How Stablecoins Are Actually Being Used

The sheer scale of the stablecoin market is staggering. With a combined market capitalization of over $246 billion and transaction volumes that have eclipsed those of payment giants like Visa and PayPal, stablecoins are undeniably a major force in global finance. But big numbers only tell part of the story. The more interesting question is what is driving all this activity. Are stablecoins just digital poker chips for traders, or are they fulfilling their promise as a new foundation for payments, finance, and commerce? To find the answer, we need to look beyond market cap and dive into the on-chain data to see how these digital dollars are actually being used.

A closer look at the data reveals that not all stablecoins are created equal. Different tokens serve different purposes and attract different types of users. Some are the workhorses of decentralized finance (DeFi), others are the preferred settlement layer for high-frequency traders, and a few are beginning to make inroads into retail and institutional payments. By analyzing metrics like transaction volume, active addresses, and average transaction size, we can start to build a clear picture of the distinct roles these assets play in the digital economy. This isn’t just about understanding which stablecoin is "winning"; it’s about understanding the diverse and evolving use cases that are driving the next wave of financial innovation. For a broader look at the market, see this article on the stablecoin market's power structure.

Transaction Volume and the Tale of Two Titans

While USDT is the undisputed king of market capitalization, the story of transaction volume is more nuanced. Over a recent 30-day period, stablecoins processed a colossal $4.6 trillion in transactions. Surprisingly, it was USDC, the market's number two player by supply, that led the charge in volume. USDC processed $64.2 billion in transactions, accounting for 50.4% of the total, slightly edging out USDT's $50.3 billion (39.4%). This is a fascinating finding because USDC achieved this with a supply base less than half the size of USDT's.

This discrepancy points to a key metric for understanding stablecoin utility, the volume-to-supply ratio. This ratio tells us how actively a stablecoin is being used relative to its total supply. A high ratio suggests the token is changing hands frequently, functioning as a true medium of exchange. A low ratio might indicate it’s being used more as a store of value, held in wallets or exchange accounts for longer periods. Here, the differences are stark. DAI, a decentralized stablecoin popular in DeFi, boasts the highest efficiency with a volume-to-supply ratio of 1.48. This indicates it’s being used incredibly actively, likely moving between smart contracts in lending, borrowing, and trading protocols. USDC follows with a strong ratio of 1.06, reinforcing the idea that it’s a preferred asset for active transactions. In stark contrast, USDT, despite its massive supply, has a ratio of just 0.32. This doesn’t mean USDT isn’t used; it’s just used differently. It likely serves more as a reserve asset and a primary trading pair on centralized exchanges where it might sit for longer periods.

Who Is Using Stablecoins and A Look at Users and Transaction Sizes

The number of active addresses provides another crucial lens into adoption. Here again, USDT's massive network effect is on full display. It boasts 2.35 million active addresses, which is roughly 61.1% of all stablecoin users. USDC comes in a distant second with 710,669 active addresses, or 18.5% of the market. This highlights the power of USDT's first-mover advantage and its deep integration into the Asian retail and trading markets.

However, the average transaction value tells a different story and helps us segment the user base. The average transaction size across all stablecoins is a whopping $230,911. This immediately tells us that the market is heavily skewed toward large, professional, or institutional players. But the averages for individual tokens are even more revealing. BUIDL, an institutional stablecoin from BlackRock, has an astronomical average transaction value of $2.51 million. This is clearly not a token for buying coffee; it’s a settlement layer for high-value institutional transfers. USDe, another popular token, has an average transaction size of $470,294. In contrast, stablecoins like PayPal's PYUSD and DAI have much lower average transaction sizes. This suggests they are gaining more traction with a broader retail audience or are being used for smaller, more frequent transactions within DeFi. These different transaction profiles show a market that is maturing and specializing, with different stablecoins being optimized for different use cases, from multi-million dollar institutional settlements to micro-transactions in Web3 games.

The Rise of a Multi-Chain World

A key trend shaping stablecoin usage is the move toward a multi-chain future. No longer is it enough to exist solely on Ethereum. The most successful stablecoins are those that are available across a wide range of blockchain networks. This multi-chain strategy is a powerful driver of adoption, as it makes the stablecoin accessible to the largest possible audience of developers and users. The data shows a strong positive correlation between a stablecoin's market share and the number of chains it supports. USDC is the leader in this regard, with a presence on 15 different networks, from high-speed chains like Solana to Layer 2 networks like Arbitrum. USDT is right behind, operating on 14 chains.

This strategy is about reducing friction. By being natively available on multiple chains, stablecoins eliminate the need for users to go through complex and often insecure bridging processes to move their assets. This makes it easier for developers to integrate them into their dApps and for users to transact seamlessly across different ecosystems. As the blockchain landscape continues to fragment and specialize, this multi-chain presence will become an even more critical factor for success. The stablecoins that win will be the ones that are available everywhere their users want to be.

The on-chain data paints a rich and complex picture of the stablecoin ecosystem. It’s a market that is simultaneously dominated by a few giants while also showing clear signs of specialization and niche development. It’s a world where some tokens are used for multi-million dollar settlements while others power the fast-paced world of DeFi. While the headline numbers are impressive, the real story is in the details, in the transaction volumes, user behavior, and multi-chain strategies that are shaping the future of digital money.

For a more detailed exploration, you can read the full academic paper, Stablecoin Growth and Market Dynamics.