The stablecoin revolution is underway: the resonance between technical architecture and business ecology

This report takes a deep look at the stablecoin ecosystem from both a technical and commercial perspective.

The global financial system is in the midst of a profound wave of change. Traditional payment networks are facing all-round challenges from emerging alternatives - stablecoins, due to outdated infrastructure, lengthy settlement cycles and high fees. These digital assets are rapidly revolutionizing the mode of cross-border value flow, the paradigm of corporate transactions and the way individuals access financial services.

Over the past few years, stablecoins have continued to develop and have become an important underlying architecture for global payments. Large fintech companies, payment processors and sovereign entities are gradually integrating stablecoins into consumer-facing applications and corporate cash flows. At the same time, a series of emerging financial tools, from payment gateways to deposit and withdrawal channels to programmable income products, have greatly improved the convenience of using stablecoins.

This report takes a deep look at the stablecoin ecosystem from both a technical and commercial perspective. It studies the key players shaping this field, the core infrastructure supporting stablecoin transactions, and the dynamic needs driving their application. In addition, it explores how stablecoins can give rise to new financial application scenarios and the challenges they face in the process of being widely integrated into the global economy.

1. Why choose stablecoins for payment?

To explore the impact of stablecoins, we first need to examine traditional payment solutions. These traditional systems include cash, checks, debit cards, credit cards, international wire transfers (SWIFT), automated clearing houses (ACH), and peer-to-peer payments. Although they have been integrated into daily life, the infrastructure of many payment channels, such as ACH and SWIFT, has existed since the 1970s. Although groundbreaking at the time, most of these global payment infrastructures are now outdated and highly fragmented. In general, these payment methods are plagued by high fees, high friction, long processing times, inability to achieve 24-hour settlement, and complex back-end procedures. In addition, they often (for a fee) bundle unnecessary additional services such as identity verification, lending, compliance, fraud protection, and bank integration.

Stablecoin payments are effectively solving these pain points. Compared with traditional payment methods, using blockchain for payment settlement greatly simplifies the payment process, reduces intermediaries, and realizes real-time visibility of capital flows, which not only shortens settlement time but also reduces costs.

The main advantages of stablecoin payments can be summarized as follows:

Real-time settlement: transactions are completed almost instantly, eliminating delays in traditional banking systems.

Safety and reliability: The blockchain's immutable ledger ensures the security and transparency of transactions, providing protection for users.

Cost reduction: Removing intermediaries significantly reduces transaction fees, saving users money.

Global coverage: Decentralized platforms can reach markets that are underserved by traditional financial services (including the unbanked) and achieve financial inclusion.

2. Stablecoin payment industry landscape

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

1. First layer: application layer

The application layer is mainly composed of various payment service providers (PSPs), which integrate multiple independent deposit and withdrawal payment institutions into a unified aggregation platform. These platforms provide users with convenient stablecoin access methods, provide tools for developers developing at the application layer, and provide credit card services for Web3 users.

a. Payment gateway

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

Well-known companies that have innovated in this field include:

Stripe: A traditional payment provider that integrates stablecoins such as USDC for global payments.

MetaMask: It does not provide direct fiat currency exchange functions. Users can realize deposit and withdrawal operations by integrating with its third-party services.

Helio: 450,000 active wallets and 6,000 merchants. With the Solana Pay plug-in, millions of Shopify merchants can settle payments with cryptocurrencies and instantly convert USDY to other stablecoins such as USDC, EURC, and PYUSD.

Web2 payment applications such as Apple Pay, PayPal, Cash App, Nubank, and Revolut also allow users to complete payments with stablecoins, further broadening the application scenarios of stablecoins.

The field of payment gateway providers can be clearly divided into two categories (there is some overlap)

1) Payment gateways for developers; 2) Payment gateways for consumers. Most payment gateway providers tend to focus more on one of them, thereby shaping their core products, user experience, and target markets.

