May 28, 2024

Image for article titled Bots perform 90% of stablecoin transactions

Photo: Dado Ruvic (Reuters)

Nearly 90% of tracked stablecoin transactions are not human-involved. According to recent data published by Visa and blockchain data provider Allium, less than 10% of transactions are initiated by actual users, and most are done by bots. This means that only $149 billion out of the total of $2.2 trillion in stablecoin transactions recorded last month can be attributed to “organic” payments activity, per the analysis.

The report cites May 5 as an example, when $51.6 billion worth of stablecoin transactions were processed, but only $4.6 billion was actual activity after removing inorganic transactions.

Stablecoins are cryptocurrencies whose value is tied to that of another currency, or commodities like gold, or any financial instrument. With the new data dashboard, both companies are tracking transactions of major stablecoins, such as Tether, Circle’s USDC, Paxo’s USDP, and PayPal’s PYUSD. All these stablecoins are pegged to the U.S. dollar.

Visa’s head of crypto, Cuy Sheffield, responded to a Coin Metrics chart that suggested stablecoins were catching up with established settlement networks. Sheffield said that transactions initiated by smart contracts, without human involvement, cannot be directly compared to traditional payment processor transactions.

Stablecoins have been developed to address the high volatility associated with the most widely used cryptocurrencies. A currency must remain relatively stable to be used as a medium of exchange, thereby guaranteeing the parties involved that it will retain its purchasing power in the short term.

For instance, Tether (USDT) is the top stablecoin that acts as a medium for investors to trade Bitcoin and other cryptocurrencies. Tether accounts for over 50% of the daily trading volume of Bitcoin and up to 70% of some other major cryptocurrencies.

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