USDT and USDC Face Growing Competition as Stablecoin Market Share Declines

Despite controlling over 80% of the stablecoin market capitalization as of October 2025, Tether's USDT and Circle's USDC are facing unprecedented challenges from new competitors. While their first-mover advantages and strong exchange integrations have created significant value, the emerging "Stablecoin Summer" has exposed vulnerabilities in their dominance. New entrants like USDG (Paxos), USDe (Ethena), and USDH (Hyperliquid) are gaining traction by offering users enhanced yield-earning opportunities and deeper ecosystem integrations. Recent data shows USDT and USDC's combined market share dropped from 88% to 82% as the overall stablecoin market grew from $205B to $313B, signaling intensified competition. Circle responded to Hyperliquid's USDH launch by deploying native USDC on HyperEVM and investing in HYPE tokens, while Ethena's Binance integration attracted $2B in USDe deposits with 12% APR rewards. The stablecoin landscape is evolving rapidly as competitors target the lucrative interest revenue from reserves that Tether and Circle previously monopolized.