Tether’s USDt and Circle’s USDC, the two largest stablecoins by market capitalization, have seen a gradual decline in market share over the past year, signaling a potential end to the “stablecoin duopoly.”
Despite steady growth in their market caps, USDT and USDC have lost more than 5% of their combined share since Oct. 2, 2024, according to data from DefiLlama and CoinGecko. Nic Carter, partner at Castle Island Ventures, noted on X that rising competition and regulatory shifts are driving the change.
— nic carter (@nic__carter) October 1, 2025
Peak dominance and gradual decline
USDT and USDC reached a combined peak of 91.6% of the stablecoin market in March 2024, when the market was valued at approximately $140 billion. At the time, USDT accounted for around $99 billion and USDC for $29 billion.
Carter noted that their dominance has fallen to 86% since that peak, and current data shows a further decline to 83.6%, representing a 5.4% drop since October 2024 and a 3.4% year-to-date decrease. He attributed this trend to growing intermediary competition, yield-focused stablecoins, and post-GENIUS regulatory dynamics.
Emerging stablecoins and yield competition
Carter highlighted several emerging stablecoins gaining traction, including Sky’s USDS, Ethena’s USDe, PayPal’s PYUSD, and World Liberty’s USD1. He also mentioned Ondo’s USDY, Paxos’ USDG, and Agora’s AUSD as notable entrants, predicting that new bank-issued stablecoins will further intensify competition.
Ethena’s USDe, which passes along yield from crypto basis trades, has been the standout success, growing to a $14.7 billion supply. Carter expects the trend of yield-bearing stablecoins to continue, noting that Circle is collaborating with Coinbase to introduce yields on USDC.
Banks and consortia entering the stablecoin market
Carter emphasized that regulatory changes are enabling banks and financial institutions to issue stablecoins. He predicted that bank consortia, rather than individual banks, will likely dominate this segment due to the distribution scale required to compete with Tether.
Several European banks have already acted on this trend. On Sept. 25, Dutch lender ING announced a joint venture with Italy’s UniCredit and seven other banks to develop a euro-denominated stablecoin, expected to be issued in the second half of 2026 under the EU’s Markets in Crypto-Assets Regulation (MiCA) framework.