Payment gateways for developers are designed to serve enterprises, fintech companies, and enterprises that need to embed stablecoin infrastructure into their workflows. They usually provide application programming interfaces (APIs), software development kits (SDKs), and developer tools to integrate into existing payment systems to achieve functions such as automatic payments, stablecoin wallets, virtual accounts, and real-time settlement. Some emerging projects that focus on providing such developer tools include:

BVNK: Provides enterprise-level payment infrastructure for easy integration of stablecoins. BVNK provides API solutions to make the process seamless. It has a payment platform for cross-border commercial payments, as well as corporate accounts that allow companies to hold and trade multiple stablecoins and fiat currencies, and merchant services that provide companies with the tools they need to accept stablecoin payments from customers. It handles more than $10 billion in annualized transactions, with an annual growth rate of 200%, and a valuation of $750 million. Its customers include emerging regions such as Africa, Latin America, and Southeast Asia.

Iron (in beta): Provides APIs to seamlessly integrate stablecoin transactions into its existing business. It provides companies with global access channels, stablecoin payment infrastructure, wallets and virtual accounts, and supports customized payment workflows (including regular payments, invoicing or on-demand payments)

**Juicyway: **Provides a range of corporate payment, salary issuance and batch payment APIs, and supports currencies including Nigerian Naira (NGN), Canadian Dollar (CAD), US Dollar (USD), Tether (USDT), and US Dollar Coin (USDC). It mainly faces the African market and has no operating data yet.

Consumer-facing payment gateways focus on users, providing a simple and easy-to-use interface for users to make 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. Some well-known projects that focus on providing users with this simple payment experience include:

Decaf: On-chain banking platform, enabling personal consumption, remittances, and stablecoin transactions in more than 184 countries; Decaf works with local channels including MoneyGram in Latin America to achieve almost zero withdrawal fees, with more than 10,000 South American users, and is highly rated among solana developers.

Meso: Deposit and withdrawal solution, directly integrated with merchants, enabling users and businesses to easily convert between fiat currencies and stablecoins with minimal friction. Meso also supports Apple Pay to purchase USDC, simplifying the process for consumers to obtain stablecoins.

Venmo: Venmo's stablecoin wallet feature leverages stablecoin technology, but its functionality is integrated into its existing consumer payment application, allowing users to easily send, receive, and use digital dollars without directly interacting with blockchain infrastructure.

b. U Card

Crypto cards are payment cards that allow users to spend cryptocurrencies or stablecoins at traditional merchants. These cards are usually integrated with traditional credit card networks (such as Visa or Mastercard) to enable seamless transactions by automatically converting cryptocurrency assets into fiat currency at the point of sale.

Projects include:

Reap: Asian card issuer, clients include Infini, Kast, Genosis pay, Redotpay, Ether.fi and more than 40 other companies, sell white label solutions, mainly rely on transaction volume commission (such as Kast 85%-Reap15%) to cooperate with Hong Kong banks, can cover most areas outside the United States, can support multi-chain deposit; transaction volume reached $30M in July 2024.

Raincards: American card issuer, supports Avalanche, Offramp, takenos and other companies to issue cards, the biggest feature is that it can serve users in the United States and Latin America. I issued a USDC corporate card myself and used on-chain assets (such as USDC) to pay for travel expenses, office supplies and other daily business expenses.

Fiat24: European card issuer + web3 bank, business model is similar to the above two, support ethsign, safepal and other corporate card issuance; Swiss license, mainly serves European + Asian users, does not support full-chain transactions, can only recharge arbitrum. Slower growth, total users 2w, monthly income $100K-150K.

**Kast: **Solana's fastest growing U card, currently issued more than 10,000 cards, 5-6k monthly active users, $7m transaction volume in December 2024, income $200k.

1Money: Stablecoin ecosystem, recently launched a credit card that supports stablecoins, and provides a software development kit to facilitate L1 and L2 integration, in beta, no data yet.

There are many cryptocurrency card providers, which mainly differ in service areas and supported currencies, and usually provide low-cost services to end users to increase users' enthusiasm for using cryptocurrency cards.

