Authors: Andrew Van Aken & Jon Ma
Compiled by: Deep Tide TechFlow
Summary
Stripe acquired Bridge.XYZ for $1.1 billion, while this company had raised $50 million from Sequoia, Ribbit Capital, and Haun Ventures less than a year ago. This means that Series A investors achieved nearly 10 times their return in less than a year.
Yellow Card completed a $33 million Series C funding round, planning to transition to B2B payment services involving stablecoins, and announced 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 in collaboration with Castle Island Ventures and Visa, we showcase both quantitative and qualitative analyses of these data.
In the past, investors generally believed that stablecoin issuers were the biggest beneficiaries of stablecoin adoption.
However, 2024 brings new changes: with the popularity of stablecoins, fintech applications, payment networks, infrastructure development, fiat on/off ramps, and data analytics tools are gradually becoming the main drivers of value accumulation.
We have identified many enterprises that will benefit from the popularity of stablecoins. Today, we share these research findings with other members of the community.
Here is the real-time updated open-source market map: If you would like to recommend a company, please contact Crystal Tai.
Introduction
"Even if we only achieved stablecoins, it is still a very meaningful accomplishment." – Nic Carter
Satoshi Nakamoto proposed a fully 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 enables global users to easily transfer funds, complete payments, and effectively cope with the challenges of high inflation. On-chain data indicates that the supply, transfer volume, and active address count of stablecoins are all significantly increasing. To validate these trends, we interviewed users from Lebanon, India, and the United States, and their feedback further confirmed the authenticity of these data. Castle Island Ventures recently released a report titled (Stablecoins: Emerging Market Stories) which, through Artemis’s on-chain data, demonstrates the practical applications and rapid growth of stablecoins in emerging markets.
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 per month, with users transferring stablecoins between wallets, demonstrating behavior similar to peer-to-peer payments, reaching historical highs.
The peer-to-peer transfer volume of stablecoins surpassed $700 billion in March 2024, once again setting a historical record.
Investors are paying attention
The traditional view holds that investing in stablecoins presents certain difficulties: because the value of stablecoins is essentially pegged to fiat currency. 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 that it achieved $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—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 had secured over $100 million in funding support. For example, Bridge.xyz stated that its customers 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 research findings with the wider 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 the trading of 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, never ceasing. For example, in the case of USDC's transfer volume in the United States, we observed that transaction activity peaks during U.S. bank hours, but remains highly active even when banks are closed.
Source: Internal Artemis Data
Although Ethereum remains the main platform for stablecoin transactions, several 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 continuously emerging, such as Sui, which recently announced 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 network grows, does the value of that network increase as well? Taking TRON as an example, its price shows a high correlation with the circulating supply amidst the growth of stablecoin supply, indicating a potential positive connection between the two.
Stablecoin Issuer
The stablecoin issuer is the entity responsible for creating, distributing, and managing stablecoins. To ensure the value stability of the stablecoins, issuers usually 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 sector, reportedly achieving a net profit exceeding $5 billion in the first half of 2024. Meanwhile, Circle is also considering launching an IPO with a valuation of about $5 billion.
Additionally, there are some stablecoin issuers providing yield, such as Mountain Protocol (with a circulating supply of about $48 million). These issuers profit from the interest spread between the assets they hold and the interest paid to token holders, while also providing users with additional earnings.
Stablecoin supply by issuer
Source: Artemis
Stablecoin Infrastructure
To help stablecoin issuers quickly issue stablecoins in a compliant manner, while allowing applications wishing to utilize stablecoins to easily switch between fiat and cryptocurrency, a comprehensive infrastructure support is needed for the stablecoin ecosystem. These enterprises form the infrastructure layer of the stablecoin ecosystem.
On the fiat side, companies like Bridge.xyz and Brale.xyz provide developers and business teams with API and infrastructure tools to facilitate smooth flows of funds between fiat and stablecoins. These fiat-stablecoin infrastructure companies help businesses achieve cross-border payments, issue their own stablecoins, and provide convenient fund management tools. They also handle complex regulatory, compliance, and technical tasks, which are usually costly and time-consuming.
Time-saving: For example, Glo Dollar (a stablecoin focused on funding public welfare projects) successfully issued Glo Dollar in just weeks through these infrastructures, while traditional processes could take up to 6 months.
24/7 service: Users can now transfer stablecoins at any time, with companies like Bridge.xyz providing backend infrastructure to ensure services run 24/7.
On the blockchain side, companies like Perena and M^0 are helping stablecoin issuers achieve scalable expansion through decentralized protocols, while avoiding the problem of liquidity fragmentation. These protocols position themselves as 'funding middleware' for stablecoin issuers, providing efficient on-chain support.
On-Ramps
Cryptocurrency fiat on-ramp services (such as 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 the user's cryptocurrency directly into digital wallets like MetaMask and Coinbase Wallet, without going through traditional cryptocurrency exchanges. These companies usually charge a small fee to cover infrastructure operations, KYC (Know Your Customer) processes, and other service costs. As shown in the chart below, cryptocurrency fiat on-ramp activity on Ethereum has shown a stable growth trend since 2023.
