Over 90% of Stablecoin Transaction Volumes Come from Automated Bots Rather Than Actual Users: Study

By Trisha Andrada

May 06, 2024 07:50 AM EDT

BRITAIN-US-BLOCKCHAIN-CRYPTOCURRENCY-STABLECOINS-USDT-TETHER — An illustration picture taken in London on May 8, 2022, shows gold plated souvenir cryptocurrency Tether (USDT), Bitcoin and Etherium coins arranged beside a screen displaying a trading chart. Tether (USDT) is an Ethereum token known as a stablecoin that is pegged to the value of the US dollar, and is currently the largest stablecoin with a market value of USD 83 billion dollars. (Photo by Justin TALLIS / AFP)
(Photo : Photo by JUSTIN TALLIS/AFP via Getty Images)

Stablecoins may have a long way to go before they become mainstream payment options as a new statistic shows that over 90% of stablecoin transaction volumes are not coming from actual customers.

To distinguish between human and bot-initiated transactions, Visa and Allium Labs built a dashboard to detect and block these types of activities. Not even $149 billion of April's over $2.2 trillion in transactions came from "organic payments activity," as reported by Visa.

Stablecoins Still in Early Stages of Development as Payment Method

According to Bloomberg, Pranav Sood of payments platform Airwallex said the data suggests that stablecoins are still in their early stages of development as a payment mechanism.

The finding casts doubt on the claims made by those who advocate for stablecoins, who claim that tokens tied to assets like the dollar have the potential to completely transform the $150 trillion payments sector.

PayPal and Stripe are among the fintech heavyweights that are investing in stablecoins.

Last year, PayPal introduced the PYUSD stablecoin as a means to facilitate faster and cheaper transactions throughout its entire payment network. Stablecoins may now be accepted for online transactions by retailers utilizing Stripe.

Stablecoins let users to move money to two different platforms, which might lead to double-counting of transactions. Cuy Sheffield, head of crypto at Visa, said a $100 USDC to PYUSD trade on the decentralized market Uniswap would cause $200 worth of stablecoin volume to be logged on-chain.

Stablecoin Value Projected to Reach $2.8 Trillion by 2028

Companies like Visa, which processed over $12 trillion in transactions last year, would be impacted if stablecoins gain popularity as a payment option.

The previous year, Bernstein researchers projected that the aggregate value of all stablecoins may reach $2.8 trillion by the year 2028. From their current combined circulation, it would represent an increase of about 18 times.

Many in the cryptocurrency industry think these tokens are ideal for shaking up the payments industry since they allow for fast and almost cost-free transactions.