2. Second layer: payment processors

As a key layer of the stablecoin technology stack, payment processors are the backbone of payment channels, mainly covering two categories: 1. Deposit and withdrawal service providers 2. Stablecoin issuance service providers. They act as a key middle layer in the payment life cycle, connecting Web3 payments with traditional financial systems.

a. Deposit and Withdrawal Processor

Moonpay: Supports more than 80 cryptocurrencies, provides multiple deposit and withdrawal methods and token swap services to meet users' diverse cryptocurrency trading needs.

Ramp Network: Covers more than 150 countries and provides deposit and withdrawal services for more than 90 crypto assets. The network handles all KYC (identity verification), AML (anti-money laundering) and compliance requirements, ensuring the compliance and security of deposit and withdrawal services.

Alchemy Pay: A hybrid payment gateway solution that supports two-way exchange and payment between fiat currency and crypto assets, realizing the integration of traditional fiat currency and crypto asset payments.

b. Stablecoin Issuance & Coordination Processor

Bridge: Bridge's core products include coordination API and issuance API. The former helps companies integrate multiple stablecoin payments and exchanges, and the latter supports companies to quickly issue stablecoins. The platform is currently licensed in the United States and Europe, and has established important partnerships with the U.S. State Department and Treasury Department, with strong compliance operation capabilities and resource advantages.

Brale (in beta): Similar to the Bridge product, it is a regulated stablecoin issuance platform that provides stablecoin coordination and reserve management APIs. It has compliance licenses in all states in the United States. All cooperating companies need to pass KYB (corporate identity verification), and users need to set up accounts in Brale for KYC. Brale's customers are mostly on-chain OGs (such as Etherfuse, Penera, etc.), and their investor endorsements and BD are slightly worse than Bridge.

Perena (in beta): Perena's Numeraire platform lowers the threshold for issuing niche stablecoins by encouraging users to provide centralized liquidity in a single pool. Numeraire adopts a "hub-and-spoke" model, in which USD* serves as the central reserve asset and acts as a "hub" for stablecoin issuance and exchange. This mechanism enables multiple stablecoins pegged to different assets or jurisdictions to be efficiently minted, redeemed, and traded, with each stablecoin connected to USD* as a similar "spoke". Through this system structure, Numeraire ensures deep liquidity and improves capital efficiency, as small stablecoins can interoperate through USD* without the need for decentralized liquidity pools for each trading pair. The ultimate design goal of the system is not only to enhance price stability and reduce slippage, but also to enable seamless conversion between stablecoins.

3. The third layer: asset issuers

Asset issuers are responsible for creating, maintaining, and redeeming stablecoins. Their business model is usually centered on the balance sheet, similar to bank operations - accepting customer deposits and investing the funds in high-yield assets such as US Treasuries to earn interest spreads. At the asset issuer level, stablecoin innovation can be divided into three levels: stablecoins backed by static reserves, interest-bearing stablecoins, and revenue-sharing stablecoins.

1. Static reserve-backed stablecoins

The first generation of stablecoins introduced the basic model of the digital dollar: a centralized issuance of tokens backed by fiat reserves held by traditional financial institutions at a 1:1 ratio. Major players in this category include Tether and Circle.

Tether's USDT and Circle's USDC are the most widely used stablecoins, both backed by US dollar reserves in Tether and Circle's financial accounts at a 1:1 ratio. These stablecoins are currently integrated with multiple platforms and serve as the base currency pairs for a large part of cryptocurrency trading and settlement. It is worth noting that the value capture of these stablecoins belongs to the asset issuers themselves. USDT and USDC generate returns for their issuing entities primarily through interest rate differentials rather than sharing returns with users.

2. Interest-bearing stablecoins

The second evolution of stablecoins goes beyond simple fiat-backed tokens to embed native yield-generating functionality. Interest-bearing stablecoins provide holders with on-chain returns, typically derived from mechanisms such as short-term Treasury yields, decentralized finance (DeFi) lending strategies, or staking rewards. Unlike traditional static stablecoins that passively hold reserves, these assets actively generate returns while maintaining price stability.

Well-known protocols that provide on-chain returns to stablecoin holders include:

Ethena ($6B): Stablecoin protocol issues USDe - an on-chain synthetic dollar backed by hedged Ethereum (ETH), Bitcoin (BTC), and Solana (SOL) collateral. Ethena's unique design enables USDe holders to earn organic returns derived from perpetual futures market funding rates (currently 6.00% annualized) and attract users through a unique collateral and yield mechanism.

