Over 90% of Stablecoin Transactions Not Genuine

The stablecoin sector is no stranger to controversy, but a recent study questions whether these assets are as widely used as claimed.

According to the report, a new metric developed by US multinational payment giant Visa indicates that more than 90% of stablecoin transactions are not done by real users, indicating that these cryptocurrencies are far from being widely adopted for payments.

Only 10% of stablecoin transactions are organic

Visa, along with Allium Labs, has done just that creature A dashboard to filter transactions initiated by bots and large-scale traders, focusing only on those made by real people. Of the $2.2 trillion in total transactions in April, only $149 billion was from “organic payments activity,” according to Visa.

This essentially means that less than 10% of stablecoin transaction volumes actually originate from real users or are considered organic. the Dashboard is reading,

“This revised measure is intended to eliminate potential distortions that could arise from inorganic activity and other artificial inflationary practices.”

The dashboard uses important filters. One directional volume filter and one inorganic used filter.

The one-way volume filter counts the largest amount of stablecoins transferred within just one transaction and removes redundant internal transactions in complex smart contract interactions.

Meanwhile, inorganic user filters take into account transactions sent by accounts that initiated fewer than 1,000 stablecoin transactions and transferred less than $10 million in volume within the past 30 days. Transactions from accounts that exceed these limits are discarded to eliminate various bot activities as well as automated transactions from large entities such as centralized exchanges.

Is the stablecoin market still in its nascent stage?

Pranav Sood, Executive General Manager EMEA at Airwallex, commented that the data indicates that stablecoins are still at an early stage of development as a means of payment. While recognizing the assets' long-term potential, the executive stressed the need to focus on improving existing payment systems in the short and medium term.

Leading blockchain intelligence firm Glassnode previously estimated that the $3 trillion market trading during the peak of the 2021 bull market was actually closer to $875 billion.

With stablecoins, transactions can be counted twice depending on the platform used. For example, converting $100 of Circle's USDC to PayPal's PYUSD on Uniswap would result in $200 of registered stablecoin volume. Visa itself, which handled more than $12 trillion in transactions last year, could face losses if stablecoins become more widely accepted.

As such, experts expect the total value of all stablecoins in circulation to reach $2.8 trillion by 2028, representing an increase of nearly 18-fold from their current circulation. Many in the cryptocurrency industry argue that stablecoins, due to their instantaneous and low-cost transactions, are well-suited to disrupting the payments sector.

PayPal introduced its stablecoin PYUSD last year to enable instant and low-cost transfers within its payment infrastructure. Stripe announced on April 25 that it is allowing merchants on its platform to accept stablecoins for online transactions.