- The stablecoin sector is under scrutiny as a new study suggests that over 90% of transactions are not made by genuine users.
- Visa, in collaboration with Allium Labs, has developed a metric to filter out transactions initiated by bots and large-scale traders.
- Out of $2.2 trillion in total transactions in April, only $149 billion were from “organic payments activity,” according to Visa.
Recent study questions the widespread adoption of stablecoins, indicating that over 90% of transactions aren’t made by genuine users. Visa’s new metric reveals that less than 10% of stablecoin transactions are organic.
Only 10% of Stablecoin Transactions Organic
Visa, in collaboration with Allium Labs, has developed a dashboard to filter out transactions initiated by bots and large-scale traders, focusing only on those made by real people. Out of $2.2 trillion in total transactions in April, only $149 billion were from “organic payments activity,” according to Visa. This suggests that less than 10% of stablecoin transaction volumes actually originate from genuine users or are considered organic. The dashboard employs two important filters: single directional volume filter and inorganic user filter.
Stablecoin Market Still in Nascent Stage?
Pranav Sood, executive general manager for EMEA at Airwallex, suggests that the data indicates stablecoins are still in an early phase of development as a payment method. Despite acknowledging the long-term potential of the assets, Sood stresses the need to focus on improving existing payment systems in the short and mid-term. Prominent blockchain intelligence firm Glassnode had earlier estimated that the $3 trillion market circulation during the peak of the 2021 bull market was actually closer to $875 billion.
Conclusion
Despite the controversies surrounding the stablecoin sector, many in the crypto industry argue that stablecoins, due to their instantaneous and low-cost transactions, are perfectly suited for disrupting the payments sector. However, the recent study and Visa’s new metric suggest that the adoption of stablecoins is not as widespread as previously thought, with less than 10% of transactions being organic. As such, the focus should be on improving existing payment systems while the stablecoin market continues to mature.