Mountain ($152M): An interest-bearing stablecoin with a current annualized yield of 4.70%. Mountain allows users to earn interest daily by simply depositing USDM into their wallets, which is attractive to users seeking passive income without additional staking or participating in complex DeFi, providing users with a simple and convenient way to earn interest.

Level ($25M): A stablecoin composed of liquid re-collateralized US dollars. Level explores a new method of stablecoin yield generation; it uses lvlUSD to provide security for multiple decentralized networks and collects the additional income of these networks, which is then passed on to lvlUSD holders, innovating the stablecoin yield model.

CAP Labs (Beta): Built on the highly anticipated megaETH blockchain, CAP is developing the next generation of stablecoin engines, aiming to provide new sources of income for stablecoin holders. CAP stablecoins generate scalable and adaptable returns by leveraging external revenue sources such as arbitrage, maximum extractable value (MEV), and real-world assets (RWA) - these revenue streams have traditionally been reserved for complex institutional players, opening up new directions for stablecoin returns.

3. Revenue-sharing stablecoins

Revenue-sharing stablecoins integrate built-in monetization mechanisms to distribute part of transaction fees, interest income, or other revenue streams directly to users, issuers, terminal apps, and ecosystem participants. This model aligns incentives between stablecoin issuers, distributors, and end users, further transforming stablecoins from passive payment tools to active financial assets.

Paxos ($72m): As a growing stablecoin issuer, Paxos announced the launch of USDG in November 2024, which is regulated by the Monetary Authority of Singapore's upcoming stablecoin framework. Paxos shares stablecoin returns and interest income generated by reserve assets with partners who help expand network utility, including Robinhood, Anchorage Digital, and others. Digital) and Galaxy, etc., through cooperation to expand the revenue sharing model.

M^0 ($106m): The M^0 team is composed of former MakerDAO and former Circle veterans. M^0's vision is to act as a simple, trusted neutral settlement layer that enables any financial institution to mint and redeem M^0's revenue-sharing stablecoin "M". The M^0 protocol shares most of the interest income with approved distributors called yielders. However, one of the differences between "M" and other revenue-sharing stablecoins is that "M" can also be used as "raw materials" for other stablecoins (such as Noble's USDN)

Agora ($76m): Similar to USDG and "M", Agora's AUSD also shares revenue with applications and market makers that integrate AUSD. Agora has received strategic support from some market makers and applications including Wintermute, Galaxy, Consensys and Kraken Ventures. Agora's Rev-sharing ratio is not fixed, but most of it will be returned to partners.

4. Layer 4: Settlement Layer

The settlement layer of the stablecoin technology stack is the foundation of the stablecoin ecosystem, ensuring the finality and security of transactions. It consists of payment channels (blockchain networks) that process and verify stablecoin transactions in real time. Today, many well-known L1L2 networks serve as key settlement layers for stablecoin transactions:

Solana: A high-performance blockchain known for its excellent throughput, fast finality, and low fees, it has become a key settlement layer for stablecoin transactions, especially in consumer payments and remittances. The Solana Foundation is actively encouraging developers to build on Solana Pay and hosting PayFi conferences/hackathons to strongly support off-chain PayFi innovation and promote the application of stablecoins in real-world payment scenarios.

Tron: A first-layer blockchain that occupies a significant market share in the field of stablecoin payments; USDT on Tron is widely used for cross-border payments and peer-to-peer (P2P) transactions due to its high efficiency and deep liquidity. Tron pays great attention to B2C transactions, but the support for B2B scenarios is currently insufficient

Codex (beta): OP L2 for cross-border B2B payments. Codex aggregates deposit and withdrawal service providers, market makers, exchanges, and stablecoin issuers to provide enterprises with one-stop stablecoin financial services. Codex has a strong distribution channel and shares 50% of its sorter fees with Circle to obtain its deposit and withdrawal traffic.

