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Visa and Allium Labs Uncover the Truth Behind Stablecoin Transactions

Visa and Allium Labs Uncover the Truth Behind Stablecoin Transactions

TL;DR

  • Bot Activity Dominates Stablecoin Transactions: A study by Visa and Allium Labs found that 90% of stablecoin transactions are initiated by bots and large-scale traders, challenging the belief that stablecoins are revolutionizing the payments industry.
  • USDC Outpaces USDT, But Adoption Still Early: The study revealed that USDC has surpassed USDT in volume. However, the adoption of these tokens as a genuine payment instrument is still in its early stages.
  • Double-Counting Issue and Future Potential: The study highlighted the issue of double-counting in stablecoin transactions. Despite these findings, analysts predict that the total value of all stablecoins could reach $2.8 trillion by 2028, indicating their long-term potential.

A recent study conducted by Visa and Allium Labs has revealed that a staggering 90% of stablecoin transactions are initiated by bots and large-scale traders. This finding challenges the widely held belief that stablecoins, cryptocurrencies pegged to a specific asset like the US dollar, are revolutionizing the $150 trillion payments industry.

The study utilized a dashboard designed to filter out transactions initiated by bots and large-scale traders, isolating those made by real individuals. Out of approximately $2.2 trillion in total stablecoin transactions recorded in April, only $149 billion was identified as “organic payments activity” conducted by genuine users.

Interestingly, the study found that USDC, the stablecoin issued by Circle, has outpaced Tether’s USDT stablecoin in volume. However, the data suggests that the adoption of these tokens as a genuine payment instrument is still in its early stages.

Pranav Sood, the executive general manager for EMEA at payments platform Airwallex, commented on the findings, stating that while stablecoins have “long-term potential”, the short-term and mid-term focus “needs to be on making sure that existing rails work much better”.

Visa’s Head of Crypto, Sheds Light on the Double-Counting Phenomenon

Visa and Allium Labs Uncover the Truth Behind Stablecoin Transactions

The study also highlighted the issue of double-counting stablecoin transactions. Cuy Sheffield, Visa’s head of crypto, explained that converting $100 of Circle’s USDC to PayPal’s PYUSD on the decentralized exchange Uniswap would result in $200 of total stablecoin volume being recorded on-chain.

Despite these findings, analysts at Bernstein predicted that the total value of all stablecoins in circulation could reach $2.8 trillion by 2028. This would represent an almost 18-fold increase from their current combined circulation.

Supporters of stablecoins maintain that their swift transactions and minimal costs position them perfectly to revolutionize the payments industry. To capitalize on the benefits of stablecoins, PayPal launched its own version, PYUSD, last year, aiming to enable quicker and more affordable transfers within its payment system. 

In a similar vein, Stripe declared on April 25 that it would permit merchants on its platform to accept stablecoins for digital transactions. The study underscores the importance of improving existing payment infrastructure and addressing user-friendly concerns to unlock the long-term potential of stablecoins.

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