Cryptocurrency fiat on-ramp activity on Ethereum
Source: Internal Artemis Data
Cross-border payment/remittance/peer-to-peer payment (P2P)
Many enterprises are simplifying cross-border payment and remittance processes through stablecoin technology. These applications are usually designed to be very intuitive, hiding the underlying cryptocurrency technology so that users can complete operations without needing to understand 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 example, the volume of stablecoin transfers from Coinbase or Kraken to Bitso (a Mexico City exchange) is gradually increasing, indicating that the application of stablecoins in cross-border remittances is expanding.
Source: Internal Artemis Data
Peer-to-peer (P2P) crypto transactions, often referred to as the 'global version of Venmo', provide users with a convenient way to transfer funds globally. Companies like TipLink and Sling offer extremely simple user interfaces that allow anyone to easily accept payments through cryptocurrency networks. More importantly, users of these products often do not realize they are using cryptocurrency, thus achieving a truly seamless user experience.
Monthly peer-to-peer 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. Moreover, many wallets include built-in fiat-to-crypto on-ramp services, making it more convenient for users to purchase cryptocurrencies. According to Artemis's data, transfers between wallets are currently one of the largest use cases of blockchain.
Data Source: Artemis
Here is an example of a seamless transfer using Sphere. Users can choose the type of transaction (for example, converting fiat to cryptocurrency or exchanging between cryptocurrencies), and then select the payment method (such as wire transfer, ACH, or SEPA), with the entire transaction process completing in just a few minutes, quickly and efficiently.
Cards and Payment Processors (Card/Card Processors)
Cryptocurrency credit cards and payment processors are collaborating to provide users with the convenience of spending cryptocurrency. The significance of this service lies in the fact that users can make payments directly within the cryptocurrency ecosystem without needing to convert cryptocurrency back to fiat. For example, Visa allows consumers to settle transactions using stablecoins between merchants and acquiring institutions.
Last year, Gnosis Pay launched a Visa card that allows European users to make credit card transactions directly through the Gnosis Safe wallet. Although the user base is currently small, Gnosis Pay's metrics show a continuous growth trend.
Gnosis Pay weekly transaction volume
MicroLending
We visited Nairobi and witnessed the actual operation of blockchain-based microloan 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 rate loan services to businesses in emerging markets. Due to the characteristics of blockchain technology, funds can be transferred almost instantly, 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. With the expansion of the global economy and the prevalence of remote work, establishing a global financial system capable of rapidly and efficiently paying salaries has become particularly important. Some systems are experimenting with real-time payment capabilities, allowing employees to receive salaries on a weekly, daily, or even second-by-second basis.
Ravi Kiran (Head of Growth) shares a story of a freelancer choosing stablecoin payments:
"I once worked with a freelancer from an emerging country who recently received payment in USDC. She kept saying that this payment method was much better than using local currency (saves on taxes, stable value, and worth more than local currency). It was at that moment I realized that every payment has a story behind it. Two months later, she switched entirely to stablecoin payments. I believe that as commercial payments become more widespread, the influence of Circle and Tether will further expand."
Stablecoin Analytics
Artemis, in collaboration with partners such as Allium, RWA.xyz, and Flipside, provides deep analytical services regarding stablecoins to the market. Allium has launched a Visa on-chain analytics dashboard in collaboration with Visa, 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 demand for understanding the driving factors behind stablecoin usage will also continue to grow.
What’s Next for Stablecoins?
As inflation rates continue 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 use case after cryptocurrency trading. We predict that the adoption rate of stablecoins will continue to rise in the future.
This growth may generate network effects: when friends, family, or businesses in a region start widely using stablecoins, it attracts more locals to join in, akin to a 'global version of Venmo'. This expansion of user scale will further enhance the liquidity of the entire network. Additionally, we expect the U.S. to introduce relevant regulations to support maintaining global demand for the dollar through stablecoins.
Although the current supply of stablecoins in the market is mainly denominated in U.S. dollars, we are also seeing a gradual increase in the adoption rate of non-U.S. dollar stablecoins. For example, euro-based 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 explored.
At the same time, yield-bearing stablecoins are receiving increasing attention. These stablecoins not only provide users with opportunities for asset appreciation but have also become an important funding source for U.S. Treasury holders. For example, Ethena has introduced an innovative 'Delta Neutral Yield Generation Mechanism' that maximizes yields through unique strategies, making it 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 enterprises 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 by providing on-chain data support.
If you are interested in the stablecoin market or need help analyzing stablecoin adoption, feel free to reach out to us! You can find us on X.com or contact us via email at team@artemis.xyz.
Special thanks to Perena's Anna, Isaiah Washington, Castle Island Ventures' Peter Schroeder, EffortCapital, and other friends for their contributions to this article! Also, thanks to all the users who provided suggestions on Twitter.
