Two Alternative Stablecoins to Consider for 2025 as USDC Increases Redemption Fees Once More
Stablecoins play a vital role in the world of cryptocurrency and the decentralized finance (DeFi) ecosystem, which is currently dominated by two major corporations. Circle’s USDC recently raised its redemption fees for the second time in 2024, leading to an increased interest in alternative stablecoins.
According to reports from Bloomberg and further coverage by Unchained, Circle raised the “standard” redemption fees for USDC on October 29. This tier applies to holders who wish to bypass the typical two-day waiting period for “basic” redemptions, allowing them to receive their dollar amount instantly for a higher fee.
Analysts believe that this fee increase could potentially reduce the demand for USDC from institutions and high-net-worth individuals for trading, investments, and reserves. Interestingly, this decision came at a time when Tether’s USDT had surpassed a $120 billion market capitalization, with over 70% dominance in the market.
In February, USDC held a 31% market share in the stablecoin market, while USDT had 52%. However, USDC’s market share has since dropped to 20%, while USDT’s has increased to 70%.
Given the importance of USDC in challenging USDT’s dominance, there may be a rise in demand for alternative stablecoins in 2025. These alternatives could range from centralized solutions like PayPal’s PYUSD to decentralized experiments like Ethena’s USDe, which is based on a new system developed by crypto executive Arthur Hayes.
One leading decentralized stablecoin to consider is Maker’s DAI, which is the third largest stablecoin by market cap, with over $5.36 billion minted. DAI is an overcollateralized stablecoin, requiring investors to deposit a higher nominal value in various cryptocurrencies to mint a smaller amount of DAI in a decentralized manner.
Another promising alternative stablecoin for 2025 is Hatom’s USH, which is in the final stages of launching after years of development and testing. USH uses the battle-tested overcollateralized model of DAI to maintain its peg to the U.S. dollar.
As the cryptocurrency ecosystem continues to evolve, decentralized alternatives like Maker’s DAI and Hatom’s USH will play a crucial role in providing stablecoin options for users and investors. It is essential to conduct thorough research and understand the risks and benefits of each alternative as 2025 approaches.
