The rise of crypto payroll with stablecoins: A viable option to hedge against inflation?

Stablecoins, a safe haven in times of inflation

Gold has traditionally been used as a hedge against inflation as people seek out assets that can hold their value over time. In recent years, crypto has emerged as a popular alternative. 

Unlike fiat, which can be manipulated by central banks through changes in interest rates and money supply, crypto is not subjected to the same inflationary pressures. It offers a unique hedge against inflation because of its decentralized nature and finite supply. 

Bitcoin, for example, is an attractive store of value for citizens of countries with unstable fiat currencies who are seeking to protect themselves against hyperinflation and rising costs of everyday goods and services. In 2021, Bitcoin hit a new all-time high in Turkey when the lira lost 15% of its value against the US dollar in a single day. 

However, its volatile nature continues to be a point of concern for many investors. 

Stablecoins, which are fundamentally reliant on fiat currencies to stabilize their value, can be a viable alternative for people to hedge against inflation.

Adrian Kolody, founder of non-custodial decentralized exchange Domination Finance, suggests that investors could find a way to earn interest on their stablecoins in DeFi markets that would be above annual inflation rates. “The best way to look at it is that crypto gives you the flexibility to take control of your finances in a variety of methods instead of being at the mercy of the federal government.”

Moreover, dollar-denominated stablecoins are increasingly being used as a store of value and a hedge against inflation and weak currencies in emerging markets. There is over $100 billion in combined market capitalization of dollar stablecoin adoption in Sub-Saharan Africa to safeguard against the devaluing of local money. Similarly, stablecoin usage surged from 42% in January 2022 to 67% in March after Ukraine’s attack in Russia, and has been on the rise since to hedge against currency devaluation.  

‍

‍

As one of the largest crypto payroll solutions with nearly $300 million in total crypto payments volume, dollar-denominated stablecoins account for 60% of the crypto payments on Request Finance. 

The popularity of invoices and payroll being paid in dollar-denominated stablecoins on the app likely reflects stablecoins being increasingly used as a store of value and a viable alternative to hedge against inflation. 

How to manage your business’ crypto payroll 

If you’re looking to pay full or partial salaries in crypto easily, Request Finance’s crypto payroll feature can help you automate payroll in crypto. 

‍

The feature allows enterprises to easily schedule recurring crypto salary payments for their employees regardless of their location. This frees up team members from the hassle of submitting invoices to HR or finance departments to receive payments. 

It also provides both employees and employers with the ability to easily review transaction histories, including the exact amount paid, to whom, when, and the market price at the time of payment.

‍

The tool also allows you to auto-fill your employees' personal information and wallet addresses on payday, manage your team by business units, and see your employee data securely in one place. 

‍

‍

If you want to get paid in crypto as a freelancer, you can use Request Finance’s invoicing tool to automate the way you invoice clients, allowing you to easily pre-set your billing details in crypto. 

Freelancers can also automatically create, and schedule invoices to be sent at a specific billing date, or even set recurring invoices so you never have to worry about forgetting. You can also schedule automated email reminders that chase clients for payment on your behalf.

With this, you and your employer can have a record of your paychecks.

Concluding thoughts

With the growing acceptance and adoption of crypto payroll, the use of crypto for payroll has emerged as a viable option for businesses and individuals looking to hedge against the effects of inflation. Crypto payroll offers a simpler, faster, and cost-effective solution compared to traditional fiat payroll. 

Stablecoins, in particular, is an increasingly popular option as a store of value and a means for investors to earn interest in DeFi markets to hedge against inflation. However, recent events such as the temporary depegging of USDC to $0.87 following Silicon Valley Bank's collapse serve as a reminder that there are still inherent risks to major stablecoins. 

Businesses and individuals who rely on stablecoins should exercise caution and have a comprehensive treasury management strategy in place to mitigate potential risks.