDC vs USDT Farming Yields

USDT generally provides higher yield farming rewards on popular DeFi applications like AAVE, Stargate Finance or Compound Finance because it carries increased risk. The consensus amongst investors and farmers is that USDT is more likely to have regulatory issues than USDC, which means there is less USDT value locked in DeFi protocols.

With less value being locked in USDT on applications, it means that users can get a higher yield by providing liquidity and taking on the extra risk. While this may seem like a good idea at first glance, it is important to consider whether the additional risk is worth an extra 1% or 2% in farming rewards. For more information on this, read our best stablecoin interest rates guide.

USDC to USDT Conversion Rate

The graph below is a live chart of USDC/USDT in US Dollar terms to compare the purchasing power USDC vs USDT. As you can see from the price history, USDC generally trades at a slight premium to USDT because it is the preferred stablecoin.

USDC vs USDT: Conclusion

USDC is the better stablecoin compared to USDT because it is more integrated with DeFi applications, and they are safer and more transparent. After the collapse of LUNA and UST, it is important that you use stablecoins that are the most secure to avoid the risk of a bank-run.

Dylan Matthews

I am the Founder & CEO of Buy Bitcoin Bank and was previously an engineer for a Prop trading firm in Crypto.

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