Stablecoin Revolution: Reshaping the Global Payment Landscape

The global financial system is undergoing profound changes. Traditional payment networks are facing a comprehensive challenge from stablecoins due to outdated infrastructure, lengthy settlement periods, and high costs. Stablecoins are revolutionizing cross-border value flow, corporate transactions, and access to personal financial services.

In recent years, stablecoins have continued to develop and have become an important infrastructure for global payments. Large fintech companies, payment processors, and sovereign entities are gradually incorporating stablecoins into consumer-facing applications and corporate cash flows. At the same time, emerging financial tools such as payment gateways, deposit and withdrawal channels, and programmable yield products have significantly enhanced the convenience of using stablecoins.

This report provides an in-depth analysis of the stablecoin ecosystem from both technical and business perspectives. It examines key participants, core infrastructure, and the dynamic demands that drive applications. Furthermore, it explores how stablecoins are spawning new financial application scenarios and the challenges they face in integrating into the global economy.

1. Why choose stablecoin payments?

To understand the influence of stablecoins, it is first necessary to examine traditional payment solutions. These systems include cash, checks, debit cards, credit cards, international wire transfers (SWIFT), Automated Clearing House (ACH), and peer-to-peer payments, among others. Although they have been integrated into daily life, many payment channels such as ACH and SWIFT have had their infrastructure in place since the 1970s. Today, much of this global payment infrastructure is outdated and highly fragmented. Overall, these payment methods suffer from high fees, high friction, long processing times, inability to settle around the clock, and complex backend procedures. Additionally, they often require extra fees for bundling unnecessary services such as identity verification, lending, compliance, fraud protection, and bank integration.

Stablecoin payments are effectively addressing these pain points. Compared to traditional payments, blockchain payment settlements greatly simplify the process, reduce intermediaries, and achieve real-time visibility of fund flows, not only shortening settlement times but also lowering costs.

The main advantages of stablecoin payments include:

• Real-time settlement: Transactions are completed almost instantly, eliminating delays of traditional banking systems.
• Safe and Reliable: The immutable ledger of blockchain ensures transaction security and transparency, providing protection for users.
• Cost reduction: Eliminating intermediaries significantly lowers transaction fees, saving expenses for users.
• Global Coverage: Decentralized platforms can reach markets underserved by traditional financial services, achieving financial inclusion.

2. The Landscape of the Stablecoin Payment Industry

The stablecoin payment industry can be divided into four technical stack levels:

1. Layer One: Application Layer

The application layer is mainly composed of various payment service providers ( PSP ), integrating multiple independent deposit and withdrawal payment institutions into a unified aggregation platform. These platforms provide users with convenient access to stablecoin, offer tools for developers, and provide credit card services for Web3 users.

a. Payment Gateway

A payment gateway is a service that facilitates transactions between buyers and sellers by securely processing payments.

Well-known companies include:

• Stripe: A traditional payment provider that integrates stablecoins like USDC for global payments.
• MetaMask: does not provide direct fiat currency exchange, users can achieve deposits and withdrawals through third-party service integration.
• Helio: 450,000 active wallets and 6,000 merchants. With the Solana Pay plugin, millions of Shopify merchants can settle in cryptocurrency and instantly convert USDY to USDC, EURC, and PYUSD.
• Web2 payment applications such as Apple Pay, PayPal, Cash App, Nubank, and Revolut also allow users to pay with stablecoins, expanding the application scenarios.

Payment gateways can be divided into two categories ( with overlap ):

1. payment gateway for developers; 2) payment gateway for consumers. Most providers tend to focus on one of these categories.

