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A new metric developed by Visa Inc. indicates that more than 90% of stablecoin transaction volumes do not originate from authentic users. According to the metric, these transactions are “fake” in the sense that they do not originate from human hands.

Visa points out that these transactions occur through robots used by traders to leverage their operations. In this sense, the famous “bots” can produce a volume beyond the capacity of any human being. For Visa, this number represents a challenge for the global adoption of cryptocurrencies.

Robot-based stablecoin transactions

The new model, developed by Visa and Allium Labs, seeks to filter transactions initiated by bots and large-scale traders, focusing only on those generated by genuine users. Of a total of approximately $2.2 trillion in transactions recorded in April, only $149 billion was identified as coming from “organic payments activity,” according to Visa analysis.

Visa’s findings challenge the claims of stablecoin proponents, who argue that these tokens, linked to assets such as the dollar, are on the verge of revolutionizing the payments industry. It is worth noting that this industry generates US$150 trillion annually, so stablecoin operations are still a fraction of this market.

However, this data does not prevent giants like PayPal from actively exploring stablecoins. Stripe co-founder John Collison also expressed optimism about them, but cited “technical improvements” as a driving factor. However, Collison did not speak directly about the research, whose data were not yet public.

On the other hand, Pranav Sood, executive general manager of payments platform Airwallex, commented on the research. Sood was optimistic about stablecoins in the long term, but called for corrections in their operation in the short term.

“This says that stablecoins are still at a very early stage in their evolution as a payment instrument. That doesn’t mean they don’t have long-term potential, because I think they do. But the focus in the short and medium term needs to be on ensuring that existing mechanisms work much better,” he said.

The issue of double counting

Quantifying the true value of cryptocurrency activity through blockchain data has always represented a challenge. As a result, market data may have duplicate entries that result in large errors.

According to Glassnode, the supposed total movement of operations in the stablecoins market totaled US$3 trillion during the market peak in 2021. But applying a methodology similar to that applied by Visa, this value would be closer to US$875 billion .

Stablecoin transactions often face the issue of double counting depending on the platforms involved in fund transfers. For example, if a user converted $100 from USDC to PYUSD from PayPal on Uniswap, this would give a total volume of $200. However, the exchange only received $100.

Once these flaws are overcome, companies like Visa, which processed more than $12 trillion in transactions last year, risk losing out if stablecoins gain widespread acceptance as a payment method. Analysts at Bernstein predicted last year that the total value of all stablecoins in circulation could reach $2.8 trillion by 2028.

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