Stablecoin Adoption Surges in Emerging Markets: Castle Island Insights

Do you believe stablecoins are merely tools for discreet cryptocurrency trading? A recent study by Castle Island Ventures suggests a different narrative.

In a report supported by Visa, the firm revealed that crypto users across five developing nations – Nigeria, India, Indonesia, Turkey, and Brazil – are primarily using stablecoins for payments and savings technologies.

Stablecoins: The Essential Use Case for Crypto

A survey involving 2,541 crypto users from these nations showed that the most common purpose for stablecoins is trading, which applies to 50% of participants.

Nonetheless, several other functions were reported. Saving money in dollars (47%) ranked as the second most common use and was the top case in Nigeria specifically. Additional purposes included obtaining better currency conversion rates (43%), earning DeFi yield (44%), and converting local currency to dollars (43%).

The stablecoin landscape is predominantly made up of USD-pegged tokens, which account for nearly 99% of the market capitalization. Tether (USDT) leads the market with a significant 69% share. Users who preferred Tether cited its network effects, reliability, liquidity, and established history as key reasons.

While Tether emerged as the favored stablecoin in these regions, Ethereum was the preferred blockchain for stablecoin users, despite its higher costs compared to alternatives like Solana and Tron. The leading non-custodial wallets were Trust Wallet, MetaMask, and Coinbase Wallet, although half of the respondents indicated they used Binance’s centralized exchange as their primary wallet.

Stablecoins are becoming a notable part of holders’ portfolios, with 55% of respondents indicating that these tokens constituted more than 10% of their assets, and 8% stating they represented 50% of their total holdings.

“In all surveyed countries, the usage of stablecoins has been on the rise,” the report noted. “A majority of participants reported increased usage over the past year, and an even larger segment anticipated further growth in the coming year.”

Nigeria’s Affection for Crypto

While all surveyed countries rank in the top 15 for crypto adoption according to Chainalysis, Nigeria stood out with the most significant stablecoin adoption on all metrics.

As for portfolio allocation, over 77% of Nigerians held more than 10% of their assets in stablecoins. They also reported the highest percentage of non-trading use cases for stablecoins and demonstrated the greatest self-reported understanding of these tokens.

In total, 87% of respondents expressed a positive view of stablecoins.

“We anticipate that crypto-dollarization events will take place. We believe that such an event is already occurring in Nigeria, despite government opposition,” stated Nic Carter, General Partner at Castle Island Ventures, via Twitter.

End users are seeking digital dollar solutions, and the shift in currency will happen regardless,” he mentioned.