Compiled by: TreeGraph Blockchain Research Institute
Source: TreeGraph Blockchain
In recent years, stablecoins are gradually being integrated into the global economy, especially in emerging markets, showing strong growth momentum. VISA's latest report shows that stablecoins, as the latest currency carrier or form of expression, have spread to all aspects of ordinary users' financial lives after being initially used as collateral or medium of exchange for crypto assets. More and more retail and institutional users are also beginning to accept this emerging technology, promoting further innovation in the global payment system.
In the report, VISA combines survey results from cryptocurrency users in five key emerging market economies (Brazil, India, Indonesia, Nigeria and Turkey) with new on-chain estimates and qualitative analysis to form a comprehensive picture of global stablecoin usage. The report focuses on the use of stablecoins in non-crypto areas such as remittances, cross-border payments, salary payments, trade settlements and B2B transfers.
1. Overview of the Stablecoin Market
Stablecoins are currently the âkiller applicationâ in the encryption field. Today, the total value of stablecoins in circulation exceeds $160 billion, up from just a few billion dollars in 2020. More than 20 million addresses transact stablecoins on public blockchains every month. In the first half of 2024 alone, stablecoin settlements exceeded $2.6 trillion. Stablecoins have significant advantages over existing payment systems: on-chain programmability, strong audit capabilities, settlement of transactions, self-custody of funds, and interoperability.
While stablecoins were initially used by traders and cryptocurrency exchanges as a medium of exchange for collateral and assets, they have now expanded beyond this category and are now being used across the global economy. In emerging markets, the use of stablecoins for payments, currency substitution, and obtaining high-quality returns is accelerating.
Based on the difference between the activity of stablecoins and the crypto market cycle, it is clear that the use of stablecoins is no longer just serving crypto users and transaction scenarios.
Stablecoins have an increasing number of non-transactional uses, especially in emerging markets. They are used for currency substitution (to escape volatility or depreciation of local currencies), as an alternative to US dollar bank accounts, for inter-business payments and consumer payments, to obtain various forms of income products, and for trade settlement. Stablecoins are particularly attractive in countries with high inflation or where a fiat financial system is lacking when US dollar banking services are absent or difficult to obtain.
2. On-chain stablecoin data
2.1 The stablecoin market is growing year by year
The total supply of stablecoins has grown rapidly since 2017. At that time, the total circulation of stablecoins was less than $1 billion, and this figure peaked at about $192 billion in March 2022 before the collapse of Terra's UST and the credit crisis. The credit crisis suppressed cryptocurrency native interest rates, depressed cryptocurrency trading volumes, and hurt the balance sheets of crypto-native companies. After the credit crisis largely subsided, from December 2023, as the voices of the US approving a Bitcoin ETF grew louder, major crypto assets began to rebound and stablecoin supply began to recover.
In recent months, new forms of stablecoins have emerged as various regulators have passed clear stablecoin legislation in the hope of attracting issuers. Some of the most active jurisdictions in developing stablecoin regulatory frameworks include the European Union, Singapore, Dubai, Hong Kong, and Bermuda.
2.2 Corrected and adjusted data
In this study, VISA conducted a lot of denoising and deduplication work, and finally came up with a more conservative estimate of settlement volume. The adjusted settlement volume is still a difficult number to estimate. VISA does not regard its own estimate as authoritative, but believes that this data is still close to the actual situation.
According to VISA's adjustments, the total settlement volume of stablecoins in 2023 is conservatively estimated to be $3.7 trillion, while in the first half of 2024 it will be $2.62 trillion, and the full-year settlement volume in 2024 is expected to be $5.28 trillion. It is worth noting that despite the sell-off of crypto assets and the decline in trading volume in 2022 and 2023, the settlement volume of stablecoins has continued to grow steadily over the market cycle. This once again shows that stablecoins have attracted a group of new users who are not only interested in using them for exchange settlement.
After denoising, as of June 2024, the most popular blockchains by settlement value are: Ethereum, Tron, Arbitrum, Base, BSC, and Solana.
The most popular blockchains for stablecoin transfers are: Tron, BSC, Polygon, Solana, and Ethereum.
2.3 Dollarization of Stablecoins
The phenomenon of âblockchain dollarizationâ emerges when stablecoin settlement volumes are compared to native crypto assets. While Bitcoin and Ethereum have historically been the dominant medium of exchange on public blockchains, stablecoins â and almost exclusively those pegged to the U.S. dollar â have gradually captured a larger and larger share of the market.
Currently, stablecoins account for about 50% of the total value settled on public blockchains, with a peak of 70%. The second most popular currency used in stablecoins is the euro, with a supply of $617 million as of June 2024, accounting for 0.38% of the entire stablecoin market. While there are stablecoins using the lira, Singapore dollar, yen, and some other fiat currencies, no stablecoin other than the dollar and the euro has a pegged value of more than $100 million.
3. Emerging Market Survey Report
VISA surveyed approximately 500 people from Nigeria, Indonesia, Turkey, Brazil, and India, with a total sample of 2,541 adults. VISAâs goal was to better understand how individual users interact with stablecoins.
