Recently, payment giant Visa, venture capital firm Castle Island, and global hedge fund company Brevan Howard Digital launched a tripartite research report stating that stablecoins have become the “killer currency” in cryptocurrencies, especially in emerging markets.
Payment giants such as Visa promote the development of stablecoin technology
Global payment giants such as Visa are actively adopting stablecoins and exploring the possibilities in "cross-border settlement and payment systems." Visa founder Dee Hock said: In the future, currency will be used for global transactions in the form of digital data through electronic transmission.
Currently, Visa has launched a payment solution and cooperates with 1.3 million merchants around the world, allowing users to conduct transactions through stable currency (USDC). In addition, Visa has partnered with Allium Labs to create the Visa Onchain Analytics Dashboard, which provides real-time data on stablecoins, making it easier for businesses and governments to track and analyze market dynamics.
(The CEOs of the two major payment giants Visa and Paypal unanimously stated that cryptocurrency has huge potential)
Global stablecoin trading volume is $2.6 trillion, with a supply of $192 billion
Reports show that as of the first half of 2024, global stablecoin trading volume reached $2.6 trillion, with more than 20 million blockchain addresses conducting stablecoin transactions every month. These digital assets are rapidly gaining popularity in the global market, especially in high-inflation countries such as Argentina and Nigeria, due to their fast settlement, high transparency, and characteristics of being pegged to legal currencies (to the U.S. dollar).
Data shows that stablecoin supply has grown rapidly since 2017, reaching a peak of $192 billion in March 2022, before declining due to the collapse of on-chain algorithmic stablecoin Terra UST and the crypto market crisis.
By the end of 2023, stablecoin supply will pick up with the approval of a U.S. Bitcoin ETF. Recently, the European Union, Singapore, Hong Kong and other places have passed regulations to attract issuers to launch new stable currencies, such as Ethena's USDe. This synthetic U.S. dollar token has a market value of more than 3 billion U.S. dollars, and is used to connect Bitcoin and Ethereum futures with spot prices. arbitrage transactions among them generate profits.
March 2022
The report points out that stablecoins provide a new value model that allows users to obtain income through the blockchain. When emerging markets use stablecoins pegged to the U.S. dollar, it is actually equivalent to indirectly purchasing U.S. Treasury bonds (such as short-term Treasury bills) ( Note: However, mainstream stablecoins do not provide interest on government bonds). While some early stablecoin experiments failed, Tether (USDT) was the first to succeed, with market share falling below 50% at one point but later recovering to around 70%.
USDT Supply The total stablecoin transaction volume is as high as 5.28 trillion U.S. dollars, and the steady increase in usage is not limited to settlement
Data shows that the total transaction volume of stablecoins will be US$3.7 trillion in 2023, reaching US$2.62 trillion in the first half of 2024, and reaching an overall US$5.28 trillion. Despite a decline in cryptocurrency trading volume from 2022 to 2023, the use of stablecoins has continued to grow steadily, showing that the user base of stablecoins has expanded beyond transaction settlement. As of June 2024, the blockchains with the largest transaction settlement volume are, in order, Ethereum, Tron, Arbitrum, Coinbase’s Base, Binance Smart Chain and Solana.
Blockchain "dollarization", the status of the US dollar cannot be shaken
The report pointed out that the blockchain is showing a dollarization phenomenon. The volume of transactions settled in stablecoins has significantly exceeded that of native crypto assets. While Bitcoin and Ethereum are the primary media of exchange, it’s now almost exclusively USD-pegged stablecoins that dominate the market. As of June 2024, stablecoins accounted for 50% of the settlement value of the public chain, reaching a peak of 70%.
The U.S. dollar is still the most dominant currency in the blockchain. The supply of euro stablecoins is $617 million, accounting for approximately 0.38% of the market. Other currencies such as the lira (Turkey), Singapore dollar, Japanese yen, etc. have relatively smaller market shares.
