Stablecoins Settled as Much Value as Visa in 2022: Analysis

Despite massive capital withdrawals from the cryptocurrency market, stablecoin payment acceptance has continued to flourish throughout 2017, according to a recent investigation by the European hedge fund manager Brevan Howard.

The stablecoin market's value reportedly reached over $11 trillion in 2022, and more than 25 million blockchain addresses possessed more than $1 worth of stablecoins. These figures were determined based on the conclusions of analysts.

The Rise of Stablecoin Adoption

"Non-speculative stablecoin usage" was the topic of investigation in the study that Venture Co-Head Peter Johnson and Quantitative Analyst Sai Nimmagadda penned. The paper looked at "non-speculative stablecoin usage" across several blockchains and layer 2 networks. Peter Johnson and Sai Nimmagadda contributed equally to the report's writing as co-authors.

At the event, blockchains such as Ethereum Tron, Binance Smart Chain (BSC), Polygon, Optimism, Arbitrum, Fantom, and Avalanche were also present. According to the conclusion of the research report, "the vast majority of non-speculative activity uses fiat-backed stablecoins." THIS TEST PUT the USDT, USDC, BUSD, and TUSD stablecoins through their paces. These stablecoins are all backed by various extremely liquid currency counterparts, including bank deposits, US Treasuries, and other very liquid currency equivalents.

The research indicates that the use of such tokens "has decoupled from crypto exchange volumes." Since December 2021, the volume of stablecoin transactions has only declined by 11%, while the number of weekly stablecoin transactions has climbed by 25%. Compared to the bigger CEX and DEX quantities, which have fallen by 60% and 64%, respectively, this finding stands in stark contrast.

The entire value resolved using stablecoins in 2017 came perilously close to matching the stunning $11.6 trillion published by card payment giant Visa and far beyond the $1.4 trillion reported by PayPal. This was because the whole value that was settled using stablecoins in 2017 came to be known as "stablecoins." PYUSD, PayPal's very own stablecoin, has recently been put into circulation after being made available to users. This cryptocurrency will be promoted by the corporation as a means of making low-cost payments to retailers worldwide, and the company plans to promote this cryptocurrency.

According to the survey, most stablecoin users will likely fall into the "small/retail users category." This is because 75% of weekly active stablecoin addresses only conduct transactions worth less than $1,000 per week. More than two-thirds of stablecoins are held offline, meaning they are not connected to cryptocurrency exchanges or systems that manage smart contracts.

The Ethereum network is only responsible for three percent of all transactions, even though Ethereum is responsible for roughly half of all stablecoin settlements. It is widely known that Ethereum has greater transaction costs than other networks, which makes it impossible to perform smaller transactions on Ethereum. This is because Ethereum's transaction costs are higher than other networks.

Tron and BSC are responsible for 75% of all stablecoins transactions but only account for 41% of the volume.

Tether is Still King

The volume of transactions involving Tether's USDT continues to make up more than half of the total volume of all stablecoins. Not only does the token account for 69% of the total supply of stablecoin, but it also accounts for 80% of the weekly active addresses and 75% of all transactions. In other words, the token is extremely important to the network.

Circle's USDC initially battled with USDT for market domination, but it soon lost market share to USDT after a lack of confidence during a brief dollar-de-pegging incident in March. USDT has since gained a market share advantage. Currently, USDT is the most widely used cryptocurrency in the market.

Tether has just recently terminated its support for three other blockchains because they do not have sufficient activity or acceptance of stablecoins. The first network to use the Tether token was the Omni network, which is now one of these networks.