Payment gateway services aimed at developers require enterprises, fintech companies, and businesses to embed stablecoin infrastructure. They typically offer APIs, SDKs, and developer tools to integrate existing payment systems, enabling features such as automated payments, stablecoin wallets, virtual accounts, and real-time settlements. Emerging projects focusing on such tools include:

• BVNK: Provides enterprise-level payment infrastructure for the integration of stablecoins. Offers API solutions to ensure seamless processes, with a cross-border commercial payment platform, corporate accounts, and merchant services. Handles over $10 billion in annualized transaction volume, with a year-on-year growth rate of 200%, and a valuation of $750 million, with clients including emerging regions such as Africa, Latin America, and Southeast Asia.
• Iron ( Testing ): Providing APIs for seamless integration of stablecoin trading into existing businesses. Offering global deposit and withdrawal channels, stablecoin payment infrastructure, wallets, and virtual accounts for enterprises, supporting customized payment workflows.
• Juicyway: provides enterprise payment, salary distribution, and bulk payment API, supporting NGN, CAD, USD, USDT, USDC, etc. Mainly targeting the African market, no operational data yet.

Consumer-focused payment gateways prioritize users, providing an easy-to-use interface for stablecoin payments, remittances, and financial services. They typically include mobile wallets, multi-currency support, fiat currency deposit and withdrawal channels, and seamless cross-border transactions. Notable projects include:

• Decaf: An on-chain banking platform that covers personal consumption, remittances, and stablecoin transactions in over 184 countries. In Latin America, it collaborates with MoneyGram to achieve near-zero withdrawal fees, boasting over 10,000 users in South America.
• Meso: Deposit and withdrawal solutions, directly integrated with merchants, allowing users and businesses to easily convert between fiat currency and stablecoin. Supports Apple Pay for purchasing USDC, simplifying the consumer acquisition process.
• Venmo: The stablecoin wallet feature integrates existing consumer payment applications, allowing easy use of digital dollars without direct interaction with the blockchain.

b. U Card

Cryptocurrency cards allow users to spend cryptocurrencies or stablecoins at traditional merchants. Typically integrated with Visa or Mastercard, they enable seamless transactions by automatically converting crypto assets to fiat currency.

The project includes:

• Reap: An Asian payment processor, serving over 40 clients including Infini, Kast, Genosis pay, Redotpay, Ether.fi, etc., primarily earning revenue through transaction fees. Collaborating with Hong Kong banks, it covers most regions outside the US and supports multi-chain deposits. By July 2024, the transaction volume reached $30M.
• Raincards: A card issuer in the Americas, supporting card issuance for companies such as Avalanche, Offramp, takenos, etc., serving users in the US and Latin America. Issues USDC corporate cards for paying daily business expenses with on-chain assets.
• Fiat24: European issuer + web3 bank, supports card issuance for companies like ethsign, safepal, etc. Swiss license, primarily serving European + Asian users, only supports Arbitrum deposits. Total users 20,000, monthly revenue $100K-150K.
• Kast: A rapidly growing U card on Solana, currently issuing over 10,000 cards, with 5-6k monthly active users. By December 2024, the trading volume is projected to be $7M, with revenue of $200K.
• 1Money: stablecoin ecosystem, recently launched credit cards supporting stablecoins, and provides SDK to facilitate L1 and L2 integration, still in testing with no data.

2. Second Layer: Payment Processor

Payment processors are the backbone of payment channels, mainly including: 1. Deposit and withdrawal service providers 2. Stablecoin issuance service providers. They act as a critical intermediary layer in the payment lifecycle, connecting Web3 payments with traditional financial systems.

a. Deposit and Withdrawal Processor

• Moonpay: Supports over 80 cryptocurrencies, providing various deposit and withdrawal methods as well as token swap services to meet diverse needs.
• Ramp Network: Covers over 150 countries, providing deposit and withdrawal services for more than 90 types of crypto assets. Handles all KYC, AML, and compliance requirements to ensure compliance and security.
• Alchemy Pay: A hybrid payment gateway solution that supports two-way exchange and payment between fiat currency and crypto assets, achieving the integration of traditional fiat currency and crypto asset payments.

