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Last year, the adoption of stablecoin payments continued to flourish, even amidst significant capital withdrawals from the broader cryptocurrency market, as highlighted in a recent report by European hedge fund manager Brevan Howard.
Researchers discovered that the stablecoin market processed over $11 trillion in transactions in 2022, with more than 25 million blockchain addresses holding at least $1 in stablecoins.
Stablecoin Adoption by the Numbers
The report, co-authored by Venture Co-Head Peter Johnson and quantitative analyst Sai Nimmagadda, examined “non-speculative stablecoin usage” across various blockchains and layer 2 networks.
The blockchains analyzed included Ethereum, Tron, Binance Smart Chain (BSC), Polygon, Optimism, Arbitrum, Fantom, and Avalanche. The stablecoins evaluated were USDT, USDC, BUSD, and TUSD, all of which are supported by bank deposits, US Treasuries, and other highly liquid cash equivalents.
“The vast majority of non-speculative activity uses fiat-backed stablecoins,” the report stated.
It was noted that the use of these tokens “has decoupled from crypto exchange volumes.” Since December 2021, stablecoin volumes have only decreased by 11%, while weekly stablecoin transactions increased by 25%, in contrast to broader CEX and DEX volumes, which fell by 64% and 60%, respectively.
The total value processed through stablecoins last year was nearly equivalent to card payment giant Visa’s $11.6 trillion figure and significantly surpassed PayPal’s $1.4 trillion figure. PayPal has since introduced its own stablecoin, PYUSD, which it aims to promote for affordable merchant payments globally.
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The report suggested that the majority of stablecoin users are likely “small/retail users,” as 75% of weekly active stablecoin addresses conduct transactions of less than $1000 per week. More than two-thirds of stablecoins are held outside of both exchanges and smart contracts.
While approximately 50% of stablecoin volume is processed on Ethereum, the network represents only 3% of total transactions. In comparison to other networks, Ethereum is recognized for having higher transaction fees, making smaller transactions impractical.
In contrast, Tron and BSC account for 75% of stablecoin transactions and 41% of volume.
Tether Remains King
Tether’s USDT continues to dominate, comprising over half of all stablecoin volume. The token represents 69% of stablecoin supply, 80% of weekly active addresses, and 75% of transactions.
Circle’s USDC once competed closely with USDT in market share but rapidly lost ground following a decline in confidence during a brief dollar-de-pegging incident in March.
Tether has recently discontinued support for three blockchains that exhibited minimal stablecoin activity or adoption, including the token’s original network, Omni.
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