Survey data shows that stablecoin usage is growing, transaction frequency is increasing, investment portfolio penetration is significantly increasing, and its usage is increasingly diversifying beyond cryptocurrency trading use cases.
3.1 Stablecoin activity types:
In VISAâs sample, the main purpose of using stablecoins is still to trade cryptocurrencies or NFTs, but other non-cryptocurrency uses are not far behind. Overall, 47% of respondents said one of their main purposes is to store funds in US dollars, 43% mentioned getting better currency exchange rates, and 39% said they hope to earn a yield.
The results are clear: in the countries surveyed by VISA, non-crypto uses account for a large portion of how stablecoins are used.
By far the most popular use is currency exchange, followed by shopping and cross-border transactions. Notably, the majority of respondents in all countries in the sample said they had used stablecoins for non-cryptocurrency transactions. In all countries surveyed, stablecoin usage has been growing over time. 57% of users reported an increase in their use of stablecoins in the past year, and 72% believe they will increase their use of stablecoins in the future.
3.2 Penetration of Stablecoins
VISA is also interested in the penetration of stablecoins in usersâ portfolios. At the country level, Nigerians have a significantly higher percentage than other countries, followed by Turkey and India. In the sample of Indian users, the wealthiest respondents reported a larger proportion of stablecoins in their financial portfolios.
Findings by country:
VISAâs survey found that Nigerians had the highest preference for stablecoins among the countries surveyed â much higher than other countries. Nigerians had the highest transaction frequency, stablecoins made up the largest portion of respondentsâ portfolios, reported the most non-crypto transaction uses, and had the highest self-awareness of stablecoins.
Interestingly, there are differences in the main purposes of using stablecoins by country. Trading cryptocurrencies is the most common purpose across the sample, but it varies at the country level. In Turkey, the most common purpose is to earn a yield, followed by trading cryptocurrencies; in Indonesia, it is to get a better currency exchange rate, followed by trading cryptocurrencies and saving in US dollars; in Nigeria, the main purpose is saving in US dollars, followed by trading cryptocurrencies and getting a better currency exchange rate.
The countries with the most active stablecoin use in the sample are Nigeria, India, Indonesia, Turkey and Brazil. In terms of the proportion of stablecoins in the investment portfolio, Nigeria is still far ahead, followed by India, Turkey, Brazil and Indonesia.
The survey results by age group are:
Overall, the results by age are in line with expectations: Young people use stablecoins at a higher rate. Young people are more likely to try multiple different stablecoins and hold a larger share of stablecoins in their overall financial portfolio.
While there are no significant age differences across most usage categories, younger people are more likely than older respondents to use stablecoins to save U.S. dollars, exchange local currency for U.S. dollars, or gain access to the crypto-economy. Chance. Younger age groups use stablecoins at higher rates across all non-crypto use cases: paying for goods or services with stablecoins, transferring money, receiving wages with stablecoins.
3.3 Tetherâs preference for USDT
Tether is widely considered to be the most popular stablecoin among users in emerging markets. According to the report, the most commonly cited reason for users preferring Tether is its network effect, followed by greater trust in Tether and Tether's best liquidity.
3.4 Blockchain and Wallet Usage
Across all regions, Ethereum is reportedly the most popular blockchain network, followed by BSC, Solana, and Tron.
The most popular non-custodial wallets are Trust Wallet, MetaMask, and Coinbase Wallet. More than half of all respondents said they use the Binance exchange as a wallet, which is more popular than any other non-custodial wallet. Notably, 39% of Nigerian respondents admitted to using Phantom Wallet (mainly Solana client).
IV. Conclusion
In this study, VISA first demonstrated from an on-chain perspective that stablecoin usage is growing, whether measured by monthly active addresses, total supply, or settlement amount. In particular, VISAâs new transaction amount estimates show that stablecoins have become an important settlement tool that is comparable to existing transfer networks, while avoiding the overestimation problem that is common in on-chain data in the past.
VISA's survey results overturn the common belief that stablecoins are only used for speculative crypto asset trading. 47% of the crypto users surveyed said that they use stablecoins for US dollar savings, 43% mentioned efficient currency exchange, and 39% mentioned earning income. While visiting cryptocurrency exchanges remains the most common use case for respondents, a range of ordinary (non-crypto) economic activities are also reflected.
When asked about non-crypto stablecoin activity, the most common use case was currency substitution (69%), followed by payment for goods and services (39%) and cross-border payments (39%). It is clear that in the countries surveyed, stablecoins have evolved from simple transaction collateral to a commonly used digital dollar tool.
More importantly, almost all stablecoins (about 99%) are pegged to the U.S. dollar. Discussions about stablecoin regulation in the U.S. cannot ignore the fact that a large number of individuals and businesses in emerging markets rely on these networks for savings, cross-border payments, remittances, and corporate cash management. In almost all countries surveyed, stablecoins are increasingly becoming an alternative to scarce U.S. dollar banking services. When discussing the merits of stablecoins, the potential benefits of billions of users in emerging markets efficiently accessing alternative hard currencies must have a place.
