Solana is leading the blockchain payments battle

The global stablecoin market is regaining momentum quite quickly and is quickly making inroads into the global settlement industry.

A recent report from Bernstein Research shows that stablecoins have reached a global settlement value of over $7 trillion, with total circulation increasing and major payment platforms adopting digital currencies for cross-border transactions. This number is also huge when compared to the entire $14 trillion transacted by giants like Visa (NYSE:) and Mastercard (NYSE:).

Analysts Gautam Chhugani and Mahika Sapra argue that stablecoins, digital coins designed to maintain a stable value compared to traditional currencies, are not only bridging the gap between fiat and crypto but are also increasingly being used in international payments.

“Total stablecoin supply, which peaked at $180 billion in 2021 before falling to $120 billion in 2022, is back on an upward trend and currently stands at $150 billion.” , the report says. Market leaders are USDT () with a market share of 75% and (Circle) with 22%.

Despite the so-called “crypto winter,” the value transferred with stablecoins has remained stable. In the first quarter of 2024, the annualized value is expected to reach the 2022 peak of around $7 trillion.

Solana leads the battle

has emerged as a major player in the blockchain payments space and is challenging the dominance of by securing a 43% market share in stablecoin transfers. This shift was attributed to Solana's higher throughput and lower transaction costs, as well as strong interest from major payment processors such as Visa and Shopify (NYSE:).

The report also highlighted innovative use cases outside of cryptocurrency trading. “We are witnessing a transformation as stablecoins evolve from purely speculative assets to an integral part of payment processes,” said Chhugani. Notable developments include PayPal's (NASDAQ:) launch of PY-USD on Ethereum and Visa's USDC pilot on Solana for cross-border settlements.

Despite these advances, the report warns that scalability for broader consumer payment applications remains a challenge, as current blockchain transaction speeds need to be significantly improved to match those of traditional payment networks.

Stablecoins attempt to keep their value stable, but how well they hold on to their peg depends on what supports them and sometimes what doesn't. The report notes that market fluctuations, how much people trust and use them, technological developments, demand and supply, and how easy they are to buy and sell all play a role.

A major concern with stablecoins is that they lose their supposed value. Looking at five different stablecoins, we see that moments when they fall below a dollar are more common and last longer than times when they rise above that dollar level.