The stablecoin market on a global scale is gaining momentum rapidly and quickly establishing a presence in the worldwide settlement sector.
A recent study conducted by Bernstein Research revealed that stablecoins have reached a global settlement value exceeding $7 trillion. This is a significant increase in total circulation, and major payment platforms are now embracing digital currencies for cross-border transactions.
SOLANA IS “LEADING THE BATTLE” FOR STABLECOINS BUT STRUGGLES FOR SCALABILITY ~ BERNSTEIN
– Bernstein analysts claim that @Solana is “leading the battle” for dominance in the blockchain payments sector, with both liquidity depth and investor sentiment on the rise.
– Analysts… https://t.co/8mcZERtsii pic.twitter.com/nkaad4s4YK
— BSCN (@BSCNews) April 9, 2024
When compared to the combined $14 trillion settled by industry giants such as Visa and Mastercard (NYSE:), this figure is quite substantial.
According to analysts Gautam Chhugani and Mahika Sapra, stablecoins serve as a means to connect fiat and cryptocurrency while also gaining popularity in cross-border transactions. These digital coins are specifically designed to maintain a consistent value compared to traditional currencies.
According to the report, the stablecoin supply reached its highest point of $180 billion in 2021, but then dropped to $120 billion in 2022. However, it is now increasing again and currently sits at $150 billion. USDT () remains the top player in the market with a 75% share, followed by (Circle) at 22%.
Despite the recent downturn in the cryptocurrency market, the use of stablecoins has remained strong. It is predicted that in the first quarter of 2024, the annual value transferred will reach a similar high of around $7 trillion, matching the peak seen in 2022.
Solana taking charge in the fight
Solana has become a significant competitor in the field of blockchain payments, disrupting the dominance of by capturing 43% of the market share in stablecoin transfers. This change can be credited to Solana’s ability to process a higher volume of transactions at a lower cost, as well as its popularity among major payment processors such as Visa and Shopify (NYSE:).
The report mentioned unique applications in areas other than cryptocurrency trading. According to Chhugani, there is a noticeable change as stablecoins transition from speculative assets to playing a critical role in payment systems.
We are witnessing a shift as stablecoins evolve from purely speculative assets to becoming integral to payment processes
Gautam Chhugani
Some noteworthy advancements include PayPal’s (NASDAQ:) introduction of PY-USD on Ethereum and Visa’s experiment with USDC on Solana for international settlements.
Although significant progress has been made, the report raises concerns about the ability to scale for wider usage of blockchain in consumer payments. It highlights the need for significant enhancements in blockchain transaction speeds to match the efficiency of traditional payment networks.
According to the report, the stability of stablecoins relies on their underlying support, or lack thereof. Market fluctuations, user trust and adoption, technological advancements, demand and supply, and ease of trading are all contributing factors to their ability to maintain a fixed value.
A major concern surrounding stablecoins is their potential to deviate from their intended value. Upon examining five different stablecoins, it has been found that instances of their value falling below one dollar occur more frequently and for longer periods of time than instances of their value rising above the one dollar mark.
Solana experiences congestion: impacts and solutions
The Solana network is currently facing a period of considerable congestion, despite its reputation for fast and efficient performance. This situation has caused disruptions and malfunctions in transaction processes for users, leading to discussions and worries within the cryptocurrency community.
According to the Anza team, the cause of the congestion can be traced back to the intricate interplay between the QUIC implementation and the Agave validator client. The latter is responsible for handling a large number of requests on the network.
In response to the concerns raised, the team has announced that they are currently testing a patch designed to address the current congestion problems.