Circulation grows on Solana and Ethereum Layer 2

Circle USDC has seen a significant resurgence as its total circulating supply increased by 80% from its 2023 lows.

As revealed by Blockwork data analytics manager Dan Smith, the stablecoin's supply reached nearly $44 billion as of January 2, 2025. The latest figure represents a marked increase from its 2023 low of less than $24 billion .

USDC Blockchain Diversity Expands

the latest <a target="_blank" href="https://x.com/smyyguy/status/1874841046078910631″ target=”_blank” rel=”noopener” data-wpel-link=”external”>data reveals that ethereum continues to dominate with 65% of USDC supply. However, other blockchains, including Solana and Base, hold 10% and 7% of its supply respectively. Hyperliquid and Arbitrum followed suit, capturing 5% and 3% of the growing USDC supply share, respectively.

This diversification also contrasts with the period in 2023, when ethereum represented 85% of the supply. The shift appears to be driven by retail traders migrating to a cheaper alternative, Solana, for speculative trading of meme coins and ai agent tokens.

Additionally, the rise of Layer 1 networks such as Hyperliquid, designed for low-latency trading, and ethereum's Layer 2 solutions, such as Base and Arbitrum, evidenced the evolution of cryptocurrency user preferences.

This aligns with the <a target="_blank" href="https://x.com/peterschroederr/status/1873814990932582618″ target=”_blank” rel=”noopener” data-wpel-link=”external”>statistics posted by Circle's Peter Schroeder, which revealed that USDC adoption in ethereum Layer 2 solutions skyrocketed in 2024, with supply jumping from $1.9 billion to $8.1 billion. Base led the growth with a 26x increase, followed by a 4x increase in Arbitrum.

The ethereum Dencun upgrade in March further increased scalability and reduced transaction fees below $0.01. Meanwhile, the total transaction volume of USDC exceeded $15 trillion during the year. Solana began 2024 as a leader in USDC transactions, but saw a decline in activity due to reduced use of MEV bots by market makers. On the other hand, Base's momentum grew steadily, generating transaction volumes during the last four months of the year. By the end of the year, USDC had recorded more than 100 million unique transactions.

USDC bounces

Currently, USDC trails Tether (USDT), which dominates the market by market cap. USDC and USDT almost reached parity in 2022, but the former declined, coinciding with the collapse of Silicon Valley Bank (SVB), where Circle held reserves.

The loss of the dollar peg was triggered when the fintech company revealed that $3.3 billion (about 8% of its reserves) were at risk. However, market confidence recovered as USDC reestablished its peg within four days.

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