Noble: USDC native asset issuance chain designed for Cosmos and IBC ecosystems. Cosmos is the fourth largest USDC issuance chain and has been integrated with Coinbase. Projects that integrate Noble can deposit USDC into more than 90 IBC modular chains (dYdX, Osmosis, Celestia, SEI, Injective) with one click to realize the native casting and circulation of USDC in the multi-chain ecosystem.

1Money (beta): L1 built specifically for stablecoin payments. Transactions are processed in parallel with equal priority and fixed fees, which means there is no transaction reordering and no user can "jump the queue" by paying a higher fee. The network also provides gas-free transactions through ecosystem partners to enhance user experience and provide a fair and efficient network environment for stablecoin payments.

3. Expand the application of stablecoins: Serving non-crypto native users

1. Current bottlenecks

Regulatory uncertainty: Before banks, enterprises and fintech companies fully adopt stablecoins, they urgently need regulators to provide clearer policy guidance to effectively control risks.

User side: The lack of stablecoin usage scenarios restricts its popularity among ordinary consumers. The payment scenarios used by consumers in daily life are relatively fixed, and stablecoins have not yet been deeply integrated into them. Many consumers lack the actual demand and motivation to use stablecoins.

**Enterprise side: ** The acceptance of stablecoin payments by enterprises greatly affects the promotion process of stablecoins. At present, when accepting stablecoin payments, enterprises face the dual test of willingness and ability. On the one hand, some enterprises have limited knowledge of stablecoins as an emerging payment method, and have doubts about their security and stability, which leads to low willingness to accept. On the other hand, even if enterprises have the idea of accepting stablecoin payments, in actual operations, they may still face difficulties in technical docking, financial accounting, compliance supervision and other aspects, which limits their acceptance ability.

Despite many bottlenecks, we believe that as US regulation becomes clearer, it will encourage more traditional users and businesses to adopt compliant stablecoins. Although both parties may face potential frictions such as KYC (customer identity verification) and KYB (business identity verification), the market potential is huge in the long run.

If the market is segmented into 1. Crypto native users 2. Non-crypto native users. Most of the project parties interviewed target users in the on-chain market and serve crypto native users, while the non-crypto native market is still largely undeveloped. This market gap provides a significant opportunity for innovative companies to establish a first-mover advantage in guiding new users into the crypto field.

On the chain, the stablecoin market is already highly competitive. Many participants are committed to increasing use cases, locking in total value locked (TVL) through higher yields, and incentivizing users to hold stablecoins. As the ecosystem develops, future project success will depend on expanding real-world applications, promoting interoperability between different stablecoins, and reducing friction faced by businesses and consumers.

2. Enterprise side: How to increase the adoption rate of stablecoin payments?

Stablecoins are integrated into mainstream payment applications: Mainstream payment platforms such as Apple Pay, PayPal, and Stripe have included stablecoin transactions. This move not only greatly expands the use scenarios of stablecoins, but also significantly reduces foreign exchange fees in international payments, bringing more economical and efficient cross-border payment experience to enterprises and users.

Incentivize enterprises with revenue-sharing stablecoins: Revenue-sharing stablecoins prioritize distribution channels and build a strong network effect by cleverly coordinating the incentive mechanism between stablecoins and applications. It is not directly aimed at C-end users, but precisely targets distribution channels such as financial apps. Paxos's USDG, M0 Foundation's M, and Agoda's AUSD are typical examples of "revenue-sharing" stablecoins.

Enterprises and organizations can issue their own stablecoins more easily: Ordinary enterprises can issue and manage their own stablecoins more easily, which has become a key trend in promoting the adoption of stablecoins by enterprises. For example, Perena Bridge and Brale are pioneers in this field. As the overall infrastructure continues to improve, the trend of companies or countries issuing proprietary stablecoins is expected to further increase.

B2B stablecoin liquidity and fund management solutions: Help companies properly hold and manage stablecoin assets to meet the needs of working capital and revenue generation. For example, the Mountain Protocol's on-chain revenue platform provides companies with professional fund management solutions to effectively improve the efficiency of corporate fund operations.

