Research Summary
This report provides a comprehensive analysis of stablecoin transactions, focusing on geographical preferences and the impact of major industry events. It introduces a new approach to establish geographic dominance of stablecoins, revealing distinct patterns and preferences in the Americas, Europe-Africa, and Asia regions. The analysis encompasses disruptive events and external factors that influenced trading volumes, offering valuable insights for stakeholders in the crypto landscape.
Key Takeaways
Introduction and Motivation for Stablecoin Analysis
- PayPal’s USD-Denominated Stablecoin (PYUSD): PayPal’s announcement of PYUSD emphasizes the growing importance of stablecoins in the financial industry, especially after the release of FedNow.
- Stablecoins and Banking Services: Stablecoins offer a new approach to banking, enabling neo-banks to leverage them for yield and other web3 services.
- Geographical Analysis of Stablecoin Transactions: The report introduces a method to estimate geographical preferences for stablecoins, providing insights into market factors, regulations, and investment opportunities.
Methodology for Analyzing Geographic Distribution
- Capturing Transaction Data by UTC Time Zones: The methodology focuses on analyzing stablecoin volume by UTC time zones during business hours, providing a detailed picture of global stablecoin volume distribution.
- USDT Aggregation Metric: The report includes a unified asset for Tether (USDT) across different blockchain networks, capturing the majority of USDT’s on-chain volume.
Findings and Insights
- Analysis Period and Geographical Variation: The analysis covers stablecoin volume from January to July 2023, tracking volume during stock market operating hours and identifying regional trends.
- USDC and USDT Patterns: The report highlights different patterns for USDC and USDT, with USDC showing a preference in the Americas and USDT in Europe-Africa. Events like the collapse of Terra and FTX had varying impacts on these stablecoins.
- Visualizing Volume Dominance: The report includes visualizations like mercator map projections to show volume dominance in specific regions, helping to identify trends and anomalies.
Conclusion and Implications
- New Approach to Geographic Dominance: The report introduces a new way to understand the geographic dominance of stablecoins, revealing distinct patterns and preferences.
- Influence of External Factors: Various external factors, including collapses in the crypto industry and regional holidays, influenced trading volumes and geographical preferences.
- Importance for Stakeholders: Understanding these geographically-driven trends is vital for stakeholders, including investors and policymakers, to navigate the evolving crypto landscape.
Actionable Insights
- Geographical Targeting: Understanding the geographical preferences for stablecoins like USDC and USDT can guide marketing efforts, investment strategies, and regulatory oversight.
- Monitoring External Influences: Keeping track of external factors such as regulations, banking crises, and regional holidays can help in predicting and responding to changes in stablecoin trading volumes.
- Strategic Planning: The insights into the cyclical nature of on-chain volume and the impact of disruptive events can assist in strategic planning and risk management for crypto businesses and investors.
