Stablecoin Market Nears $300 Billion as USDT, USDC Tighten Dominance: Kaiko

Even as the stablecoin market has surged into a roughly $300 billion category, the competitive landscape is tightening rather than fragmenting—leaving Tether (USDT) and USD Coin (USDC) more entrenched than ever. A new report from Kaiko Research argues that the next phase of stablecoin competition will be decided less by who can mint tokens and more by who can secure durable 'adoption' and deep 'liquidity'.

In a research note published on July 6, Kaiko Research analyst Thomas Probst described stablecoins as rapidly evolving from a trading utility into core financial infrastructure used for payments, settlement, and corporate treasury operations. That shift is drawing new issuers into the space—from banks and fintechs to payment firms and crypto-native companies—yet the report finds that market growth is coinciding with greater concentration at the top.

Kaiko’s June 2026 data underlines that imbalance. USDT’s market capitalization stood at about $186 billion, while USDC totaled roughly $70 billion. Other major dollar-linked stablecoins—including Ethena’s USDe, MakerDAO’s DAI, and PayPal USD (PYUSD)—remained far smaller by comparison, reinforcing a market that is not only 'dollar-dominant' but increasingly defined by a two-asset hierarchy.

The report frames the division as structural rather than purely reputational. USDT has become a widely used dollar proxy in emerging markets, often serving cross-border transfers and day-to-day payments in regions where local banking rails are costly, slow, or inaccessible. USDC, by contrast, has leaned into regulatory positioning, institutional uptake, and integration with traditional finance, with transparency and compliance serving as key pillars of its brand. Different user bases, same advantage: both tokens are already embedded across exchanges, wallets, payment stacks, and liquidity venues.

Market share trends suggest the gap is difficult to close even when challengers grow. Kaiko estimates USDC’s share of dollar-stablecoin trading volume rose from about 11% in early 2025 to around 21% in 2026, while USDT still retained a 'clear majority'. The implication is that incremental gains by latecomers do not automatically translate into a credible threat to incumbents, because liquidity begets liquidity: high-volume assets are more likely to be listed broadly, supported by market makers, and prioritized for integration in wallets and payment platforms—creating a reinforcing loop.

Kaiko describes this dynamic as a classic 'network effect'. Issuing a stablecoin has become technically straightforward, but turning one into a widely used settlement asset requires dense distribution channels, thick order books, and sustained trust built through repeated use. Even well-designed products backed by prominent partners can struggle if market depth remains shallow, the report said.

Liquidity metrics show just how wide the moat is. In June 2026, Kaiko estimates USDC’s average 1% market depth—an indicator of the dollar value that can be traded within 1% of mid-price—was roughly $16 million, with USDT around $14 million. Over the same period, Bitcoin (BTC) was closer to $5 million. For spot markets, those figures highlight the degree to which leading stablecoins can support large transfers and institutional-scale execution with comparatively low slippage, reinforcing their role as settlement instruments rather than mere trading pairs.

Meanwhile, euro-denominated stablecoins remain a small corner of the market despite improved regulatory clarity in Europe. After the European Union’s Markets in Crypto-Assets (MiCA) framework came into effect, interest in euro stablecoins increased, but volumes stayed marginal. Kaiko estimates euro stablecoins accounted for about 0.03% of stablecoin trading volume in early 2025, rising to roughly 0.12% by mid-2026—versus about 99.88% for dollar-denominated stablecoins over the same period.

Depth comparisons are even starker. Kaiko noted USDC frequently exceeded $10 million in average 1% depth on both bid and ask sides, while USDT typically held between $5 million and $10 million per side. By contrast, EURC and EURCV—among the more visible euro stablecoins—generally posted average 1% depth in the $200,000 to $500,000 range. The report characterized this as evidence of 'growth' without the kind of market maturity needed to compete with dollar incumbents.

Against that backdrop, attention is shifting to a new competitive axis: entrants backed by banks, payment companies, and fintech firms positioning stablecoins as real-world settlement rails. The appeal is familiar—24/7 operation, lower transaction costs, and near-instant cross-border value transfer—but Kaiko cautioned that institutional interest does not automatically translate to market relevance. The report pointed to Europe-based examples such as CACEIS’s EURXT as part of a broader trend of traditional finance exploring issuance.

Still, Kaiko drew a sharp line between 'launch' and 'success'. While the technical barriers to creating a stablecoin have fallen, the barriers to becoming a major transactional asset remain high. Exchange listings, integration into payments applications, market-maker incentives, and consistent end-user demand all matter—and must happen at scale.

As a case study, Kaiko highlighted Open USD (OUSD), describing it as a collaborative initiative involving multiple stakeholder types—including payment firms, financial institutions, fintech players, and exchanges—aimed at establishing a core transactional asset for institutions and platforms. Given that ambition, the market has speculated that OUSD could eventually compete with USDC. Kaiko’s view, however, is that any bid to reshape the market hinges on rapidly proving sufficient depth and credibility—two attributes incumbents have spent years compounding.

USDC’s existing footprint—around $70 billion in supply alongside broad integration and established liquidity—illustrates why the report characterizes stablecoin competition as closer to distribution and habit formation than technology. Replacing what exchanges, institutions, and users already default to requires more than a compliant design or prominent backers; the tougher challenge is overcoming 'usage inertia'.

Kaiko ultimately concludes that the stablecoin market’s growth is real but structurally uneven. USDT and USDC have built a defensive perimeter rooted in scale, liquidity, distribution, and trust—making them difficult to unseat in the near term. Yet as stablecoins become more central to payments and financial plumbing, the report leaves room for the possibility that new issuers—especially those supported by banks, fintechs, and industry partnerships—could eventually pressure the status quo.

For now, Kaiko’s message is straightforward: the battleground is not issuance—it is 'adoption'. Any newcomer that hopes to matter must secure deep liquidity, broad integration, and sustained real-world use at the same time. The market may be opening to more players, but the wall of incumbency remains high.