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A new analysis conducted by Visa and data analytics firm Allium Labs has discovered that less than 10% of stablecoin transaction volumes are generated by real users, with the vast majority driven by automated bots and large-scale traders.
Limited organic activity in stablecoin transactions
The study, which was reported by Bloomberg, investigated approximately $2.2 trillion worth of transactions in April and found that only about $149 billion represented genuine, organic payments activity. This stark discrepancy highlights the prevalence of non-human actors in the stablecoin markets.
The analysis aimed to strip out bot-generated activity and trades from large entities to focus solely on transactions made by actual people.
Stablecoin market dominated by major players
The stablecoin sector, with a total market supply of around $150 billion, is predominantly controlled by Tether (USDT) and USD Coin (USDC), which hold market shares of 75% and 22% respectively, according to broker Bernstein.
Stablecoins, which are cryptocurrencies pegged to stable assets like the U.S. dollar, are designed to maintain a constant value and are becoming increasingly significant in the broader digital currency landscape.
Regulatory and industry developments
The spotlight on stablecoins has intensified following announcements by companies such as PayPal about issuing their own stablecoins.
Additionally, the prospect of stablecoin regulation is increasingly likely to progress through the U.S. Congress, aiming to establish clearer rules for their usage and issuance.
Analyzing the data complexity
Cuy Sheffield, Visa’s Head of Crypto, noted the complexity in analyzing stablecoin transactions due to the multifaceted uses of blockchains.
“There is a lot of noise in this data given that blockchains are general-purpose networks where stablecoins can be used across a range of use cases.”
Growth in user engagement
Despite the challenges in identifying the nature of transactions, the report found a positive trend in user engagement.
There was a reported increase in the number of monthly active stablecoin users, with 27.5 million active users across all blockchain networks.
This indicates a growing adoption and utilization of stablecoins by the general public amidst the backdrop of automated trading activities.
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