b. Stablecoin Issuance & Coordination of Processors

• Bridge: The core products include coordination API and issuance API, helping enterprises integrate various stablecoin payments and exchanges, supporting rapid issuance of stablecoins. Licensed in the US and Europe, establishing important cooperation with the US government, with strong compliance operational capabilities and resource advantages.
• Brale ( testing ): a regulated stablecoin issuance platform that provides stablecoin coordination and reserve management APIs. Compliant licenses are available in all U.S. states, partner companies must pass KYB, and users need to create an account with Brale for KYC. Most customers are on-chain OGs.
• Perena ( Testing ): The Numeraire platform lowers the issuance threshold for niche stablecoin by encouraging users to provide concentrated liquidity in a single pool. It adopts a "central hub-radiating" model, with USD* serving as the central reserve asset acting as the "hub". This allows for the efficient minting, redemption, and trading of various stablecoins pegged to different assets or jurisdictions.

3. Layer Three: Asset Issuer

Asset issuers are responsible for creating, maintaining, and redeeming stablecoins. The business model is usually centered around the balance sheet, similar to bank operations - accepting customer deposits and investing the funds in high-yield assets like U.S. Treasury bonds to earn interest rate spreads. Stablecoin innovations can be divided into three levels: static reserve-backed stablecoins, interest-bearing stablecoins, and revenue-sharing stablecoins.

1. Stablecoin Supported by Static Reserves

The first generation of stablecoins introduced a digital dollar-based model: a centrally issued token supported by a 1:1 ratio of fiat reserves held by traditional financial institutions. Major players include Tether and Circle.

Tether's USDT and Circle's USDC are the most widely used stablecoins, both backed 1:1 by dollar reserves in their financial accounts. These stablecoins have been integrated with multiple platforms, serving as a major part of the base currency pairs for cryptocurrency trading and settlement. It is noteworthy that the value acquisition of these stablecoins belongs to the asset issuers themselves. USDT and USDC primarily generate revenue for the issuing entities through interest spreads rather than sharing it with users.

2. Earning Stablecoin

The second evolution of stablecoins goes beyond simple fiat-backed tokens, embedding native yield generation features. Yield-bearing stablecoins provide on-chain returns to holders, typically sourced from mechanisms like short-term government bond yields, DeFi lending strategies, or staking rewards. Unlike traditional static stablecoins that passively hold reserves, these assets actively generate yield while maintaining price stability.

Well-known protocols that provide on-chain yields for stablecoin holders include:

• Ethena($6B): A stablecoin protocol issuing USDe - an on-chain synthetic dollar backed by hedged ETH, BTC, and SOL collateral. The unique design allows USDe holders to earn organic yields derived from the perpetual futures market funding rate, currently an annualized 6.00%(.
• Mountain)$152M(: Currently, the annualized yield of 4.70% on interest-earning stablecoin. Users only need to deposit USDM into the wallet to earn daily interest, without the need for additional staking or participating in complex DeFi.
• Level)$25M(: A stablecoin composed of liquid re-staked US dollars. It provides security for multiple decentralized networks, collects the additional yields from these networks, and passes them on to lvlUSD holders, innovating the yield model.
• CAP Labs) in testing(: Built on the megaETH blockchain, developing the next generation stablecoin engine to provide new sources of income for holders. By leveraging arbitrage, MEV, and RWA to generate scalable and adaptive yields.

3. Yield Sharing Stablecoin

The revenue-sharing stablecoin integrates a built-in monetization mechanism that directly allocates a portion of transaction fees, interest income, or other revenue streams to users, issuers, terminal apps, and ecosystem participants. This model aligns the incentives among stablecoin issuers, distributors, and end users, further transforming stablecoins from passive payment tools into active financial assets.

• Paxos)$72M(: Announced the launch of USDG in November 2024, regulated by the upcoming stablecoin framework from the Monetary Authority of Singapore. Sharing with partners.