Authors: Andrew Van Aken & Jon Ma
Compiled by: Deep Tide TechFlow
Summary
Stripe acquired Bridge.XYZ for $1.1 billion, while this company had just raised $50 million from Sequoia, Ribbit Capital, and Haun Ventures less than a year ago. This means that A-round investors achieved nearly 10 times their return in less than a year.
Yellow Card completed a $33 million Series C funding round and plans to pivot towards stablecoin B2B payment services, announcing that it has served over 30,000 businesses with revenues reaching eight figures.
Meanwhile, on-chain data for stablecoins is breaking or approaching historical highs. In a report done in collaboration with Castle Island Ventures and Visa, we presented quantitative and qualitative analyses of this data.
In the past, investors generally believed that stablecoin issuers were the biggest beneficiaries of stablecoin adoption.
However, 2024 has brought a new change: with the proliferation of stablecoins, fintech applications, payment networks, infrastructure development, fiat on/off ramps, and data analysis tools are gradually becoming the main drivers of value accumulation.
We have identified many businesses that will benefit from the adoption of stablecoins. Today, we share these findings with other members of the community.
Here is a real-time updated open-source market map: If you would like to recommend companies, please contact Crystal Tai.
Introduction
"Even if we only got stablecoins, that is still a very meaningful achievement." - Nic Carter
Satoshi Nakamoto proposed a completely decentralized peer-to-peer electronic cash system in its white paper, which does not rely on central servers or trusted third parties. We believe that 2024 will bring us closer to this vision, and stablecoins are the killer application of blockchain networks.
The emergence of stablecoins has enabled global users to easily transfer funds, make payments, and effectively address the challenges of high inflation. On-chain data indicates that the supply of stablecoins, transfer volumes, and the number of active addresses are all significantly increasing. To validate these trends, we interviewed users from Lebanon, India, and the United States, whose feedback further confirmed the accuracy of this data. Castle Island Ventures recently released a report titled (Stablecoins: Emerging Market Stories), showcasing the practical applications and rapid growth of stablecoins in emerging markets through Artemis's on-chain data.
Stablecoins are gradually moving towards the mainstream market.
Although the cryptocurrency market has experienced cycles of boom and bust, several key indicators of stablecoins continue to break or approach historical highs:
The total supply of stablecoins has exceeded $160 billion, nearing historical highs.
Stablecoin Supply - Real-time Dashboard
Between May and July 2024, there were 16 million active addresses monthly, with users transferring stablecoins via wallets, demonstrating behavior similar to P2P payments, reaching historical highs.
The P2P transfer volume of stablecoins surpassed $700 billion in March 2024, setting another historical record.
Investors are paying attention
The traditional view holds that investing in stablecoins is somewhat challenging: because the value of stablecoins is essentially pegged to fiat currencies. In most conversations with investors, the focus often centers on how stablecoin issuers (such as Circle and Tether) benefit from this.
For example, Circle disclosed achieving $779 million in revenue in the first half of 2023, while Tether's net profit reached $4.52 billion in the first quarter of 2024—this figure is three times that of Blackrock's net profit during the same period ($1.5 billion).
However, this situation is changing. In August 2024, several cryptocurrency-related payment companies announced they secured over $100 million in funding. For example, Bridge.xyz stated that its clients include SpaceX and Bitso, indicating a growing market demand for stablecoin products.
Through research, we have identified many companies accumulating value in the stablecoin space. Today, we share these findings with the broader community.
In our market map, we aim to show investors and the community that supporting the global adoption of stablecoins is not limited to a single approach. In addition to investing in private companies, opportunities in public blockchains or related tokens can also be explored.
Stablecoin Value Accumulation Chain
Blockchain
The operation of stablecoins is inseparable from blockchain.
Blockchain plays a crucial role in transactions involving stablecoins. As a public and transparent ledger, blockchain not only supports the final settlement of stablecoins but also allows anyone to verify transaction information. Blockchain operates around the clock without interruption. For example, concerning USDC's transfer volume in the United States, we observe that its transaction activity peaks during US bank operating hours but maintains high activity even when banks are closed.
Source: Internal Artemis Data
Despite Ethereum still being the main platform for stablecoin trading, new blockchains with faster block generation times and lower fees are driving further growth of stablecoins. These blockchains include Solana, Tron, TON, Base, Celo, Stellar, and BNB Chain. Additionally, new blockchains are continually emerging, such as Sui recently announcing a partnership with Circle.