** Payment infrastructure for developers (enterprises): ** It is not difficult to find that some of the most successful platforms currently position themselves as crypto-native versions of traditional financial services and are committed to providing innovative financial solutions for companies. For example, many companies currently have to manually coordinate liquidity providers, exchange partners, and local payment channels, making large-scale adoption of stablecoins inefficient. BVNK solves this problem by automating the entire payment workflow. The protocol also introduces a multi-track solution that combines local banks, crypto liquidity providers, and fiat off-chain into a single payment engine. BVNK does not require companies to manage multiple intermediaries, but automatically routes funds through the "fastest, cheapest, and most reliable channels" to optimize each transaction in real time. As stablecoin enterprise adoption continues to accelerate, solutions like BVNK will play a key role in making stablecoin payments frictionless, scalable, and fully integrated with global commerce. By solving the inefficiencies that prevent enterprises from adopting stablecoins on a large scale.

Settlement networks designed for cross-border payments: Proprietary L1L2 covering scenarios such as business-to-business cross-border payments or business-to-consumer retail transfers. It has the significant advantages of easy integration and comprehensive supervision, and can effectively meet the payment needs of enterprises in complex business scenarios. For example, Codex, as an L2 built specifically for cross-border transactions, provides enterprises with one-stop stablecoin financial services by aggregating deposit and withdrawal service providers, market makers, exchanges, and stablecoin issuers; Solana fully supports PayFi. In addition to its own technology stack advantages, it actively promotes products to partners and local enterprises, guiding Shopify, Paypal enterprises and offline merchants to use Solana pay for payment (especially in relatively weak banking services such as Latin America and Southeast Asia). A major trend is that the competition between L1L2 settlement networks is not just about technology, but will also involve multi-level competition in the future, including developer ecology, BD merchants, and traditional enterprise cooperation.

3. Consumer side: How to expand non-crypto native users?

As stablecoins become more accessible and integrated into traditional financial applications, non-crypto native users will begin to use them without noticing. Just as today's users can use digital payments without understanding the underlying banking system, stablecoins will increasingly become invisible infrastructure, providing faster, lower-cost, and more efficient transaction support for various industries.

Embedded stablecoin payments in e-commerce and remittances

The application of stablecoins to daily transactions is a key driver of their popularity, especially in e-commerce and cross-border remittances where traditional payment systems are inefficient, costly, and rely on outdated banking networks. Embedded stablecoin payments provide the following value for these scenarios:

Faster and lower-cost payment experience: Stablecoins significantly reduce transaction fees and settlement times for merchants and consumers by eliminating intermediaries. When integrated into mainstream e-commerce platforms, they can replace credit card networks, achieve instant transaction finality, and save payment processing costs.

Gig economy, cross-border freelance salary payments, and currency hedging needs in Latin America and Southeast Asia: The needs of these specific scenarios have given rise to the need for barrier-free cross-border payments. Stablecoins enable gig workers and freelancers to receive funds in seconds at a lower cost than traditional banks and remittance services, making them the preferred payment solution for the global labor market.

As stablecoin payment channels become more embedded in mainstream platforms, their application will extend beyond the circle of native cryptocurrency users. In the future, consumers will use blockchain-driven trading services in their daily financial activities without any awareness.

On-chain yield products for non-crypto users

Earning income through digital dollars is another core value proposition of stablecoins, which remains underdeveloped in the traditional financial sector. Although native DeFi users have long been exposed to on-chain income, emerging products are bringing these opportunities to mainstream consumers through simplified, compliant interfaces.

The key is to introduce traditional financial users to the field of on-chain income in a seamless and intuitive way. In the past, obtaining DeFi income required technical knowledge, self-custody capabilities, and experience in operating complex protocols. Today, compliant platforms abstract technical complexity and provide intuitive interfaces so that users can earn income by holding stablecoins without deep crypto knowledge.

As a pioneering protocol in this field, Mountain Protocol deeply understands the inclusive value of on-chain yields. Unlike traditional stablecoins that only serve as a medium of exchange, Mountain's stablecoin USDM defaults to distributing yields directly to holders on a daily basis. Its current annualized yield of 4.70% is derived from short-term low-risk US Treasuries, making it a dual alternative to traditional bank deposits and DeFi staking mechanisms. Mountain attracts non-crypto native users in the following ways:

Frictionless passive income: Users only need to hold USDM to automatically accumulate yields without additional staking, participating in complex DeFi strategies or active management.

