ZAR stablecoins by the numbers

I have done some more work on the ZAR stablecoin tracker and some simple analysis.

First the updates:

• The tracker now has transaction volume as well as supply - summarised by week.

• There are still 10 ZAR coins covered, but I have added LZAR, a loyalty focused coin, and dropped CZAR, which is inactive - it looks like the project has been abandoned or mothballed.

• I have attempted, with Claude's help, to remove wash trading and rebalancing from the volume, and to ignore large static balances held in issuer wallets.

Please note that the inclusion of a stablecoin in this tracker does not imply any endorsement. These are simply the ZAR coins in issue and use.

What to measure

The headline is that there are R500 million of ZAR stablecoins in issue, with a 90 day transaction volume of about R330 million. The question is what to compare these to for perspective. Next to the volumes processed by the National Payments System, and the sheer size of US dollar stablecoins, ZAR coins are tiny. USD stablecoins are about $300 billion in issue, with transaction volumes in the trillions of dollars. But that is only part of the story - USD coins had the early boost in scale from crypto trading. That is not so easily available to other currencies without local growth in crypto trading (tricky in a bear market), or winning share from USDC and USDT (just tricky).

The thing is to look at two elements: how does ZAR scale compare to other non-USD stablecoins, and how does the actual use of these coins compare to other stablecoins that are being used in similar ways? On these measures, SA's stablecoin industry stacks up very well, and on some measures compares favourably to the largest stablecoins.

Scale of supply

In SA, we are at an earlier stage of adoption, and a look at the numbers shows that. There are stablecoins with fairly large supplies but low numbers of wallets and low volume - ZARU is in this category, with the low wallet count exacerbated by the fact that the users on Luno will all show as a single address. eZAR also looks to be at scale in terms of supply, but early in terms of adoption. These two, and ZARP, have large corporate partners and high ambition, but it does not always show in the volumes yet. ZARSC and ZARC are also at an early stage, with low supply, users and volume.

Having said that, outside the Euro, there are not many other non-USD stablecoins. According to DeFiLlama, the largest non-USD coin is a rouble pegged one, at around $550m. For comparison, the whole ZAR stablecoin market is about $30m - roughly the same as tokenised GBP (tGBP), no. 7 on the ranking, and JPYC, the Yen stablecoin (no. 9). The list falls off quickly, and the largest rand stablecoin by supply - eZAR - would be 11th. This probably doesn't mean that eZAR is the 11th largest non USD coin out there, since the absence of all but ZARm from this list suggests that it is not comprehensive. On RWA.xyz, the only ZAR coin listed is mZAR; ZARP is on CoinMarketCap and CoinGecko, which also has ZARm again. So it is safe to infer that those lists are not comprehensive. They may also have entry criteria that I am not aware of - I confess I have not dug into the rules for listing. 

But the message is clear: ZAR stablecoins are at a scale that is in the top tier of the largest non-USD stablecoins. That is a significant achievement, especially given the continuing regulatory uncertainty.

Usage of ZAR coins

While dollar stablecoins are used in SA as a store of value and in crypto trading, the key use case for ZAR coins at the moment is transactions, so the relevant measure is how fast the supply turns over. By turnover I mean the supply divided by average daily transaction value: in other words, how many days it takes for the full supply to change hands. This is the point of stablecoins that do not bear interest: they are used as money. On this basis, the ZAR coins compare favourably with the largest coins in issue.

To get a baseline, we can look at the largest stablecoins. USDT and USDC differ in their business models, and each of them has different dominant use cases across the different chains that they are on. USDC, for example, is widely used in DeFi, so has a high volume of transactions, and on average cycles its supply every 0.6 days (using data from RWA.xyz). The transaction volume of USDC is about $128 billion a day against a supply of $76 billion. For comparison, FedNow (cf. PayShap) does about $2-3 billion a day, and the latest reports of JP Morgan's deposit token suggest around $5 billion a day. On Stellar, however, where USDC has more payments use cases, supply is cycled more slowly: every 2.2 days. USDT on the Tron blockchain shows a similar story: also mainly used for payments, and the $84 billion of USDT on there cycles every 4 days. 

The fair comparison for ZAR coins is not aggregate USDC, where DeFi churn inflates the figure, but the payments-focused deployments: USDC on Stellar at 2.2 days, and USDT on Tron at 4 days. Sorting the ZAR coins by fastest turnover, we see the following:

• ZARm is the winner, turning over every 1.6 days - faster than Stellar USDC and Tron USDT. This illustrates the ZARm use case, which is well established for payments and remittance, and the fact that it is being used by real customers in the MiniPay wallet. They are using stablecoins as intended, and are probably unaware that ZARm is backed by crypto.

• Next is ZARZ, another payment focused coin, turning over its R4m supply every 5.1 days. ZARZ has over 27,000 wallets, most of which hold small air-dropped balances that have never moved, but it looks like someone is using it.

• mZAR turns over its supply - currently about R5m - every 9.4 days. This one is an interesting case: mZAR is the rand on Mesh's trading platform, so you would expect a relatively smaller number of larger transactions given the investment use case. You might also expect quite a volatile supply as traders move in and out of positions, and also move between mZAR and its yield bearing cousin yZAR. Given that yZAR exists on the same platform, I would expect that to suck up any supply of mZAR that is being held for any length of time, further contributing to mZAR supply variation.

• ZARP is responsible for more than a quarter of ZAR coin transaction value, but has a relatively large supply that it turns over roughly every 2 months. ZARP has significant usage in DeFi, particularly Uniswap. In this regard I think it is unique amongst ZAR coins - fully permissionless and in action across multiple use cases.

• LZAR is fairly new, but already turning over its small (R400k) supply about every 3 months, showing some early adoption, albeit at small scale.

Then there are the rest, either in the early stages of adoption, like ZARU, eZAR, ZARSC, ZARC, or older but barely used like xZAR. The coins with big supply may actually be used more than the small ones, but a lot of the supply is untapped so far and so the turnover metric looks low.

Caveats

All the above carries a heavy caveat that the data may be unreliable for a number of reasons. The data is pulled from the coins' public blockchains, but despite Claude's and my best efforts, problems may include:

• The number of holders is understated in the case of coins that are listed on exchanges, where one wallet covers many people, e.g. ZARU - almost all activity in its current early stages is on Luno.

• Holders are unreliable - if you think of them as users - in cases where wallets have been air-dropped with stablecoins, e.g. ZARZ, where the vast majority of wallets contain exactly R10 or R25. There may also be cases where there are a lot of dummy wallets that do not represent real customers.

• Supplies include large chunks of seed funds from a small number of users or partners in some cases, which you can see where the average balance per wallet is very high, e.g. ZARU again.

The idea of this tracker is that it gives us a base. As adoption grows, the errors and approximations become less significant; even if they persist, we can see a direction and velocity of travel. The things to watch are the growth in supply and the volume, particularly the latter, since existing supply can support much more volume without additional growth. Which coins are growing helps us see what is working, and which stablecoins will win in SA. In the meantime, please let me know if you have any comments or ideas.