Over 90% of Stablecoin Transaction Volumes Are Not Initiated By Real Users, Study Finds

Over 90% of stablecoin transaction volumes are not being attributed to transfers made by legitimate users, according to a metric created by Visa Inc. (NYSE: V), indicating that these crypto tokens could be far away from becoming a popular method of payment.

The dashboard from Visa and Allium Labs is developed to strip out transfers carrried out by bots and large-volume crypto traders to pinpoint those performed by real users.

Out of around $2.2 trillion in aggregate transactions in April, merely $149 billion were initiated from “organic payments activity,” according to Visa estimates.

As reported by Bloomberg, Visa’s recent findings clearly challenges stablecoin supporters’ claim that the digital tokens, which are usually pegged to an asset such as the US dollar, are set to enhance the $150 trillion payments ecosystem.

PayPal and Stripe are among the major Fintechs making their foray into stablecoins, with Stripe co-founder John Collison in April referencing “technical improvements” for being bullish on the crypto tokens.

Pranav Sood, Executive GM for EMEA at payments platform Airwallex, stated:

“It says that stablecoins are still in a very nascent moment in their evolution as a payment instrument. That’s not to say that they don’t have long-term potential, because I think they do. But the short-term and the mid-term focus needs to be on making sure that existing rails work much better.”

Keeping track of the actual value of crypto-related activity using blockchain data remains a significant challenge. Blockchain data analytics firm Glassnode has said that the record $3 trillion of overall market circulation assigned to crypto tokens at the peak of the 2021 bull market was really a lot closer to $875 billion.

With stablecoins, transfers may get double-counted depending on the platform or exchane clients are transferring money to. For instance, converting $1000 of Circle’s USDC to PayPal’s PYUSD on Uniswap may lead to $2000 of aggregate stablecoin volume being registered on-chain, explained Cuy Sheffield, Visa’s head of crypto.

Recently, Visa revealed it partnered with the blockchain data provider Allium Labs to create a dashboard that is “designed to be an easily-digestible, freely-available window into publicly-available aggregated blockchain data, beginning with stablecoins.”

From information on active users, to volumes by coin and blockchain, to transaction sizes and a continuously evolving set of stablecoin metrics, the Visa Onchain Analytics Dashboard looks to “provide clear insights into stablecoin activity—insights that enable anyone interested in the stablecoin ecosystem to easily access and follow.”

Looking at the data, they’ve found three notable trends relating to the current state and potential of stablecoins:

  • Stablecoin supply is approaching all-time highs. Total demand for stablecoins has picked back up in 2024, with circulating supply approaching $150B.
  • Steady growth of monthly active stablecoin users. We are seeing growth in regular users of stablecoins, with 27.5M monthly active users across all chains.
  • Discrepancy between total transfer volume vs. bot-adjusted transfer volume. When we apply a simple heuristic that removes inorganic data, we see that transfer volume for the last 30 days can be adjusted from $2.65T to $265B2

As a company, Visa has been “at the forefront of digital payments for nearly sixty years, studying value transfer and application of financial data.”

They have deep expertise and history “around the myriad ways consumers and businesses use payment products.”

And they make it their business to “understand deeply any new technologies that can facilitate money movement as they emerge.”

Visa, the company itself, which handled over $12 trillion in transfers this past year, is among the Fintechs that may potentially lose out if stablecoins become a more widely accepted mode of payment.

The overall value of all stablecoins in circulation may hit $2.8 trillion by 2028, according to analysts at Bernstein.

Should this happen, then it could be nearly an 18x increase from their total circulation at present. Since transfers via such tokens are instant and nearly without cost, people in the crypto space say that they’re ideal for disrupting the traditional payments ecosystem.

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