Stablecoins are rapidly gaining popularity as the leading crypto application and could become mainstream sooner than any other crypto application, as pointed out by strategist Patrick Hansen.
The total value settled with stablecoins has surpassed $7 trillion in 2022, outpacing Mastercard’s $2.2 trillion processed in the same year. The data shows that USDC volume and weekly active wallets are both rising despite the bear market, indicating the growing popularity of stablecoins among investors.
The rise of stablecoins is largely driven by the growing number of merchants and companies that are prioritizing stablecoin payments, saving them a lot of money in the process. Companies such as VISA, Mastercard, Stripe, and Worldpay from FIS are investing in USDC payment and settlement solutions, helping to drive the growth of stablecoins in the market.
Stablecoins are also being adopted for corruption-resistant, low-cost, and instant financial aid programs in war-affected regions like Ukraine. International organizations such as the UNHCR are leading the way in using stablecoins for financial aid programs.
The increasing popularity of stablecoins is also linked to their usage as working capital in the Decentralized Finance (DeFi) sector. In the second half of 2022, around 45% of the liquidity in decentralized exchanges was provided by stablecoins.
The growth of stablecoins in the DeFi sector is driven by the significant growth in their relative share of the Ethereum market cap compared to DeFi market capitalization.
Stablecoins are also becoming more popular among the unbanked and underbanked populations, as they offer 24/7 instant settlement on a credibly neutral and shared global ledger.
Stablecoins have the potential to reduce foreign exchange costs by up to 80%, saving individuals $30 billion per year. In some parts of the world, over a third of the population has already made an everyday purchase with a stablecoin.
Finally, regulatory clarity and frameworks for stablecoins are advancing rapidly across the world, with countries such as the EU, UK, US, Japan, and Singapore leading the way. This regulatory clarity is expected to drive the growth of stablecoins as a core part of the global payments infrastructure over the coming decade.
