The landscape of blockchain transactions is undergoing a significant shift towards dollarization, with stablecoins like USDT and USDC becoming the dominant mediums for settling transactions on public blockchains. This trend is sidelining native crypto assets such as Bitcoin and Ether. Despite representing only about 10% of the total crypto market cap, stablecoins account for 70%-80% of transactional value on blockchains. Their usage has remained robust even during the bear market, with a growing number of active users and increasing transaction counts.
Major blockchains like Tron and Binance Smart Chain (BSC) are witnessing substantial stablecoin activity. Ethereum Layer 2 solutions such as Arbitrum, Polygon, and Optimism are also emerging as popular stablecoin settlement venues. This shift raises questions about the original intent of native crypto assets, which were envisioned as major mediums of exchange rather than primarily as stores of value or subjects of financial products like ETFs.
The rise of stablecoins challenges the long-held belief that native tokens would become significant means of exchange. This trend is particularly notable in the U.S., where tax implications favor transactions in stablecoins. The debate continues over whether stablecoins are "parasitic free riders" on blockchain security without contributing back, especially among Bitcoin enthusiasts who advocate for alternatives like the Lightning Network. However, the market cap of stablecoins vastly outweighs the total value locked in Lightning, indicating a strong preference for stablecoin transactions.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.