Analyzing the stablecoin ecosystem from both technical and commercial perspectives

Author: Alice

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 Traditional payment networks are facing all-round challenges from emerging alternatives - stablecoins due to outdated infrastructure, lengthy settlement cycles and high fees.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 obtain financial services.

In 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 funding 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 deeply analyzes the stablecoin ecosystem from both a technical and commercial perspective. It studies the key players that shape this field, the core infrastructure that supports stablecoin transactions, and the dynamic needs that drive its 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 stablecoin payment?

To explore the impact of stablecoins, it is first necessary 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 become part of everyday life, the infrastructure for 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 Although groundbreaking at the time, most of these global payment infrastructures are now outdated and highly fragmented.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, the inability to achieve 24/7 settlement, and complex back-end procedures. In addition, they are often bundled (for a fee) with 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 intermediate links, and achieves real-time visibility of capital flow, 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 settled almost instantly, eliminating the delays found in traditional banking systems.
• Safe and reliable: The blockchain’s immutable ledger ensures the security and transparency of transactions, providing protection for users.
• Cost reduction: Eliminating the middleman significantly reduces transaction fees, saving money for users.
• Global reach: Decentralized platforms can reach markets that are underserved by traditional financial services (including the unbanked), achieving financial inclusion.

2. Stablecoin Payment Industry Landscape

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

1. Layer 1: 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 stable currency access, provide tools for developers developing at the application layer, 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.

Notable companies innovating in this area include:

• Stripe: A traditional payment provider that integrates stablecoins like USDC for global payments.
• MetaMask: It does not provide direct fiat currency exchange function. 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 plugin, millions of Shopify merchants can settle payments in 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 use stablecoins to complete payments, 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 these categories, thereby shaping their core products, user experience, and target market.

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

• BVNK: Providing enterprise-level payment infrastructure to easily integrate stablecoins. BVNK provides API solutions to make the process seamless, with 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 an annualized transaction volume of more than $10 billion, 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 existing businesses. It provides enterprises with global access channels, stablecoin payment infrastructure, wallets and virtual accounts, and supports customized payment workflows (including recurring payments, invoicing or on-demand payments)
• **Juicyway: **Provides a series of enterprise payment, salary distribution and batch payment APIs, supporting currencies including Nigerian Naira (NGN), Canadian Dollar (CAD), US Dollar (USD), Tether (USDT), and US Dollar Coin (USDC). Mainly targeting the African market, no operational data yet.

Consumer-facing payment gateways are user-focused, providing a simple, easy-to-use interface for stablecoin payments, remittances, and financial services. They typically include mobile wallets, multi-currency support, fiat on/off ramps, and seamless cross-border transactions. Some notable projects focused on providing this simple payment experience to users include:

• Decaf: An on-chain banking platform that enables personal consumption, remittances, and stablecoin transactions in more than 184 countries; Decaf cooperates with local channels including MoneyGram in Latin America to achieve almost zero withdrawal fees. It has more than 10,000 South American users and is highly rated among Solana developers.
• Meso: A deposit and withdrawal solution that integrates directly with merchants, allowing 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 payments app, allowing users to easily send, receive, and spend digital dollars without having to directly interact 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, with clients including Infini, Kast, Genosis pay, Redotpay, Ether.fi and more than 40 other companies, selling white label solutions, mainly relying on transaction volume commission (such as Kast 85%-Reap15%), cooperating with Hong Kong banks, covering most areas outside the United States, and supporting multi-chain deposits; transaction volume reached $30M in July 2024.
• Raincards: An American card issuer that supports Avalanche, Offramp, Takenos and many other companies to issue cards. Its 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, supports ethsign, safepal and other corporate card issuance; Swiss license, mainly serves European + Asian users, does not support full chain transactions, only arbitrum recharge. Slow growth, total users 20,000, monthly income $100K-150K.
• **Kast：**The fastest growing U card on Solana. Currently, more than 10,000 cards have been issued, with 5-6k monthly active users, transaction volume of $7m in December 2024, and revenue of $200k.
• 1Money: Stablecoin ecosystem, recently launched a credit card that supports stablecoins and provides a software development kit to facilitate L1 and L2 integration. No data is available in beta yet.

