Stablecoins, cryptocurrencies that promise stability and utility, face a serious problem: their real-world use. A recent study conducted by Visa and Allium Labs found that more than 90% of stablecoin transactions are not made by real users.
According to Kui Sheffield, Visa’s head of cryptocurrencies, as of April 24, the total volume of stablecoin transactions over the past 30 days was a whopping $2.65 trillion.
However, only a fraction – $265 billion – was identified as originating from “organic payment activity,” indicating a huge gap between reported and actual usage.
Despite this discrepancy, the study notes a steady increase in the number of monthly active users of stablecoins, indicating a sustained interest in these assets.
This begs the question: if the majority of transactions are not made by actual users, who is making them, and what could this mean for the cryptocurrency market?
One of the main reasons for this discrepancy is the prevalence of bots in cryptocurrency. These bots can execute transactions at high speeds and in high volumes, which skews the perception of real user activity and usage patterns.
At the same time, the flexible nature of blockchain networks also contributes to this problem. Blockchain allows for a wide range of use cases, including automated transactions. This flexibility can make it difficult to distinguish between transactions made by real users and those made through automated processes.
Despite the difference in total and bot-adjusted transfer volume, the analysis revealed a steady increase in the number of monthly active users of stablecoins. As of April 24, 27.5 million monthly active users across all chains, indicating a steady growth trend.
Visa’s report and the rise in popularity of stablecoins
A recent report from Visa is consistent with the growing popularity of stablecoins for facilitating cross-border payments.
According to market research firm Sacra, transaction volume in stablecoins has grown from $26 billion in January 2020 to a staggering $1.4 trillion in April 2024 and could potentially surpass Visa’s total payment volume in the second quarter of 2024.
Sacra also reported that stablecoin transactions are processed within minutes, in stark contrast to the 6-9 hours required by traditional systems.
From a cost perspective, stablecoin transactions are also cheaper, with fees as low as $0.0037 compared to the average fee of $12 for traditional methods.
Meanwhile, major banks including Wells Fargo, JPMorgan Chase, Visa and Mastercard are exploring using stablecoins to expand their payment infrastructure.
It remains to be seen whether Visa’s reports are a statement of fact or an attempt to undermine competition.
