Gartner Hype Cycle Insights: Stablecoins to Achieve Mainstream Status Within Two Years

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In late July, Gartner released its latest Hype Cycle for Blockchain and Web3 technologies for 2024. This cycle evaluates the maturity of emerging technologies, and one of the standout predictions is that technologies like blockchain wallets, smart contracts, and stablecoins will reach a performance plateau within the next two years.

Key Technological Advances

Gartner’s report highlights significant advancements in various areas, including Tier 2 scaling solutions, decentralized finance (DeFi), non-fungible tokens (NFTs), and cross-chain interoperability. These technologies represent some of the most promising developments in the blockchain space.

A Closer Look at the Downward Curve

Initially, seeing technologies like NFTs and wholesale central bank digital currencies (CBDCs) on the downward curve may appear surprising. Although there is negative sentiment around NFTs and wholesale CBDCs, there’s substantial hype surrounding real-asset tokenization (RWA). While much of the blockchain sector, including our focus, revolves around finance, Gartner explores tokenization across various industries, primarily for business automation. In this context, tokenization’s positioning makes sense. Similarly, stablecoins appear on a downward curve despite nearing historic market capitalization highs, which should indicate broader acceptance. Numerous new stablecoin initiatives and improving legal clarity also support this trend. However, Gartner’s broader perspective considers massive consumer adoption. Stablecoins are still closely associated with cryptocurrencies, which carry negative associations for many, especially following the collapses of Terra and FTX. This negative sentiment hasn’t shifted significantly over the past year.

Web 2.5: Bridging Web3 and Web2

Gartner’s interdisciplinary approach introduces the concept of web 2.5, which combines web3 elements like NFTs, tokens, or smart contracts within web2 applications. Prominent applications include large corporations launching NFTs and web2-style NFT trading platforms. Gartner classifies Franklin Templeton’s OnChain US Government Money Fund as an example of web 2.5. Other instances might include wallets and centralized crypto exchanges. While web2 focuses on centralized user interface (frontend) usability, web3 is more of a backend innovation, impacting the core of the product. Many web3 user interfaces currently range from subpar to poor. A notable omission in the hype cycle is the wholesale CBDC, perhaps because it’s not considered part of web3, although other authorized applications are included. Retail CBDCs have a place on the curve, despite many projects avoiding direct blockchain use. In contrast, wholesale CBDCs have experienced a resurgence and are always based on distributed ledger technology (DLT). The latest BIS CBDC survey indicates that wholesale activity is surpassing retail CBDCs. This shift could significantly impact adoption as some projects aim to expand the capabilities of blockchain applications, including web3, such as Brazil’s DREX.

Transformational Technologies

Gartner also categorizes technologies it deems transformational—those poised to reshape industry dynamics. Technologies expected to become mainstream within two years include stablecoins, smart contracts, Tier 1 blockchains, blockchain wallets, and consensus mechanisms. Over the next two to five years, tokenization, cryptocurrencies, and blockchain interoperability are expected to gain traction. While significant progress has been made, the road ahead still holds considerable challenges.