The cost-efficiency of stablecoins for international small businesses

Stablecoins work well for international business transactions and startup treasury management. Here's how Trading Strategy is using stablecoins and how we are able to enjoy near-zero transaction costs.

This post is also available as a Twitter thread here.

Are stablecoins effective?

Many people criticise stablecoins, these people are especially critical if they come from the banking industry, a natural competitor for stablecoins. There are studies that claim stablecoin transactions are more expensive than wire transfers.

However, taking a deeper look would prove stablecoins are vastly more efficient. Most of the assumptions why stablecoins are not efficient are based on misunderstandings and false assumptions:

  • Legacy blockchain transaction costs: Ethereum is 2014 tech and we are living 2022. We have much more efficient blockchains available today - energy, speed and cost-wise.
  • Using unfriendly fee models and choosing unideal fiat off-ramps. The competition has heated up during the last few years. As a business, if you manage your treasury well, you can also directly trade USD to EUR and others on an order book yourself, without relying on service providers and their fees. This is another benefit of the direct-to-user cryptocurrency ecosystem.

This blog post is not a full-fledged case study, but just one data point from one company showing that stablecoins can be more efficient than the traditional banking system. By using one solid data point should invalidate the theory "stablecoins have no use at all and are more expensive".

An example transaction cost $0.03 for an Avalanche C-chain transaction. While the transaction cost goes up during the blockchain peak utilisation, modern blockchains like Avalanche, Polygon, Solana and NEAR still have managed to keep the transaction cost consistently down in the range of tenths of a dollar.

The mixed currency bag of international  startup

Trading Strategy is a seed stage startup. We are incorporated in Europe, having fully remote staff in eight different countries around the globe. We are funded by international investors from many continents. Our future cash flow is likely to be heavily denominated in USD, our expenses are everything between USD, EUR and small national fiat currencies.

While we are a European company and we make a large number of USD based payments. For example, we pay for our service providers and subcontractors in the US, in USD.

As we are an early-stage company and operate within fintech, no bank is going to permit us to open a US dollar account, if they do it will be very expensive. We are not an attractive business customer for banks. For reference, we received offers between $1k - $8k a month for a corporate account that would include USD wires.

We are not investing our treasury in lending pools, yield farming or any other decentralised finance (DeFi) services. While yield earned by investing might increase our startup's runway by a month or two, it would not significantly contribute to finishing our product faster. However, we are longing USD, and shorting EUR and this is already making us "gains" on EUR based expenses.

It is likely to keep going down - in one year 20% EUR savings vs. USD savings wiped out

What is our cost of making a stablecoin transaction?

For us to make a payment to our US-based service provider is nearly zero. Here is an example of a made-up small business transaction.

  • Us making a USDC payment on the Avanlance blockchain: $0.12 in transfer fees
  • Us maintaining a USDC balance in self custody: $0
  • Subcontractor opening a business account on Circle: $0
  • Subcontractor doing a USDC redemption and wire to his business account: $0
Total fees for sending $10 - $50,000: $0.012  

The cost of $0.012 compares very positively to Western Union's $4.88:

An old and flawed study on stablecoin transaction costs

What is our cost of currency conversion?

Currently, we are paying

  • 0% on USD transfers to our US service providers.
  • 1% on USD:EUR conversion. This cost is high, but we are looking for new service providers here. For example, in the future, we can directly trade on FTX or Kraken order books and convert a larger batch of currencies ourselves instead of relying on our banking service provider. The reason we are not doing this yet is we have been stuck in corporate onboarding for some months. Compliance has a very high business cost if not done properly, but the bearer is always the customer, not the business. The leading decentralised markets offer 1 BPS trades between stablecoins or 100x cost reduction over 1%.
  • ~75 EUR/month for cards and EUR and GBP IBANs.

On the robustness of USDC

USDC, the USD Coin, is a stablecoin issued by Circle. Not all stablecoins are stable. Algorithmic stablecoins like TerraUSD, or UST, should not be confused with asset-backed stablecoins. USDC is asset-backed. In fact, its asset basket is more solid than your deposits on a bank account because it holds a higher degree of US treasury bills as high-quality assets than retail banking does.

USDC is backed by treasury bills and cash, as stated in a monthly GrantThorton report.


Robust stablecoins like USDC will make international trade for small to medium businesses much more efficient, as you can find from our company data points.

Can banks compete with stablecoins in transfer-of-value business? The main drivers for cost efficiencies are open source, open data and open networks. Banks can migrate to public blockchains themselves, but at that point they would no longer be banks as we know them.

To read more about this and see more about trading fees and currency conversion costs, please also read our previous blog post "Why the most efficient market in the world is decentralised".

Trading Strategy is an algorithmic trading protocol for decentralised markets, enabling automated trading on decentralised exchanges (DEXs). Learn more about algorithmic trading here.

Join our community of traders and developers on Discord. operated by Trading Strategy Operations Ltd., Victoria, Mahe, Seychelles.