The Prevalence of Stablecoins: Ten Key Points Revealing Market Impact and Future Prospects

Original author: Peter Johnson

Original compilation: Kaori, BlockBeats

Stablecoin data is closely related to market sentiment and performance. According to CoinGecko data, the market capitalization of the stablecoin USDC has dropped by over $30 billion since its peak in January 2022 ($56,128,605,419), with a decline of 41.6% in 2023, currently reported at $25,989,247,153, which is at the same level as July 2021. The outflow amount of USDC on trading platforms (7-day moving average) is $16.16 million, dropping to a one-month low.

As an important underlying asset in the crypto world, PayPal's entry into stablecoins has once again brought hope to the crypto world, with the issuance of PYUSD exceeding 40 million within a month. Related reading: 《Payment giant Paypal's stablecoin is expected to lead the crypto industry to the mainstream》

The Relentless Rise of Stablecoins is a research report on stablecoins co-authored by Peter Johnson, Co-Head of Venture Capital at Brevan Howard Digital, and Sai Nimmagadda. Peter Johnson shared the top ten points of the report on his social media platform. BlockBeats summarizes as follows:

1. In 2022, the amount settled on-chain by stablecoins exceeded $11 trillion, dwarfing the $1.4 trillion processed by PayPal, nearly matching Visa's $11.6 trillion payment transaction volume, and reaching 14% of the U.S. Automated Clearing House (ACH) settlement transaction volume, as well as over 1% of the U.S. Federal Reserve wire transfer system (Fedwire) settlement volume.

2. Over 25 million blockchain addresses hold more than $1 in stablecoins. About 80% of these, nearly 20 million addresses, hold stablecoins between $1 and $100. To give a sense of scale, if a U.S. bank had 25 million accounts, it would become the fifth-largest bank in the U.S. (by number of accounts).

3. Approximately 5 million blockchain addresses send stablecoins weekly, providing a very rough proxy for global users interacting with stablecoins regularly.

4. The use of stablecoins has decoupled from the trading volume of cryptocurrency exchanges, indicating that a significant portion of stablecoin trading volume may be driven by non-trading/speculative activities. Since December 2021, trading volume on centralized exchanges has decreased by 64%, and trading volume on decentralized exchanges has decreased by 60%. During this period, stablecoin trading volume has only declined by 11%, with weekly active stablecoin addresses and weekly stablecoin trading volume rising by over 25%.

5. Among the approximately 5 million weekly active stablecoin addresses, about 75% of the transaction volume does not exceed $1,000 per week, indicating that small, retail users may constitute the majority of stablecoin users.

6. The supply of stablecoins was less than $3 billion five years ago and has now exceeded $125 billion (peaking at over $160 billion), demonstrating strong resilience. Compared to the total market capitalization of the entire crypto market, the market cap of stablecoins has dropped about 24% from its peak, while the total market cap of the crypto market has dropped about 57%.

7. Less than one-third of stablecoins are stored on trading platforms, with most stablecoins held in externally owned accounts (not on trading platforms or smart contracts).

8. Most stablecoin activity uses Tether (USDT), which accounts for 69% of the stablecoin supply, and has accounted for 80% of weekly active addresses, 75% of transactions, and 55% of trading volume year-to-date.

9. Most stablecoin activity occurs on Tron and BSC. As of now, Tron and BSC together account for 77% of weekly active addresses, 75% of transactions, and 41% of trading volume.

10. On average, the Ethereum blockchain is primarily used for higher-value transactions; although the Ethereum blockchain accounts for only 6% of active wallets and 3% of transactions, it holds 55% of the stablecoin supply, and nearly 50% of weekly stablecoin dollar trading volume is settled on the Ethereum blockchain.

With the continuous rise of stablecoins, we are still in the early stages of global stablecoin adoption. In the coming years, the circulating supply of stablecoins is expected to grow to trillions of dollars, with annual transaction volumes reaching hundreds of trillions of dollars. Furthermore, stablecoins will increasingly provide financial services to the unbanked population globally, offering them a way to escape high-inflation currencies and triggering an explosion of innovation based on these new global open network currency circulation tracks.