Visa, Allium Labs report reveals less than 10% of stablecoin transactions are organic, highlighting a market dominated by bots and traders.
In a recent report co-developed by Visa and Allium Labs, as reported by Bloomberg, a surprising revelation about the stablecoin market has come to light. The analysis, which focused on the nature of transactions within the stablecoin ecosystem, found that a mere fraction of the transaction volume can be attributed to real, everyday users. This finding sheds light on the current state of stablecoin use and its implications for the broader cryptocurrency market.
Before diving into the findings, it's essential to understand what stablecoins are. Stablecoins are a type of cryptocurrency designed to maintain a stable value over time, typically pegged to a fiat currency like the US dollar. This stability makes them an attractive option for users seeking to avoid the volatility associated with other cryptocurrencies like Bitcoin and Ethereum.
The report revealed that out of approximately $2.2 trillion in stablecoin transactions recorded in April, only about $149 billion were identified as organic payments activity. This means that less than 10% of the transaction volume came from real users engaging in genuine transactions, such as purchasing goods and services or transferring money. The rest of the volume is believed to be dominated by bots and large-scale traders, who often engage in high-frequency trading and other automated strategies to profit from the market.
Despite the low percentage of transactions attributed to real users, the report notes a steady growth in the number of monthly active stablecoin users. The total reached 27.5 million across all chains, indicating a growing interest in stablecoins as a digital payment method. This increase in users suggests that while the current transaction volume may be dominated by trading activities, there is a significant and growing base of people interested in using stablecoins for their intended purpose as a stable digital currency.
The findings from the report have several implications for the future of stablecoins and the broader cryptocurrency market. Firstly, they highlight the need for more transparency and understanding of the nature of transactions within the stablecoin market. For stablecoins to achieve their potential as a widely used digital currency, there needs to be a shift towards more organic usage by real people for everyday transactions. Secondly, the growing user base suggests that there is a demand for stable digital currencies, which could drive innovation and adoption in the space.
