Visa Reveals Over 90% of Stablecoin Transactions Are Not Linked to Real Users, According to New Dashboard Developed with Allium Labs

Visa Reveals Over 90% of Stablecoin Transactions Are Not Linked to Real Users, According to New Dashboard Developed with Allium Labs
Photo by Nathan Dumlao / Unsplash

Visa Inc., in collaboration with Allium Labs, has introduced a sophisticated new dashboard designed to monitor transactions involving stablecoins. This innovative platform has unveiled surprising insights into the stablecoin market, indicating that a mere 10% of these transactions are linked to actual users. Despite the colossal turnover of $2.2 trillion recorded last month, only $149 billion is considered "organic," reflecting genuine payment activity.

The bulk of stablecoin transactions, as per the findings displayed on the dashboard, are attributed to trading bots, automated services, and major traders rather than to real, individual users. This discovery sheds light on a significant discrepancy between the user engagement reported by asset issuers and the real scenario. Visa’s data highlights a critical issue: the potential overestimation of user interest and activity in the stablecoin space.

Representatives from Visa and Allium Labs have shared that the platform was meticulously designed to deliver accurate and comprehensive data on stablecoin transactions. Throughout April 2024, the total volume of transactions in the stablecoin segment reached an impressive $2.2 trillion. However, only a fraction of this, $149 billion, pertains to organic traffic that can be directly linked to genuine payment activities.

This information is particularly relevant in understanding the current state and potential future of stablecoins as a payment tool. Although stablecoins are still in the early stages of becoming mainstream payment instruments, they hold substantial long-term potential. Pranav Sood, the Executive General Director for the EMEA region at payment platform Airwallex, emphasized the need to focus on improving existing mechanisms to enhance the performance and reliability of stablecoins in the short to medium term.

The complexity of accurately calculating the true volume of stablecoin transactions is highlighted by the challenges in tracking these digital assets across different platforms and networks. Cuy Sheffield, Head of Cryptocurrency at Visa, pointed out a common issue where transaction volumes are often counted twice depending on the platform and network used. For instance, converting 100 USDC into PYUSD on the decentralized exchange Uniswap could be recorded as $200 in total stablecoin volume, potentially doubling the perceived activity.

This overestimation issue was also noted by analytics firm Glassnode back in 2021 during the peak of the "bull run," where the reported monthly turnover of $3 trillion actually did not exceed $875 billion.

In April 2024, Visa reported a significant number of transactions involving USDC and USDT, totaling 172.26 million and 169.24 million transactions respectively, with volumes amounting to $1.69 trillion for USDC and $445.2 billion for USDT. This data not only highlights the dominant role of USDC among stablecoins in terms of transaction volume but also underscores the importance of robust and accurate monitoring tools to capture real user engagement.

Furthermore, Visa’s ongoing efforts to integrate digital assets into conventional financial systems were reinforced by a recent agreement with payment infrastructure provider Transak. This partnership aims to expand the capabilities for converting digital assets into fiat currencies, potentially increasing the usability and acceptance of digital currencies in everyday transactions.

This revelation about the real nature of stablecoin transactions challenges the perceived market dynamics and emphasizes the necessity for more transparent and reliable metrics in the cryptocurrency industry. As the market continues to evolve, the tools developed by companies like Visa and Allium Labs will be crucial in providing stakeholders with clear and accurate information to guide future developments in this rapidly changing landscape.