In a noteworthy revelation, a recent report from European hedge fund Brevan Howard suggests that the stablecoin market remains buoyant despite facing broader crypto market downturns. The report reveals that in 2022, stablecoins settled over $11 trillion in value. That brings them near parity with payment giant Visa’s $11.6 trillion and far exceeds PayPal’s $1.4 trillion.
Decoupling from Broader Crypto Markets
The study considered “non-speculative stablecoin usage” across a multitude of blockchains. Those include Ethereum, Tron, Binance Smart Chain (BSC), Polygon, Optimism, Arbitrum, Fantom, and Avalanche. Fiat-backed stablecoins like USDT, USDC, BUSD, and TUSD were the primary focus of the analysis.
Significantly, the report notes that the use of stablecoins has “decoupled from crypto exchange volumes.” Since December 2021, stablecoin volumes have dipped a mere 11%, even as broader centralized and decentralized exchange volumes plummeted 64% and 60%, respectively. “The vast majority of non-speculative activity uses fiat-backed stablecoins,” the report asserted.
According to the report, the massive adoption of stablecoins is not restricted to institutional players. It points out that most stablecoin users are likely “small/retail users,” given that 75% of weekly active stablecoin addresses transact amounts less than $1,000. Remarkably, over two-thirds of all stablecoins are held outside of exchanges and smart contracts, emphasizing the growing retail interest.
Platform Preferences and Stablecoin Network Fees
Ethereum, despite its popularity, accounts for only 3% of total stablecoin transactions, mainly due to its higher transaction fees. By contrast, Tron and Binance Smart Chain account for 75% of stablecoin transactions and 41% of volume.
Tether’s USDT continues to dominate the stablecoin landscape, accounting for 69% of the total stablecoin supply, 80% of weekly active addresses, and 75% of transactions. Circle’s USDC, once a strong contender, has lost significant ground to Tether, particularly after a “dollar-de-pegging event” in March, which led to a loss of user confidence.
To capitalize on the burgeoning stablecoin market, PayPal has introduced its stablecoin, PYUSD. The payment giant aims to leverage PYUSD for low-cost merchant payments globally, further accentuating the growing relevance of stablecoins.
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