There are many cryptocurrency card providers, which mainly differ in the service areas and supported currencies, and usually provide low-fee services to end users to increase their 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: Covering more than 150 countries, providing 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 processors

• Bridge: Bridge's core products include coordination API and issuance API. The former helps enterprises integrate multiple stablecoin payments and exchanges, and the latter supports enterprises 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 the Treasury Department, with strong compliance operation capabilities and resource advantages.
• Brale (in beta): Similar to Bridge, 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. Partners need to pass KYB (corporate identity verification), and users need to set up an account at Brale for KYC. Brale's customers are mostly on-chain OGs (such as Etherfuse, Penera, etc.), and its investor endorsement and BD are slightly worse than Bridge.
• Perena (in beta): Perena's Numeraire platform lowers the barrier to entry for niche stablecoins by incentivizing users to provide centralized liquidity in a single pool. Numeraire uses a hub-and-spoke model, where USD* is the central reserve asset, acting as the "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 system is ultimately designed to not only enhance price stability and reduce slippage, but also 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 U.S. 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. Stablecoins backed by static reserves

The first generation of stablecoins introduced the basic model of the digital dollar: a centrally issued token backed 1:1 by fiat reserves held by traditional financial institutions. 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 USD reserves in the financial accounts of Tether and Circle at a 1:1 ratio. These stablecoins are currently integrated with multiple platforms and serve as the base currency pairs for a large portion of cryptocurrency transactions and settlements. It is worth noting that the value of these stablecoins belongs to the asset issuers themselves. USDT and USDC mainly generate income for their issuing entities through interest rate spreads rather than sharing income with users.

2. Interest-bearing stablecoins

The second evolution of stablecoins went 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 yield while maintaining price stability.

Well-known protocols that provide on-chain yields 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 from perpetual futures market funding rates (currently 6.00% annualized) and attracts 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 simply by depositing USDM into their wallets, which is attractive to users seeking passive income without the need for 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 USD. Level explores a new method of generating stablecoin yields; it uses lvlUSD to provide security for multiple decentralized networks, collects additional yields from these networks, and then passes it on to lvlUSD holders, innovating the stablecoin yield model.
• CAP Labs (Beta): Built on the highly anticipated megaETH blockchain, CAP is developing a next-generation stablecoin engine designed to provide new sources of income for stablecoin holders. CAP stablecoins generate scalable and adaptable income by leveraging external income sources such as arbitrage, maximum extractable value (MEV), and real-world assets (RWA) - these income streams have traditionally been reserved only for sophisticated institutional players, opening up new directions for stablecoin income.

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, end 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 revenue and interest income generated by reserve assets with partners who help expand network utility, including Robinhood, Anchorage Digital, and Galaxy, expanding the revenue sharing model through cooperation.
• M^0 ($106m): The M^0 team is made up of former MakerDAO and Circle veterans, and the vision of M^0 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 yield-earners. However, one of the differences between "M" and other revenue-sharing stablecoins is that "M" can also be used as the "raw material" 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 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. The fourth layer: 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 in 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 currently lacks support for B2B scenarios.
• 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: A USDC native asset issuance chain designed for the 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 minting 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, providing a fair and efficient network environment for stablecoin payments.

3. Expanding the application of stablecoins: serving non-crypto native users

1. Current bottleneck

• Regulatory uncertainty: Before banks, enterprises and fintech companies fully adopt stablecoins, they urgently need regulators to provide clearer policy guidance to effectively manage risks.
• User side: The lack of stablecoin usage scenarios has restricted its popularity among ordinary consumers. Consumers’ daily payment scenarios are relatively fixed, and stablecoins have not yet been deeply integrated into them. Many consumers lack the actual demand for stablecoins and the motivation to hold them.
• **Enterprise side: **Enterprises' acceptance of stablecoin payments greatly affects the promotion of stablecoins. At present, enterprises are facing the dual test of willingness and ability when accepting stablecoin payments. 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 U.S. 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. All the project parties interviewed mostly target the on-chain market and serve crypto native users, while the non-crypto native market is still largely undeveloped. This market gap provides a major 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 players 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 the international payment process, 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 more easily issue their own stablecoins: Ordinary enterprises can more easily issue and manage their own stablecoins, 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 enterprises or countries issuing proprietary stablecoins is expected to be further strengthened.

B2B stablecoin liquidity and fund management solutions: Help enterprises properly hold and manage stablecoin assets to meet working capital and revenue generation needs. For example, the Mountain Protocol’s on-chain revenue platform provides enterprises with professional fund management solutions, effectively improving the efficiency of enterprise 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, committed to providing innovative financial solutions for enterprises. 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 currency off-chain into a single payment engine. Instead of requiring companies to manage multiple intermediaries, BVNK automatically routes funds through the "fastest, cheapest, and most reliable channels" to optimize each transaction in real time. As the adoption of stablecoins by enterprises 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 one-stop stablecoin financial services to enterprises 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 companies, and guides Shopify, Paypal companies and offline merchants to use Solana pay for payment (especially in Latin America, Southeast Asia and other regions where banking services are relatively weak). 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 in 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 to these scenarios:

• Faster, 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 payment, and currency preservation 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. Compared with traditional banking and remittance services, stablecoins enable gig workers and freelancers to receive funds in seconds at a lower cost. This advantage is destined to make it the preferred payment solution for the global labor market.

