Stablecoin Adoption Surges in Emerging Markets: Castle Island Ventures
Stablecoins have long been seen as a tool primarily for anonymous crypto trading, but a recent survey by Castle Island Ventures suggests that their utility goes far beyond that perception. According to a report sponsored by Visa, users in developing countries such as Nigeria, India, Indonesia, Turkey, and Brazil are increasingly turning to stablecoins for payment transactions and as a savings technology.
Stablecoins: More Than Just Crypto Trading
The survey, which included 2541 crypto users across the mentioned countries, revealed that while crypto trading remains a popular use case for stablecoins with 50% of respondents, there are several other significant applications. Saving money in dollars was the second most popular use case at 47%, particularly in Nigeria. Other reasons cited for using stablecoins included seeking better currency conversion rates (43%), earning DeFi yield (44%), and converting local currency to dollars (43%).
The majority of stablecoins in the market are pegged to the US dollar, accounting for nearly 99% of the total market cap. Tether (USDT) leads the pack with a 69% market share, favored by users for its network effects, user trust, liquidity, and track record.
While Tether dominates as the most popular stablecoin in these regions, Ethereum emerged as the blockchain of choice for stablecoin users, despite its higher fees compared to competitors like Solana and Tron. Popular non-custodial wallets among respondents included Trust Wallet, MetaMask, and Coinbase Wallet, with half of the users also utilizing Binance’s centralized exchange as their wallet.
Growing Adoption and Portfolio Allocation
The survey revealed that stablecoins are becoming a significant portion of users’ investment portfolios. Over 55% of respondents reported that stablecoins accounted for more than 10% of their assets, with 8% indicating that they comprised 50% of their holdings.
According to the report, stablecoin usage is on the rise across all countries surveyed, with a majority of respondents expressing their intention to further increase their usage in the coming year.
Nigeria Leads in Stablecoin Adoption
Among the countries surveyed, Nigeria stood out as the leader in stablecoin adoption across various metrics. Over 77% of Nigerians held more than 10% of their assets in stablecoins, significantly higher than the global average. Nigerians also demonstrated the highest interest in non-crypto trading use cases for stablecoins and reported the highest level of knowledge about these digital assets.
Overall, 87% of respondents expressed a favorable opinion of stablecoins, indicating a growing acceptance and adoption of these digital assets in emerging markets.
Nic Carter, General Partner at Castle Island Ventures, highlighted Nigeria’s rapid adoption of stablecoins, noting that “Crypto-dollarization events are likely to happen, and currency substitution will occur regardless of government hostility.”
In conclusion, stablecoins are proving to be a versatile financial tool for users in emerging markets, offering benefits beyond traditional crypto trading. As adoption continues to grow, stablecoins are reshaping the way people transact and save money in these regions.