In the context of the rapidly evolving fintech landscape, stablecoins – cryptocurrencies pegged to stable assets like the USD – are attracting strong attention from industry giants in payments like Visa, Mastercard, and Stripe. Some recent reports even suggest that stablecoin trading volumes have surpassed those of Visa, sparking a wave of discussion about the future role of stablecoins in the global economy.
However, behind these flashy figures is a growing wave of skepticism from industry experts. They warn that these figures may be inflated and do not accurately reflect the true economic nature.
High trading volume – Reality or illusion?
According to Chamath Palihapitiya, CEO of Social Capital, the average weekly stablecoin trading volume in Q4 2024 reached $464 billion – far exceeding Visa's $319 billion during the same period. A report from Bitwise also estimates that total stablecoin volume in 2024 will reach approximately $13.5 trillion, surpassing Visa's annual trading volume for the first time.
Weekly stablecoin transfer volume | Source: Chamath Palihapitiya
These figures initially seem to mark an important milestone, signaling the potential of stablecoins to change how global payments are made. Citigroup even predicts that the stablecoin market could reach a value of $3.7 trillion by 2030.
However, some industry experts argue that caution is needed. They question the reliability of the reported figures, suggesting that much of this volume comes from activities that do not represent real economic value.
Artificial trading and the risk of data manipulation
Joe, an advisor at Maven 11 Capital, provided a typical example to illustrate the unreality of these figures. He stated that with just $100,000 USDC on the Solana blockchain, a user could create trading volume of up to $136 million with only $1 in fees. Solana is a high-speed blockchain with extremely low costs – about $0.0036 per transaction – creating ideal conditions for "inflating" volume strategies.
"With just $3,400, you can double the weekly stablecoin trading volume," Joe joked, illustrating how easy it is to manipulate these figures.
Dan Smith, a data expert at Blockworks Research, added that the use of flash loans – a type of loan that does not require collateral but must be repaid within the same transaction – can also inflate volumes without needing much capital investment. These tools allow for large transactions to be executed in just a few seconds with almost no real costs.
Rajiv, a member of Framework Ventures, doesn’t hesitate to call stablecoin trading volume a "useless metric." He argues that this data does not reflect the actual demand of users but is primarily the result of system exploitation behaviors.
Agreement comes from Dan Smith, who warns that unusually high trading volumes are often signs of artificial activities, such as wash trading or bot trading.
Wash trading and bots: Undermining real value
One of the main reasons experts are skeptical is due to the prevalence of trading forms that do not generate real economic value.
Wash trading is a form of buying and selling assets between wallets controlled by the same individual or organization to create the appearance of a vibrant market. Bot trading uses automated algorithms to execute numerous transactions, often with the goal of manipulating liquidity or profit margins.
For example, a stablecoin transaction worth $1 million might simply be a transfer of money between two wallets owned by the same individual – not representing any actual buying or selling action. This is completely different from Visa's transaction model, where each card swipe often constitutes evidence of a real transaction such as purchasing goods, paying for services, or consumer transactions.
A report from Visa indicated that only about 10% of stablecoin transactions actually represent transactions with economic value. A report from Chainalysis in 2024 also revealed that wash trading involving tokens like ERC-20 and BEP-20 accounted for up to $2.57 billion in volume.
While stablecoins hold great potential in modernizing payment systems, using trading volume as a success metric is controversial. The massive figures presented by some investors or entrepreneurs may mislead the public about the actual adoption and use of stablecoins.
As the fintech industry continues to advance, it is important to clearly distinguish between metrics that reflect actual development and inflated figures. Only with transparency and accurate assessment can stablecoins fully play their role in the future financial ecosystem.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.