More than 90% of Stablecoin transactions are not genuine

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

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

Only 10% of Stablecoin transactions are organic

Visa, along with Allium Labs, has created a dashboard to filter out transactions initiated by bots and merchants at scale, focusing only on those made by real people. Of the $2.2 trillion in total transactions in April, only $149 billion came from “organic payments activity,” according to Visa.

This basically means that less than 10% of stablecoin transaction volumes come from genuine users or are considered organic. The board says:

“This adjusted metric is intended to remove potential distortions that may arise from inorganic activity and other artificial inflationary practices.”

The dashboard uses two important filters. Unique directional volume filter and inorganic user filter.

A one-way volume filter only counts the largest amount of stablecoins transferred in a single transaction and eliminates redundant internal transactions in complex smart contract interactions.

Meanwhile, inorganic user filters consider transactions submitted by accounts that have initiated fewer than 1,000 stablecoin transactions and transferred less than $10 million in volume in the past 30 days. Transactions from accounts that exceed these thresholds are disregarded 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, EMEA Executive Director of Airwallex, commented that the data suggests that stablecoins are still at an early stage of development as a payment method. While acknowledging the long-term potential of the assets, the executive stressed the need to focus on improving existing payment systems in the short and medium term.

Prominent blockchain intelligence firm Glassnode had previously estimated that the $3 trillion market float during the 2021 bull market peak 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, having handled more than $12 trillion worth of transactions last year, could suffer losses if stablecoins become widely accepted.

As such, experts predict that the total value of all stablecoins in circulation could reach $2.8 trillion by 2028, which would represent a nearly 18-fold increase over their current circulation. Many in the crypto industry argue that stablecoins, because of their instant and low-cost transactions, are perfectly suited to disrupt the payments industry.

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

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