A study by Visa and Allium Labs revealed that more than 90% of stablecoin volumes do not come from real users, challenging the idea that stablecoins are set to revolutionize the payments industry. The joint dashboard aims to filter out transactions from bots and large-scale traders to identify those made by genuine individuals. Out of approximately $2.2 trillion in total transactions, only $149 billion is attributed to genuine users. This suggests that stablecoins are still in the early stages of development as a payment instrument, requiring a focus on ensuring existing payment rails work effectively.
Accurately tracking the value of crypto activity using blockchain data has always been a challenge, as seen in Glassnode’s estimation that the $3 trillion market circulation during the 2021 bull market was actually closer to $875 billion. Stablecoin transactions face the issue of double-counting depending on the platform used for transfers. Visa’s head of crypto, Cuy Sheffield, pointed out that converting $100 of USDC to PYUSD on Uniswap would result in $200 of total stablecoin volume being recorded on-chain. Visa is among the entities that could lose out if stablecoins become widely accepted as payment methods.
Analysts predict that the total value of all stablecoins in circulation could reach $2.8 trillion by 2028, advocating for their near-instantaneous transactions and low costs as ideal for disrupting the payments sector. PayPal introduced its own stablecoin PYUSD to enable instant and cost-effective transfers within its payment infrastructure, and Stripe announced that merchants on its platform can now accept stablecoins for online transactions on various blockchains. However, limited demand for stablecoin-based payment solutions has been observed by Airwallex, indicating that many customers do not find the technology user-friendly enough, especially in comparison to traditional payment methods like checks still widely used in the US.
The study raises concerns about the level of genuine user activity in stablecoin transactions, emphasizing the importance of developing existing payment systems to better serve the needs of users. With stablecoin volumes facing issues of double-counting and potential impact on established entities like Visa, the industry must address these challenges to ensure the stablecoins’ long-term success as a payment instrument. As stablecoins continue to gain traction, it will be crucial for companies to prioritize improving user experience and adoption to realize their potential in revolutionizing the payments landscape. Despite the growth potential predicted for stablecoins, barriers such as user perception and technological adoption need to be addressed to drive wider acceptance and usage in the payments industry.