Compliance guarantee: USDM is fully audited, fully collateralized, and designed with a segregated bankruptcy isolation account structure to ensure that users receive the same level of transparency and investor protection as off-chain money market instruments.

On-chain yield risk control: Mountain minimizes the risk of bank bankruptcy and stablecoin decoupling by strictly limiting reserve assets to US Treasuries and simultaneously establishing a credit line denominated in USDC, eliminating common concerns of non-crypto users about digital assets.

Mountain brings a paradigm shift for non-crypto users: for individual users, USDM provides a low-risk digital asset income entry without DeFi knowledge; for institutional and corporate fund management departments, USDM is a compliant, stable and interest-bearing alternative to traditional banking products. Mountain Protocol's long-term strategy includes deepening the integration of USDM in the DeFi and TradFi ecosystems, expanding multi-chain support, and expanding institutional cooperation (such as the existing cooperation with BlackRock). These measures will further simplify the path to on-chain income and promote the adoption of stablecoins by non-crypto users.

Optimize KYC process for seamless user access

For stablecoin payments to achieve large-scale consumer-level adoption, the KYC (know your customer) process must be extremely simplified under the premise of compliance. One of the key pain points that currently hinders the entry of non-crypto users is the cumbersome identity verification process. To this end, leading stablecoin payment service providers are embedding KYC directly into the platform to enable smooth user access.

Modern platforms no longer require users to complete verification separately, but integrate KYC into the payment process. For example:

Ramp and MoonPay allow users to complete KYC in real time when purchasing stablecoins through debit cards, reducing manual review delays;

BVNK provides enterprises with embedded KYC solutions to quickly and securely complete customer authentication without interrupting the payment experience.

The fragmentation of regulatory frameworks across jurisdictions remains a challenge to simplifying the KYC process. Head service providers use modular KYC frameworks to address regional compliance differences. For example:

Circle's USDC platform adopts a hierarchical verification mechanism, where users can complete small transactions through basic KYC and unlock higher limits through advanced verification.

In the future, transforming KYC into a seamless process through automation and process optimization will become the key for stablecoin payment service providers to break the entry barriers for mainstream users and accelerate on-chainization.

4. Stablecoin Native Economy: Will Consumers Skip Fiat?

Although stablecoins have greatly accelerated the global payment process and saved a lot of time and capital costs, real-world transactions currently still rely on fiat currency access channels. This has formed a metaphorical "stablecoin sandwich" framework, where stablecoins only act as a bridge between fiat currencies in the transaction life cycle. Many stablecoin payment providers focus on fiat currency interoperability, essentially making stablecoins a temporary transfer layer between fiat currencies. However, a more forward-looking vision is that stablecoin native payment service providers (PSPs) may emerge in the future to realize the native operation of stablecoin payments. This means fundamentally rebuilding the payment system, assuming that trading, settlement, and fund management functions are completely performed on-chain.

Companies like Iron are actively exploring innovation in this field and are committed to building a future where stablecoins are not only a bridge between fiat currency systems, but also the foundation of the entire on-chain financial ecosystem. Unlike other payment solutions that often replicate traditional financial rails with stablecoins, Iron is working on a chain-first payment and fund management stack, hoping that in the future, funds can stay on-chain throughout the process, financial markets can achieve true interoperability, and achieve 24/7 real-time settlement on a shared public ledger.

Whether the future of funds staying on-chain is feasible depends entirely on the choice of consumers: whether to exchange stablecoins for fiat currency and settle through traditional rails, or keep funds on-chain. Several key factors may drive this shift:

1. On-chain yield and capital efficiency

A very compelling reason for consumers to keep their funds in stablecoins is to be able to earn passive, risk-adjusted returns directly on-chain. In a stablecoin-native economy, consumers will have greater control over the use of their funds and can almost instantly obtain returns that are better than traditional savings accounts. But for this goal to truly achieve this goal, users must be able to discover highly attractive yield opportunities in the future, and the protocols that provide such yields must reach a level of maturity with almost no counterparty risk.

