Global Stablecoin Users Combined to Create the Fifth Largest Bank in the U.S.

Author: Peter Johnson

Stablecoin data is closely related to market sentiment and performance. According to data from CoinGecko, the market value of the stablecoin USDC has fallen by more than US$30 billion since its January 2022 high ($56,128,605,419), with a drop of 41.6% in 2023, and is now at $25,989,247,153, the same level as in July 2021 . USDC exchange platform outflows (7-day moving average) fell to a one-month low of $16.16 million.

As an important underlying asset in the encrypted world, PayPal's entry into the stable currency has once again seen the dawn of the encrypted world. In less than a month, the circulation of PYUSD has exceeded 40 million.

The Relentless Rise of Stablecoins is a research report on stablecoins co-authored by Peter Johnson, co-director of venture capital at Brevan Howard Digital, an asset management company, and Sai nimmagadda. Peter Johnson shared the ten main points of the report on his social platform. BlockBeats organizes it as follows:

1. In 2022, the amount of stable currency settled on the chain exceeds 11 trillion US dollars, dwarfing the transaction volume processed by PayPal (1.4 trillion US dollars), almost catching up with the payment transaction volume of Visa (11.6 trillion US dollars), and It has reached 14% of the settlement volume of the US Automated Clearing System (ACH) and more than 1% of the settlement volume of the US Federal Reserve Wire Transfer System (Fedwire).

2. More than 25 million blockchain addresses hold more than $1 in stablecoins. About 80% of them, or close to 20 million addresses, hold stablecoins between $1 and $100. To give everyone a sense of scale, if a US bank had 25 million accounts, it would be the fifth largest bank in the US (by number of accounts).

3. About 5 million blockchain addresses send stablecoins every week. This number provides a very rough proxy indicator for users around the world to regularly interact with stablecoins.

4. The use of stablecoins has decoupled from the trading volume of cryptocurrency trading platforms, suggesting that a large number of stablecoin trading volumes may be driven by non-trading/speculative activities. Since December 2021, trading volume on centralized exchanges has fallen by 64%, and trading volume on decentralized exchanges has dropped by 60%. During this period, stablecoin transaction volumes fell by just 11%, with weekly active stablecoin addresses and weekly stablecoin transaction volume up more than 25%.

5. Of the approximately 5 million weekly active stablecoin addresses, approximately 75% have a transaction volume of no more than $1,000 per week, suggesting that small, retail users may account for the majority of stablecoin users.

6. The supply of stablecoins was less than 3 billion US dollars five years ago, and now it has exceeded 125 billion US dollars (more than 160 billion US dollars at the peak), and has shown a strong ability to resist risks. Compared to the overall crypto market cap, stablecoins are down about 24% from their peak, while the total crypto market cap is down about 57%.

7. Less than one-third of all stablecoins are stored on exchanges, and the majority of stablecoins are stored in externally owned accounts (not exchanges 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 transaction volume year-to-date.

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

10. On average, the Ethereum blockchain is mainly used for higher value transactions. Although the Ethereum blockchain only accounts for 6% of active wallets and 3% of transactions, it accounts for 55% of the stablecoin supply. And nearly 50% of the weekly stablecoin USD transaction volume is settled on the Ethereum blockchain.

As stablecoins continue to rise, we are currently still in the early stages of global stablecoin adoption. The circulating supply of stablecoins is expected to grow into the trillions of dollars in the next few years, with annual transaction volumes expected to reach hundreds of trillions of dollars. And stablecoins will increasingly provide financial services to the global unbanked population, providing them with a way out of hyperinflationary currencies, and triggering an explosion of innovation based on these new global open network currency circulation tracks.