Stablecoins Weakening Traditional Finance through Payments and Forex Activities

Coin World News Report:
Stablecoins are continuously developing in a clear leadership and niche product environment. Recent summarized research shows that stablecoins are making progress as payment tools, but also in imitating finance, foreign exchange trading, and other transaction use cases.
Stablecoins have made greater progress in the past few months, growing in several categories and gaining a place in traditional finance. The supply of stablecoins is $160.5 billion, distributed among leaders such as USDT and USDC, but there is also a wider niche asset ecosystem. So far this year, the supply of stablecoins has grown by 30% and entered new ecosystems, especially Toncoin and Base.
Last quarter, Tether (USDT) had the most active development. The most widely used stablecoin also increased its supply to $120.2 billion, matching BTC’s recent rise to $69,000. USDC, on the other hand, lags behind, with growth slowing to 34.6 billion tokens.
Most of the stablecoin liquidity is still locked in Ethereum and TRON. In the past three months, Solana’s share in stablecoin activity has slightly increased. Binance Smart Chain (BNB) has slowed down the use of stablecoins, while Binance focuses on its centralized trading pair, FDUSD.
In 2024, a total of 70 stablecoins attempt to coexist, although some of these markets are fragmented with low liquidity. According to Artemis, only the daily trading volume of the top 10 stablecoins exceeds $10 million. The top liquidity and trading volume are concentrated in USDT and USDC, but also in FDUSD, which is one of the most concentrated stablecoins. FDUSD is mainly used on Binance and minted with the participation of the exchange.
One of the trends in the past three months is the trading of EURC tokens based on the euro. The asset pegged to the euro launched by Circle has created a small market similar to forex swaps. Several use cases, such as remittances and DEX-based forex swaps, have reached historical highs in the past three months.
Stablecoins are making the cryptocurrency market more dollarized, replacing Bitcoin and Ethereum for value transfer and settlement.
The biggest role of stablecoins is to replace other coins and tokens as the main payment and settlement tools. Although initially Bitcoin (BTC) and Ethereum (ETH) were used for payments, their volatile prices did not make them suitable and intuitive tools. As a payment method, the number of stablecoin addresses with over 10,000 stablecoins has expanded to nearly 500,000 wallets. In the past three months, each chain has supported over 22 million active addresses per month.
Stablecoins are making the cryptocurrency market more dollarized, replacing Bitcoin and Ethereum for value transfer and settlement. | Source: Artemis
Stablecoins are also driving the remittance market, especially between the United States and Mexico. Over time, the flow of US dollars to pesos between the United States and Mexico has increased to $100 million per month. Although the value of transfers continues to grow, stablecoins are usually used for small-scale transactions, especially those below $100. Artemis points out that transaction sizes also show a steady growth trend, ranging from $100 to $1,000.
There is also regional differentiation in usage, with the fastest payment growth in Asia. USDT payments conducted through the TRON network are the main driver of Asian use cases. Remittances, e-commerce, and transfers to centralized exchanges drive the trend in Asia. Usage in Europe follows the US market and primarily uses USD-denominated tokens.
Since 2020, stablecoins have rapidly expanded in trading volume on-chain, from accounting for 3.3% of all activity to around 60%. At its peak, stablecoin usage accounted for over 70% of on-chain trading volume. Stablecoins can be used through self-wallets or encrypted credit cards such as Gnosis Pay or Monerium. Revolut and Paxos are among the widely used stablecoin onboarding platforms in the past three months.
Stablecoins have also expanded the supply on top L2 chains. The total supply of the top five reached its peak, exceeding $10 billion, but then fell to 890 million tokens. L2 chains receive stablecoin inflows from Ethereum, and some assets flow back during slower periods. Base remains the fastest-growing place for USDC, although growth has stagnated in the past three months. Arbitrum still holds approximately $4.4 billion in stablecoins, while Base’s goal is to catch up with $3.4 billion.
L2 chains attract stablecoins for DEX trading and other decentralized activities. However, centralized exchanges are still among the largest holders of stablecoins. Binance and OKX absorb the largest inflows, providing a variety of currency pairs for exchanging USDT and USDC.