Great question!
USDC PROS:
- token price won't fluctuate in dollar value based on the price of the underlying asset
- cleaner in dashboards, analytics, marketing, and usually people refer to coin market caps in dollar amounts
- taxes
USDC CONS:
- can require multiple pool hops (eth=>USDC=>TOKEN) which can increase txn fees per swap
- on some chains, a stablecoin may have shallower liquidity compared to the wrapped native token
- isolates the europooors and countries whose primary currency isn't USD
WETH PROS:
- dexes pick up WETH pools easier in general
- Best composability with DEX aggregators, lending protocols, trading bots
WETH CONS:
- double volatility (token/eth x eth/usd)
- market cap is seldomly referred to in WETH terms
- price charts can be misleading as the default y-axis is usually dollar based (see attached images)
TAKEAWAY:
use USDC for consumer app tokens, stable yield / RWAs, treasury protocols, and maybe governance tokens
use WETH for defi-native projects / infra tokens, memes, speculative tokens that are built to bounce up and down