Stablecoin Growth Continues Despite Regulatory Challenges and Market Dynamics

Despite regulatory challenges and negative market dynamics, stablecoin growth is accelerating. The use of stablecoins, which hold a significant position in the market, is increasingly becoming widespread.

The Latest on Stablecoins: Mastercard and PayPal

In 2022, stablecoins on various layer 1 networks reached a transaction volume of $6.87 trillion, surpassing traditional payment giants such as Mastercard and PayPal. Comparative data for 2022 from Coinmetrics and Bloomberg showed that Mastercard conducted transactions worth $6.57 trillion, while PayPal conducted transactions worth $1.3 trillion.

Despite the challenges faced by the broader crypto market in 2023, such as strict regulations in the United States and ongoing bear market conditions, the adoption rate of stablecoins like USDT and USDC was even higher than that of Ethereum. Since 2021, the number of stablecoin addresses holding more than $1 has grown seven times faster than Ethereum addresses with the same balance.

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Although there has been a significant increase in the adoption of stablecoins according to Coinmetrics and Glassnode statistics, the annual transaction volumes ranged from only 0.5% to 3% of traditional payment networks. One reason for the limited adoption of decentralized networks could be the high transaction fees and scalability limitations of platforms like Ethereum.

Ethereum or Tron?

Nevertheless, while Ethereum’s limitations may be a bottleneck for stablecoin adoption, centralized networks like Tron propose a different narrative. According to Coinmetrics, by mid-2023, Tron surpassed Ethereum’s current 30 transactions per second (TPS) with 130 TPS and facilitated approximately 20 times more USDT transactions.

However, transaction speed is not the only factor that markets consider. Although Tron offers more transactions per second, its centralization increases security concerns and prevents it from dominating the USDT market value. According to Bloomberg Market Analyst Jamie Coutts, Tether‘s market value on Tron is 48%, while the slower and more expensive but decentralized Ethereum holds approximately 43% of the pie.