Stablecoin supply by chain
Another question worth exploring is: how does blockchain accumulate value? When the supply of stablecoins on a particular network increases, does the value of that network also rise? Taking TRON as an example, its price shows a high correlation with circulating supply when stablecoin supply increases, which suggests a potential positive relationship between the two.
Stablecoin Issuers
Stablecoin issuers are the entities responsible for creating, distributing, and managing stablecoins. To ensure the value of stablecoins remains stable, issuers typically back each stablecoin with reserve assets (such as cash or equivalents). Their main responsibilities include issuing and redeeming stablecoins, managing reserve assets, ensuring transparency, and complying with relevant regulations.
Currently, Tether is one of the major issuers in the stablecoin space, reportedly having a net profit of over $5 billion in the first half of 2024. Circle is also considering launching an IPO with an estimated valuation of around $5 billion.
Additionally, there are some stablecoin issuers offering yields, such as Mountain Protocol (with a circulating supply of about $48 million). These issuers profit from the spread between the assets they hold and the interest paid to token holders while providing users with additional returns.
Stablecoin supply segmented by issuer
Source: Artemis
Stablecoin Infrastructure
To help stablecoin issuers issue stablecoins quickly and compliantly, while allowing applications that wish to utilize stablecoins to easily convert between fiat and cryptocurrency, a robust infrastructure support for the stablecoin ecosystem is necessary. These enterprises constitute the infrastructure layer of the stablecoin ecosystem.
On the fiat side, companies like Bridge.xyz and Brale.xyz provide API and infrastructure tools for developers and business teams, enabling smooth flows of funds between fiat and stablecoins. These fiat-stablecoin infrastructure companies help businesses facilitate cross-border payments, issue their own stablecoins, and provide convenient fund management tools. At the same time, they also take on complex regulatory, compliance, and technical tasks, which are often costly and time-consuming.
Time savings: For example, Glo Dollar (a stablecoin focused on funding public welfare projects) successfully issued Glo Dollar within weeks through this infrastructure, while traditional processes could take up to 6 months.
24/7 service: Users can now transfer stablecoins at any time, while companies like Bridge.xyz serve as backend infrastructure, ensuring service runs 24/7.
On the on-chain side, companies like Perena and M^0 help stablecoin issuers achieve scalable expansion through decentralized protocols while avoiding liquidity fragmentation issues. These protocols position themselves as 'funding middleware' for stablecoin issuers, providing efficient on-chain support.
OnRamps
Cryptocurrency fiat on-ramp services (like MoonPay and Transak) allow users to directly purchase cryptocurrencies using traditional payment methods (such as credit cards, bank transfers, or mobile payments). These services typically deposit users' cryptocurrencies directly into digital wallets like MetaMask and Coinbase Wallet without going through traditional cryptocurrency exchanges. Such companies usually charge a small fee to cover infrastructure operations, KYC (Know Your Customer) processes, and other service costs. As shown in the figure below, cryptocurrency fiat on-ramp activities on Ethereum have shown a steady growth trend since 2023.
Cryptocurrency fiat on-ramp activities on Ethereum
Source: Internal Artemis Data
Cross-Border Payments/Remittances/P2P Payments (P2P)
Many enterprises are simplifying cross-border payments and remittance processes using stablecoin technology. These applications are often designed to be very intuitive, hiding the underlying cryptocurrency technology, allowing users to operate without understanding the technical details. The fees charged by these companies are usually much lower than traditional remittance companies while also offering more competitive exchange rates. For instance, stablecoin transaction volumes from Coinbase or Kraken to Bitso (a Mexico City exchange) are gradually increasing, indicating that the application of stablecoins in cross-border remittance is expanding.
Source: Internal Artemis Data
P2P cryptocurrency transactions, often referred to as 'global Venmo', provide users with a convenient way to transfer funds globally. Companies like TipLink and Sling offer extremely simple user interfaces, enabling anyone to easily accept payments through the cryptocurrency network. More importantly, users of these products often do not realize they are using cryptocurrency, achieving a truly seamless user experience.
Monthly P2P stablecoin transfer volume by stablecoin
Source: Artemis
Wallet
Cryptocurrency wallets provide users with a self-custodial way to have complete control over their digital assets. These wallets typically support multiple blockchain networks, allowing users to store and manage various types of crypto assets. Furthermore, many wallets also include fiat-to-crypto on-ramp services, enabling users to purchase cryptocurrencies more conveniently. According to Artemis data, transfers between wallets are currently one of the largest application scenarios for blockchain.