Some countries, like Nigeria, are concerned that this may pose a risk to the local fiat currency (naira). Stablecoins are almost entirely pegged to the U.S. dollar, reflecting the U.S. dollar’s status as a global reserve currency, and most countries have no restrictions on U.S. dollar stablecoins. Due to the strength of the US dollar relative to other sovereign fiat currencies, users prefer USDT and USDC with high liquidity. Future regulations may affect the dollarization trend of stablecoins.
Stablecoins have multiple uses, and each country has different purposes.
Data shows that in countries such as Nigeria, India, Brazil, and Turkey, more than 57% of users said that their frequency of using stablecoins has increased in the past year, and about 72% of users believe that they will use it more in the future. Nigeria is mainly used to store U.S. dollars, India's wealthier groups are more inclined to hold stablecoins, Turkey focuses on returns, and Indonesia focuses on better currency exchange.
This shows that stablecoins are increasingly popular in these countries, especially for transactions and preservation of value. The application of stablecoins is no longer limited to cryptocurrency transactions. Many users use stablecoins for cross-border payments, commodity transactions, national legal currency substitution, etc.
USDT remains in the lead, users: Just use your habits to change it
When the survey team asked users whether they would switch from Tether (USDT) to other stablecoins, most people said they would continue to use USDT out of "habit". For example, some people said: "There is no specific reason, it's just habit" and "I'm used to using (USDT), so there's no reason to change." Some users said: "If there were stablecoins that were more common and cheaper, I might Change it, why not change it."
The reason why Tether (USDT) is so popular is its high stability and wide range of uses, which also affects trust. Therefore it has become the most popular stablecoin.
Ethereum is the most popular, with most using Binance as their wallet
Blockchains such as Ethereum, Tron and Binance have become the main networks for stablecoin transactions. The survey shows that Ethereum is the most popular blockchain in all regions, followed by Binance, Solana and Tron. Although Ethereum’s The handling fee is higher. In addition, 18% of users stated that they conduct stablecoin transfers within exchanges and less directly use the blockchain.
The most commonly used wallets are Trust Wallet, MetaMask, Coinbase Wallet, while more than half of the respondents use Binance exchange as a wallet.
On-chain data shows stablecoin usage continues to grow, both in terms of monthly active addresses, total supply, and settlement amounts. The survey results counter the notion that stablecoins are only used for crypto trading, with 47% of respondents using stablecoins to store dollars, 43% for currency exchange and 39% for yield. The most common non-crypto uses are currency substitution 69%, payment for goods and services 39% and cross-border payments 39%.
99% of stablecoins are pegged to the U.S. dollar and have become an important alternative to U.S. dollar banks in many emerging markets.
The future development of stablecoins in the global market
Looking ahead, stablecoins are expected to play a key role in more emerging markets, especially in cross-border payments, financial inclusion and global capital flow management. As technology and infrastructure develop, stablecoins will provide more users with access to the U.S. dollar and other fiat currencies, adding new momentum to the global economy.
As the development of digital payment technology accelerates, traditional payment giants such as Visa and PayPal and cryptocurrency stablecoins such as USDC, USDT and PYUSD have gradually entered the stablecoin pie. Visa has consolidated its market position by supporting USDC’s cross-border settlement solution. USDC It is widely favored in the field of cross-border payments because of its transparency and compliance; USDT maintains its dominant position in emerging markets with its strong liquidity. The launch of PyUSD by PayPal further enhances its competitiveness in the digital payment market.
In the future, competition between traditional payment companies and stablecoins will revolve around payments, ecosystems and financial inclusion. Who can take advantage of user needs, regulatory compliance and technological innovation will determine who can dominate the stablecoin market and further promote innovation in the global payment market. Who can come out on top? Stay tuned!
(What’s promising in the future? The market value of stablecoins hit a new high in two years, and the market value of PYUSD tripled in a single month!)
(Apple opens up NFC usage rights, Circle CEO is happy to see: USDC contactless payment will be launched soon)
This article Visa launches stablecoin research report: On-chain transactions are dollarized, and more than 50% of them are settled by stablecoins. First appeared on Chain News ABMedia.
