In 2022, stablecoins executed transactions valued at over 11 trillion dollars, competing with the payment giant Visa’s 11.6 trillion dollar transaction volume.
According to a new report from Brevan Howard, a European hedge fund, stablecoins have made significant progress in the payment sector, especially in non-speculative transactions. In 2022, the stablecoin market outpaced the annual figures of Paypal and Mastercard, executing transactions with a similar value of 11 trillion dollars compared to Visa’s annual 11.6 trillion dollars. Paypal processed a volume of 1.4 trillion dollars throughout the year, while Mastercard reported a total transaction of 6.57 trillion dollars.
Stablecoin Activities Analyzed
Brevan Howard’s study, led by Peter Johnson and Sai Nimmagadda, closely examined non-speculative stablecoin activities on prominent blockchains like Ethereum, Tron, and Binance Smart Chain (BSC). The research showed that over 25 million blockchain addresses held more than 1 dollar in value in stablecoins.
The primary focus of the research were stablecoins, especially those backed by fiat (national currency), which included USDT, USDC, BUSD, and TUSD. Underpinning these digital assets were bank deposits, US Treasury bonds, and other liquid cash equivalents. The report found that these fiat-backed stablecoins made up the majority of non-speculative activities.
The report also noted that the majority of stablecoin users in 2022 were small or retail category. An estimated 75% of weekly active stablecoin addresses executed transactions below 1000 dollars.
Furthermore, the report highlighted that the use of stablecoins was not tied to the patterns observed in crypto exchange volumes. While stablecoin volumes only fell by 11% since December 2021, centralized and decentralized exchange volumes decreased by 64% and 60%, respectively.
Dominance of Stablecoins
Even though Ethereum accounted for 50% of all stablecoin volumes, it only contributed to 3% of the total transactions due to high transaction fees. In contrast, Tron and BSC conducted 75% of total stablecoin transactions, making up 41% of the total volume.
Tether‘s USDT emerged as the undisputed leader in the total stablecoin supply in 2022 with approximately a 69% share. Throughout the year, it constituted 80% of the weekly active addresses and 75% of the transaction pie.
Despite this success in 2022, stablecoins lagged behind Mastercard so far in 2023, a situation mainly due to crypto market cycles and a challenging U.S. regulatory environment.
However, projections by Brevan Howard suggest that with payment integrations and revolutionary innovations, stablecoins could surpass Bitcoin users within five years.
