Stablecoin's Real Deal: $149B of $2.2T by Users, Visa Reports

Key Takeaway

• Less than 10% of stablecoin transactions, totaling $149 billion out of $2.2 trillion in April, are from real users.
• Tether (USDT) and USD Coin (USDC) dominate the stablecoin market with 75% and 22% shares respectively.
• Despite high bot activity, there's steady growth in active stablecoin users, reaching 27.5 million monthly.

Stablecoin Transaction Reality

A groundbreaking analysis by Visa Inc. and Allium Labs has unveiled a stark reality in the stablecoin market: a mere fraction of transaction volumes stem from genuine users. In a detailed examination for April, out of an astounding $2.2 trillion in total transactions, only $149 billion was identified as originating from "organic payments activity." This revelation is based on a sophisticated dashboard designed to sift through the noise—excluding transactions by bots and large-scale traders to spotlight those conducted by real individuals.

The Challenge of Adoption

The findings from Visa and Allium Labs cast a long shadow over the optimistic narrative that stablecoins are on the cusp of transforming the $150 trillion payments industry. Despite significant interest and integration efforts by fintech behemoths like PayPal Inc. and Stripe Inc., the reality of stablecoin usage for genuine payments is far from the envisioned revolution. Pranav Sood, executive general manager for EMEA at Airwallex, reflected on the data, suggesting that while the long-term potential for stablecoins remains intact, the immediate priority should be enhancing the efficiency of existing payment systems. "It’s a really significant barrier to overcome," Sood remarked, emphasizing the need for user-friendly solutions in a market still clinging to traditional payment methods.

Misleading Volumes and Bot Domination

The challenge of accurately gauging the "real" value of crypto activity is exacerbated by the inherent complexities of blockchain data, which can often lead to inflated transaction volumes through double-counting. Visa's head of crypto, Cuy Sheffield, illustrated this issue with the example of converting stablecoins, which could misleadingly double the volume recorded on-chain. This, coupled with the overwhelming dominance of bots in stablecoin transactions, highlights a significant discrepancy between the perceived utility of stablecoins and their practical application in real-world payments. The analysis also noted a steady growth in monthly active stablecoin users, with 27.5 million across all chains, suggesting a growing interest despite the current limitations.

Management Quotes

• Cuy Sheffield, Head of Crypto at Visa:

  "There is also a lot of noise in this data given that blockchains are general purpose networks where stablecoins can be used across a range of use cases with transactions that can be initiated manually by an end user or programmatically through bots."