The stablecoin market has officially crossed the $300 billion mark. However, the latest data shows that growth across the broader sector is rapidly slowing. Rather than fueling broader stablecoin expansion, the recent capital inflows are flowing directly into Tether’s USDT. Meanwhile, several rival stablecoins, including USDC, USDe, and PYUSD, recorded steep supply declines over the past month, highlighting Tether’s growing dominance across the digital asset market.
Tether Pulls Ahead as Market Growth Slows
According to DeFiLlama data, the stablecoin market recorded only around $0.9 billion in growth over the past month. Despite the sector surpassing $323 billion in total supply, monthly growth stood at just 0.3%.
Interestingly, nearly all of that expansion came from Tether’s USDT, which added $5 billion in supply during the same period. The stablecoin continued to attract fresh capital as traders and institutions appeared to prioritize liquidity and stability amid slowing market conditions.
DeFiLlama data further shows that USDT now dominates the stablecoin sector with a 58.69% market share and a market cap of $189.64 billion. Reports of Tether’s growing dominance come shortly after market intelligence platform Lookonchain revealed that the company minted another 1 billion USDT on Tron. The report also noted that Tether’s total USDT supply on the Tron network has now surpassed $89 billion.
Further strengthening its global reach, Tether recently partnered with fintech firm LemFi to expand stablecoin settlement across African and Asian markets by integrating USDT. The collaboration is expected to improve cross-border payment infrastructure and accelerate stablecoin adoption in emerging economies.
USDe and PYUSD See Sharp Declines
Meanwhile, competing stablecoins have moved in the opposite direction. USDC, Ethena’s USDe, and PayPal’s PYUSD collectively lost around $4.2 billion in supply during the same timeframe.
Ethena’s USDe posted one of the biggest drops among major stablecoins. Its supply fell 28% over the past month and is now down nearly 34% since the start of the year. The data linked the decline to compressed perpetual futures funding rates. Lower funding yields have reduced the incentives that previously attracted users to Ethena’s yield-generating stablecoin model.
PayPal’s PYUSD also struggled. Its supply declined by 13% over the month as competition across the stablecoin market intensified. The shrinking supply highlights growing pressure on newer stablecoin projects competing with dominant players like Tether.
Smaller Stablecoins Capture Some Inflows
While several leading stablecoins lost ground, a few smaller projects attracted fresh inflows. Sky’s USDS and World Liberty Financial’s USD1 both recorded modest growth during the month. Interestingly, Sky’s USDS has now surged 48.9% year-to-date, while World Liberty Financial’s USD1 is up 33.7% over the same period.
The gains suggest that some users are still willing to explore alternatives outside the largest stablecoin issuers. Even so, the broader market remains heavily concentrated around USDT. Tether continues to dominate stablecoin liquidity across exchanges and trading platforms.
Meanwhile, analysts believe that if newer stablecoin issuers want to directly displace USDT’s market share, they would need to offer higher yields, stronger distribution channels, or regulatory advantages that Tether cannot match. However, reports suggest that none of the current second-tier stablecoins have demonstrated those capabilities yet.
Josiah Oluwadare
