DeFiLlama: Circle has burned a record ~$9B of its USDC stablecoin in the past 90 days, decreasing supply from $55.55B to $46.57B, as DeFi yields decline
- The USDC supply has dropped about $9 billion since early July. — This decline is due to an uptick in USDC redemptions for the U.S. dollar. Tweets: @mdudas , @whale_alert , @whale_alert , and @whale_alert Tweets: Mike Dudas / @mdudas : $USDC outstanding has dropped by ~ 16% over the past quarter as investors move to cash, likely to earn interest on their dollars https://www.theblock.co/... @whale_alert : 🔥 99,000,000 #USDC (99,000,000 USD) burned at #USDC Treasury https://whale-alert.io/... @whale_alert : 🔥 11,000,000 #USDC (11,000,000 USD) burned at #USDC Treasury https://whale-alert.io/... @whale_alert : 🔥 50,000,000 #USDC (50,011,282 USD) burned at #USDC Treasury https://whale-alert.io/...
Context & Ripple Effects
USDC's supply has been whipsawed by trust and yield cycles before: the token gained roughly $3.4B when Tether briefly lost its dollar peg in May 2022, as issuers' fortunes inverted with each stress event. This record ~$9B burn is different in kind — not a confidence shock but a carry trade unwinding, with Mike Dudas noting outstanding USDC fell ~16% in a quarter as holders moved to cash to earn interest.
The redemption wave also foreshadows what came next in the coverage arc: further net outflows around SVB's collapse pushed USDC off its $1 peg, circulation bottomed near $26B by mid-2023, before the token later recovered to a $56.2B market-cap high in early 2025.
First-order effects
- Circle is redeeming USDC for dollars at record pace, shrinking its float from $55.55B to $46.57B — and with it the reserve base that generates its interest income, the engine behind the revenue figures it reported through 2023.
Second-order effects
- Rival issuers face the same negative-carry math: when dollar yields beat on-chain returns, every stablecoin competes against T-bills, pressuring rivals like Binance USD — which had gained $1.2B during the Tether scare — to defend deposits with their own incentives.
- Redemption pressure pushes Circle toward monetizing speed instead of float: two years later it was charging 0.03%+ per transaction for near-instant redemptions above $2M, effectively pricing the exit ramp.
Third-order effects
- Stablecoin supply is becoming rate-cyclical rather than ever-growing: the same asset that swelled on Tether's troubles and shrank on SVB's collapse swung between roughly $24.5B and $56B across the cycle, meaning issuer economics now track Fed policy as much as crypto activity.
- If redemptions keep scaling with rate cycles, regulators and banks gain leverage over the sector's plumbing — the reserve-bank concentration that turned SVB into a USDC solvency scare becomes the recurring fault line.
The trend: Stablecoin issuance is turning into a rate-sensitive, cyclical business where supply expands and contracts with the spread between dollar yields and DeFi returns, making reserve management — not minting — the core of an issuer's risk.