Stablecoins Facing Usage Challenges: Visa Report Reveals Surprising Data

Stablecoins, known for their stability and utility in the cryptocurrency world, are currently facing a significant challenge when it comes to actual usage. A recent study conducted by Visa and Allium Labs has shed light on the fact that more than 90% of stablecoin transactions are not originating from real users.

Visa’s Head of Crypto, Cuy Sheffield, reported that the total transactions involving stablecoins in the last 30 days amounted to an impressive $2.65 trillion as of April 24. However, only a small fraction of $265 billion was identified as organic payments activity, highlighting a substantial gap between reported and authentic usage.

Despite this discrepancy, the study noted a consistent growth in the number of monthly active stablecoin users, indicating a continued interest in these assets. This raises the question of who is behind the majority of transactions if not real users, and what implications this might have for the crypto market.

Understanding the Reality of Stablecoin Transactions

Stablecoins are digital currencies designed to maintain a stable value by pegging them to an underlying asset, usually a fiat currency like the U.S. dollar. While these coins offer stability and are favored for various purposes such as trading and remittances, Visa’s data reveals that less than 10% of stablecoin transaction volumes are considered organic payments activity.

One of the main reasons for this discrepancy is the prevalence of bots in the crypto space. These bots can execute transactions at high speeds and volumes, making it challenging to differentiate between real user transactions and those driven by automated processes. Additionally, the flexible nature of blockchain networks also contributes to this challenge by allowing for a wide range of automated transactions.

Visa and Allium Labs have implemented filters to identify and eliminate such activities, including a single-directional volume filter and an inorganic user filter. Despite adjustments for bot-driven transactions, the analysis shows a consistent increase in the number of monthly active stablecoin users, reaching 27.5 million as of April 24.

USDC and USDT Usage Trends

Visa’s analysis indicates a significant growth in the usage of USD Coin (USDC) over the past eight months. USDC’s share of stablecoin transactions analyzed has more than doubled, surpassing 50% by the end of the year. This trend suggests that USDC’s usage in actual transactions is outpacing Tether (USDT), despite USDT’s higher market capitalization.

Experts’ Views on Stablecoin Usage

While some experts agree with Visa’s findings, others, like Nick van Eck of Agora, criticize the methodology, suggesting that the data may include legitimate businesses utilizing stablecoins for trading purposes. This discrepancy highlights the ongoing debate surrounding stablecoin usage and adoption.

Visa’s Report and the Future of Stablecoins

Visa’s report on stablecoin transactions aligns with the increasing role of stablecoins in facilitating cross-border payments. The surge in stablecoin transaction volume indicates a potential shift towards stablecoins surpassing traditional payment methods in terms of speed and cost-effectiveness.

As major banks explore the use of stablecoins to enhance their payment infrastructure, the future of stablecoins remains uncertain. Whether Visa’s report aims to present facts or undermine competition is still up for debate.

In conclusion, stablecoins are facing challenges in terms of real user adoption, but their utility and potential for growth cannot be ignored. As the cryptocurrency market evolves, the role of stablecoins in facilitating transactions and payments is likely to continue expanding.

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