Real Stablecoin Use Below 10% in $2.2T Market, Study Finds

In A Nutshell

A recent report co-developed by Visa and Allium Labs, and highlighted by Bloomberg, reveals a striking insight into the stablecoin transaction volume. The findings indicate that less than 10% of stablecoin transactions in April, totaling around $149 billion of the approximate $2.2 trillion, were conducted by real users. This analysis aimed to dissect the genuine organic payment activity from the voluminous transactions attributed to bots and large-scale traders. The current market supply of stablecoins sits at about $150 billion, with Tether (USDT) and USD Coin (USDC) leading the market. This revelation comes amidst growing discussions around stablecoin regulation and the increasing adoption of stablecoins by mainstream financial services.

The Underlying Issue with Transaction Volumes

The report’s analysis sought to cleanse the stablecoin transaction data of elements that skewed the genuine user engagement metrics. By excluding transactions identified as being conducted by bots or part of large-scale trading activities, the study aimed to isolate organic payment activities. This distinction is crucial as it sheds light on the actual adoption and usage rates of stablecoins by everyday users versus the inflated transaction volumes often reported.

Stablecoin Market Dominance and Regulatory Landscape

With a combined market share of 97%, Tether (USDT) and USD Coin (USDC) dominate the stablecoin landscape. This oligopoly raises questions about market variety and competition, especially as these stablecoins become more integrated into digital and traditional finance. Concurrently, the U.S. is moving towards establishing a regulatory framework for stablecoins, which could profoundly impact how these digital assets are issued, managed, and used across financial systems.

Growth in Active Users Despite Volume Discrepancies

Despite the report’s findings on transaction volume discrepancies, there is a silver lining. The analysis observed a steady growth in the number of monthly active stablecoin users, totaling 27.5 million across all chains. This growth indicates a rising interest and acceptance of stablecoins as a viable component of digital finance ecosystems, notwithstanding the challenges in accurately capturing real user engagement.

Our Take

The report co-developed by Visa and Allium Labs serves as a critical reminder of the complexity underlying stablecoin transaction volumes. The fact that less than 10% of these volumes stem from real users uncovers a significant gap between perceived and actual usage of stablecoins in the digital economy. However, the steady increase in active users demonstrates a growing trust and reliance on stablecoins, suggesting that, despite current challenges, stablecoins have a solid foothold in the future of finance. As discussions around regulation advance, it will be essential to consider both the raw transaction volumes and the underlying user activities to foster a stable and inclusive digital financial ecosystem.

Sources

– Bloomberg
– Visa
– Allium Labs