Stablecoin volumes have remained comparable to Visa, with projections indicating a potential surpassing of Visa's transaction volume in 2024.
Stablecoins have emerged as a vital asset class in the crypto industry, gaining significant traction over the past five years. Stablecoins aim to offer price stability and a familiar medium of exchange, addressing a critical issue within the volatile crypto market.
Stablecoins have been part of the cryptocurrency ecosystem since 2014, but their prominence surged during the crypto boom of 2020. The total issuance of stablecoins skyrocketed from approximately $5 billion at the start of 2020 to over $180 billion by May 2022, marking a phenomenal 3,500% increase.
One of the most striking developments in the stablecoin space is the surge in on-chain transaction volumes. According to K33 Research, In 2020, stablecoin transaction volumes surpassed those of PayPal, and by the following year, they even eclipsed the much larger Visa network. As of 2022 and 2023, stablecoin volumes have remained comparable to Visa, with projections indicating a potential surpassing of Visa's transaction volume in 2024.
However, while these figures are impressive, they can be misleading. The nature of stablecoin transactions differs significantly from traditional payment transactions. For instance, the average transaction size on the Visa network is approximately $54, with around 276 billion transactions processed. In contrast, stablecoin transactions average around $4,200, with only 2.6 billion transactions recorded. This disparity suggests that stablecoins may be primarily used for larger, institutional transactions rather than everyday retail purchases.
According to a recent report from CCData, there is a slight increase in the total stablecoin market capitalization, rising by 2.11% in July to $164 billion. Among these, Tether (USDT) remains the dominant player, boasting a market cap of $116 billion, which accounts for 69.6% of the total stablecoin market. This marks Tether's eleventh consecutive month of growth, underscoring its resilience in a competitive landscape.
Other stablecoins, such as USD Coin (USDC), BlackRock’s BUIDL, and PayPal USD (PYUSD), have also seen positive growth. Notably, PayPal USD reported a remarkable 17.9% increase, reaching an all-time high of $589 million. Conversely, some stablecoins, including First Digital USD (FDUSD) and Ethena USDe, experienced declines in market capitalization, highlighting the volatility within this segment.
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