USDC dominates in DeFi because of years of Tether FUD.

But IMHO AI hacking DeFi is a bigger risk than USDC or USDT depeg risks.
And because Circle fails to proactively freeze hacked funds, Tether's USDT might be a safer bet than USDC in DeFi.
With Tether helping Drift maybe more of Solana DeFi will move to Tether?
I remember years ago Aave wouldn't even list USDT as collateral on Ethereum.
But as USDC depegged to $0.87 during SVB, ACI resubmitted the USDT collateral proposal the same month.
The USDT backing also changed.
Used to be up to 50% commercial paper, including Chinese bank paper nobody could verify.
That was the main FUD point for years.
By late 2022 Tether moved from commercial paper into US Treasuries.
Latest Tether's Q4 2025 attestation shows USDT is backed by:
~74% US Treasuries
~9% gold
~4% Bitcoin
~8% secured loans
~5% other
To be fair, backing is still too exotic for many. S&P gave them a 'weak' rating.
In comparison, USDC is backed by 85% Treasuries and 14% cash at banks.
But last month Tether signed a Big Four firm for its first full audit.
So what's actually the bigger risk for a DeFi user in 2026?
USDT briefly depegging to $0.95 like in 2022, or your hacked funds going to North Korea because Circle won't freeze funds without a court order?
Circle's refusal to freeze is a luxury DeFi can't afford this until AI hacking risks decrease.