Stablecoin On-chain Transaction Volumes Soar, Outpace Venmo

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Over the past year, stablecoins have received considerable attention. In mid-2018, several stablecoin projects were launched to much fanfare. Recently, interest in stablecoins has risen as large corporations look to launch their own stable digital currencies. Earlier this year, JP Morgan launched its own stablecoin, JPM Coin, on a private blockchain. Last month, Facebook released a white paper for its highly anticipated Libra stablecoin. In response, various law makers have pushed back on Facebook’s project, including the President of the United States who tweeted against Libra and digital currencies.

In February 2019 we published an in-depth report on stablecoins. As outlined in that report, an oft-used key metric to gauge stablecoin adoption, relative to traditional payment processors, is to compare on-chain transactional and notional volumes. In this report we build on our previous results by analyzing recent on-chain metrics across various stablecoins, iterated on the Ethereum network.

 

Stablecoin transactional volumes surpass that of Venmo

Transfer volumes across stablecoin platforms have considerably rose in 2019. While the number of on-chain transactions across tracked stablecoins still trail that of Venmo, the aggregate total on-chain transfer volume across the largest stablecoins has now surpassed Venmo’s total payment volume (TPV).

In the figure below we diagram TPV between the top-five largest stablecoins and Venmo. On-chain transactions represent any value transfer between wallet addresses, for a specific stablecoin. On-chain transactions do not include trade transactions that occur on centralized exchanges.

Figure 1: Total Payment Volume over time

Data for chart sourced from TradeBlock and Etherscan

In addition, fees associated with sending stablecoins across the Ethereum network were dwarfed by merchant fees and fees from associated Venmo services. Across the five largest ERC-20 tokens, customers spent just $827,000, in Ethereum network fees, to transfer more than $37 billion. Over this same period, fees and fees on associated services paid to Venmo are expected to reach $150 million.

 

Tether’s Ethereum based stablecoin rises

The largest stablecoin by market capitalization, and the leading stablecoin by various metrics, is Tether. While Tether was initially built on an Omni layer of the Bitcoin blockchain, Tether has migrated to additional versions built on other blockchains, such as the Tron and Ethereum blockchains. Recently, Tether’s ERC-20 standard, built on the Ethereum blockchain, has seen a surge in transactional activity and growth in its market cap.

We analyzed the largest stablecoins and found that Tether has recently rose to reach the highest spot in terms of on-chain activity for Ethereum iterated stablecoins. Additionally, we found that nearly all such stablecoins saw an increase in, not only their on-chain volumes (as shown in Figure 1 above), but also in the number of on-chain transactions. In the figure below we diagram on-chain transactions for the largest ERC-20 stablecoins over time.

Figure 2: Stablecoin on-chain transactions year-over-year

Data for chart sourced from TradeBlock and Etherscan

As shown in the figure above, Tether has seen a recent, and quite considerable, uptick in on-chain transaction count since March 2019. While other large stablecoins showed a similar increase in on-chain transactions, Tether has far outpaced their growth. The recent rise in transactions comes at the same time bitcoin prices and trading activity have begun to rebound.

In comparison, between traditional payment processors and stablecoins, we find that the number of on-chain transactions still lags behind Venmo and Zelle. While stablecoins saw daily transaction counts in the thousands (as shown in Figure 2 above), Zelle saw more than 1.5 million transactions per day in the first quarter of 2019.

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