Data Source: Artemis
Here is an example of a seamless transfer through Sphere. Users can choose the type of transaction (such as fiat to crypto conversion or exchange between cryptocurrencies), then select the payment method (like Wire transfer, ACH, or SEPA), and the entire transaction process can be settled in just a few minutes, quickly and efficiently.
Cards and Payment Processors
Cryptocurrency credit cards and payment processors are collaborating to provide users with the convenience of spending cryptocurrency. The significance of this service is that users can make payments directly within the cryptocurrency ecosystem without having to convert back to fiat currency. For example, Visa allows consumers to settle payments in stablecoins between merchants and acquiring institutions.
Last year, Gnosis Pay launched a Visa card that allows European users to conduct credit card transactions directly through the Gnosis Safe wallet. Although the current user base is still small, various metrics of Gnosis Pay indicate a continuous growth trend.
Gnosis Pay weekly transaction volume
MicroLending
We visited Nairobi and witnessed the practical operation of blockchain-based micro-lending services, which was impressive.
These companies provide loans to small businesses or individuals through blockchain technology. Enterprises like Haraka and Goldfinch focus on providing lower-interest loans to businesses in emerging markets. The characteristics of blockchain technology allow funds to be almost instantly available, while transaction costs are significantly reduced, providing a new solution for markets that traditional banks cannot cover.
Payroll
An increasing number of companies are beginning to support employees receiving salaries in cryptocurrency. As the global economy expands and remote work becomes more common, establishing a global financial system capable of quickly and efficiently paying salaries has become particularly important. Some systems are experimenting with real-time payment functionalities, allowing employees to receive salaries streamed weekly, daily, or even by the second.
Ravi Kiran (Head of Growth) shared a story about a freelancer choosing stablecoin payments:
"I once worked with a freelancer from an emerging country who recently received a payment in USDC. She kept saying that this payment method is much better than using local currency (saves on taxes, value stability, and is worth more than local currency). It wasn't until that moment that I realized there’s a story behind every payment. Two months later, she completely switched to stablecoin payments. I believe that as business payments become more common, the influence of Circle and Tether will further expand."
Stablecoin Analytics
Artemis, in collaboration with partners such as Allium, RWA.xyz, and Flipside, provides in-depth analysis services on stablecoins to the market. Allium has partnered with Visa to launch a Visa on-chain analytics dashboard, while the RWA platform provides many key data indicators about stablecoins and their issuers.
We believe that as the stablecoin market continues to expand, the market's demand for understanding the driving factors behind stablecoin usage will also continue to grow.
What's Next for Stablecoins?
As inflation continues to rise in 2024, the application of stablecoins is also rapidly expanding. According to the CIV / Visa / BHD stablecoin report, stablecoins have become the second largest application scenario after cryptocurrency trading. We predict that the adoption rate of stablecoins will continue to rise in the future.
This growth may create a network effect: when friends, family, or businesses in a region begin to widely use stablecoins, it attracts more locals to join, like a 'global version of Venmo.' This expansion of user scale will further enhance the liquidity of the entire network. Additionally, we expect the US to introduce relevant regulations to support maintaining global demand for the dollar through stablecoins.
Although the current stablecoin supply in the market is primarily denominated in USD, we are also seeing a gradual increase in the adoption rate of non-USD stablecoins. For example, Euro-denominated stablecoins are gradually increasing their circulation, while Bitso recently launched a stablecoin based on the Mexican peso, MXNB, marking the potential of regional stablecoins being tapped.
At the same time, yield-generating stablecoins are receiving increasing attention. These stablecoins not only provide users with opportunities for asset appreciation but also become important funding sources for US Treasury holders. For example, Ethena has launched an innovative 'Delta-neutral yield generation mechanism' that maximizes yield through unique strategies, becoming one of the fastest-growing stablecoins.
How Artemis Can Help
Artemis is committed to providing in-depth analysis in the field of stablecoins, helping users and businesses better understand the usage trends and market dynamics of stablecoins. We have collaborated with Nic Carter and his Castle Island Venture team to complete the most comprehensive stablecoin analysis report to date through providing on-chain data support.
If you are interested in the stablecoin market or need help analyzing the adoption of stablecoins, feel free to contact us! You can find us at X.com or reach out via email at team@artemis.xyz.
Special thanks to Anna from Perena, Isaiah Washington, Peter Schroeder from Castle Island Ventures, EffortCapital, and others for their contributions to this article! Also, thanks to all users who provided suggestions on Twitter.
