Visa, the international payments giant, has unveiled a new study that challenges the idea that stablecoin transaction volumes are reaching the level seen in traditional payment networks.
- Visa doubts the reliability of stablecoin transactions.
- The network attributes these mistrusts to bot activity.
- Visa uses two methods to distinguish stablecoin transactions.
- The legitimacy of Visa’s methodology is questionable.
Visa questions the reliability of stablecoin transactions
global payment network, Visaexpressed doubts about the reliability of transactions with stablecoins, it goes against the belief that they compete in popularity with traditional currency networks.
Distrust attributed to bot activity
According to Cuy Sheffield, her crypto manager, “Much of stablecoin transactions in many blockchain networks are affected by a lot of noise”mainly due to automated bot activity.
3/ We found that there can be a lot of noise in stablecoin data as it can be used in a wide range of use cases with transactions that can be initiated manually by the end user or programmatically via bots.
— Cuy Sheffield (@cuysheffield) April 25, 2024
Questioned methodology
To distinguish transactions on stablecoins, Visa uses two metrics. First, the network only focuses on the largest amount of stablecoins transferred in a single transaction, ignoring smaller transactions resulting from complex smart contract interactions. It also uses an “inorganic user filter” that targets transactions initiated by accounts with less than 1,000 stablecoin transactions and $10 million in transfer volume.
Challenging Visa’s methodology
However, the crypto industry does not unanimously agree with Visa’s conclusions. The very use of this methodology is questioned. Nick van Eck, co-founder of Agora, a startup specializing in stablecoins, questioned the validity of this data, noting that“They don’t make sense because they would take into account trading firms that are perfectly legitimate businesses using these products.”
Ultimately, despite the initial enthusiasm for stablecoins as a future mainstream currency, their adoption appears to be not as flourishing and seamless as one might expect.