Why is USDT supply >> USDC supply?

This has come up a few times in conversation over the last week, and it’s an interesting question, especially given the perceived legitimacy of Circle over Tether. The most liquid stable-volatile pair (which also does the most daily volume of any pair) onchain is WETH-USDC. USDC is featured prominently in the Coinbase UI. USDC is used for margining on dYdX. USDC is the only asset borrowable in Compound v3, and the most supplied and borrowed stablecoin across Aave v2/v3. Yet it’s supply is less than a third of that of tether.

What about USDT? It’s used to margin futs on Binance and is the stablecoin for dominant volatile-stable pairs. However, only so much of tether supply is on nance. We’ve all heard about how USDT is used for p2p and merchant payments on Tron in emerging markets. Surely this accounts for some of the supply, but the largest USDT tron holders have relatively inactive addresses.

If most of the supply is highly concentrated, who are the whales that hold USDT and why do they hold USDT over any other stable? My hunch is it is folks who want offshore eurodollar exposure want it to be structured such that it’s hard to seize, similar to an offshore bank account. Tether’s opaque structure, history of successful redemptions, and lindyness (better to be #1 than #2) make it a suitable choice.