2. Reduced reliance on custodial intermediaries

Holding stablecoins greatly reduces the need for traditional banking relationships. Today, users rely heavily on banks for account custody, payments, and access to financial services. Stablecoins enable self-custody wallets and programmable finance, allowing users to hold and manage their funds without third-party intermediaries. This is particularly valuable in areas where the banking system is unstable or access to financial services is limited. Despite the growing appeal of the self-custody model, most non-crypto native users either lack understanding of it or are wary of managing their funds in this way. To further promote the development of this self-custody model, consumers may demand more regulatory assurances and powerful applications.

3. Regulatory maturity and institutional adoption

As stablecoin regulation becomes clearer and its acceptance continues to increase, consumers will also have increasing confidence in the long-term value preservation ability of stablecoins. If large enterprises, payroll agencies, and financial institutions begin to settle transactions natively in stablecoins, the need for users to convert back to fiat currency will be greatly reduced. This is similar to the process of consumers gradually transitioning from cash to digital banking. Once the new infrastructure is widely adopted, the demand for traditional systems will naturally decline.

It is worth noting that the transition to a stablecoin native economy may eventually have an impact on many existing payment rails. If consumers and businesses increasingly prefer to store value in stablecoins rather than fiat currencies in traditional bank accounts, this will have a significant impact on the existing payment system. Credit card networks, remittance companies, and banks rely primarily on transaction fees and foreign exchange spreads as a source of revenue, while stablecoins can be settled instantly and at almost zero cost on blockchain networks. If stablecoins can circulate freely in a country's economy like fiat currencies, these traditional payment players are likely to be cut out of the middleman.

In addition, the stablecoin native economy will also challenge the fiat-based banking business model. In the traditional model, deposits are the basis for lending and credit creation. If funds remain on the chain, banks may face deposit losses, and their ability to lend and earn returns on customer funds will also be reduced. This may accelerate the transformation of the financial system, prompting decentralized and on-chain financial services to gradually replace the traditional role of banks.

Obviously, as long as the incentives are conducive to keeping funds on the chain, the theoretical stablecoin native economy has the potential to become a reality. This shift will be gradual. With the increasing opportunities for on-chain revenue, the continued existence of bank friction, and the continued maturity of stablecoin payment networks, consumers may increasingly choose stablecoins instead of fiat currencies, causing some traditional financial tracks to gradually become obsolete.

V. Conclusion: How can we accelerate the adoption of stablecoins?

Payment application layer: Make every effort to simplify the consumer experience, build a regulatory-first stablecoin solution, and provide lower prices, higher asset returns, and faster and more convenient transfer experience than Web2 payment tracks.

Payment processor layer: Focus on building enterprise-friendly, out-of-the-box infrastructure middleware. Due to its business characteristics, different licenses and compliance requirements are required to serve different regions, and the competitive landscape of payment processors is still relatively fragmented.

Asset issuer layer: Actively pass stablecoin revenue to non-crypto native companies and ordinary users to encourage users to hold stablecoins instead of fiat currencies.

Settlement network layer: The competition between L1L2 settlement networks is not only at the technical level, but will also involve multi-level competition such as developer ecology, BD merchants, and traditional enterprise cooperation in the future, accelerating stablecoin payments into real life.

Of course, the mass adoption of stablecoins depends not only on emerging startups, but also on the collaboration of established financial giants. In recent months, four major financial giants have announced their entry into the stablecoin field: Robinhood and Revolut are launching stablecoins, Stripe recently acquired Bridge to achieve faster and cheaper global payments, and Visa is helping banks launch stablecoins despite its own interests.

In addition, we observe that Web3 startups are leveraging these mature distribution channels to integrate crypto payment products into existing mature companies through software development kits (SDKs), providing users with multiple options such as fiat currency & cryptocurrency payments. This strategy helps solve the cold start problem and build trust with businesses and users from the beginning.

Stablecoins have the potential to reshape the global financial transaction landscape, but the key to mass adoption lies in bridging the gap between the on-chain ecosystem and the broader economy.