As stablecoin payment channels are deeply embedded in mainstream platforms, their application scope will go beyond the circle of native cryptocurrency users. In the future, consumers will use blockchain-driven transaction services in their daily financial activities without any awareness.

On-chain yield products for non-crypto users

Earning yields through digital dollars is another core value proposition of stablecoins, a feature that remains underdeveloped in traditional finance. Although native DeFi users have long been exposed to on-chain yields, 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, allowing users to earn income by holding stablecoins without in-depth crypto knowledge.

As a pioneering protocol in this field, Mountain Protocol deeply recognizes the inclusive value of on-chain returns. Unlike traditional stablecoins that only serve as a medium of exchange, Mountain's stablecoin USDM defaults to directly distribute returns to holders on a daily basis. Its current annualized yield of 4.70% is derived from short-term low-risk US Treasury bonds, 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 income, without the need for additional staking, participation in complex DeFi strategies or active management.
• Compliance Guarantee: USDM is fully audited, fully collateralized, and has 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 risks of bank bankruptcy and stablecoin decoupling by strictly limiting reserve assets to U.S. 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 point 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 the KYC process to achieve seamless user access

For stablecoin payments to achieve large-scale consumer 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 non-crypto users from entering the market 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 an embedded KYC solution to quickly and securely complete customer authentication without interrupting the payment experience.

The fragmentation of regulatory frameworks across jurisdictions remains a challenge in streamlining the KYC process. Leading service providers address regional compliance differences through modular KYC frameworks. 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 chain-based transformation.

4. Stablecoin Native Economy: Will Consumers Skip Fiat Currency?

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. 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 in the future, stablecoin native payment service providers (PSPs) may emerge 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 area, 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 usually use stablecoins to replicate traditional financial tracks, Iron is focusing on developing a payment and fund management stack that prioritizes on-chain, 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.

As for whether the future of keeping funds on the chain is feasible, it all depends on the choice of consumers: whether to exchange stablecoins for fiat currency, settle through traditional rails, or keep the funds on the chain. There are several key factors that may drive this transition:

1. On-chain revenue and capital efficiency

A compelling reason for consumers to keep their funds in stablecoins is 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 receive returns that are superior to traditional savings accounts almost instantly. But for this to truly be possible, users must be able to discover 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. Reduce reliance on custodians

Holding stablecoins makes traditional banking relationships much less necessary. Today, users are highly dependent 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 the need for a third-party intermediary. 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 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 adoption grows, consumers will have more confidence in the ability of stablecoins to maintain value over the long term. If large businesses, payroll agencies, and financial institutions begin to settle transactions natively in stablecoins, the need for users to convert back to fiat 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 shift to a stablecoin-native economy could 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 existing payment systems. 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 on blockchain networks at almost zero cost. If stablecoins can circulate freely in a country's economy like fiat currencies, these traditional payment participants are likely to be excluded from the middleman.

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

Obviously, as long as the incentives are favorable for funds to stay on-chain, the theoretical stablecoin native economy has the potential to become a reality. This transition will be gradual. As on-chain yield opportunities continue to increase, banking frictions continue to exist, and stablecoin payment networks continue to mature, consumers may increasingly choose stablecoins instead of fiat currencies, causing some traditional financial tracks to gradually become obsolete.

5. 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 a faster and more convenient transfer experience than the Web2 payment track.
• Payment processor layer: Focus on building enterprise-friendly, out-of-the-box infrastructure middleware. Due to the characteristics of its business, different licenses and compliance requirements are required to serve different regions, and the competition landscape of payment processors is still relatively fragmented.
• Asset issuer layer: actively pass on stablecoin revenue to non-crypto native companies and ordinary users, thereby incentivizing users to hold stablecoins instead of fiat currencies.
• Settlement network layer: The competition between L1L2 settlement networks will not only stay at the technical level, but will also involve competition on multiple levels such as developer ecology, BD merchants, and traditional enterprise cooperation in the future, accelerating stablecoin payments into real life.

Of course, the large-scale 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 enable faster and cheaper global payments, and Visa is helping banks launch stablecoins despite its own interests.

In addition, we have observed 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 and 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.