Stablecoin On-Chain Payments — Liquidation Web2 Thinking

Humans don't need banks, and payments don't need humans

TL;DR

• Income is not a means of value-added, but the core part [current income is a means of subsidy]

• The last mile of stablecoins is not fiat currency deposits and withdrawals, but becoming a permissionless fiat currency. When you can't destroy USDT, there is no point in launching alternative or permissioned currencies

• Banks screen their customers, while retail investors choose DeFi Product

• Risk control and supervision need to be "programmable" and inserted into existing business flows

• The region has been occupied by USDT, and only scenarios remain. Streaming payment is more imaginative than cross-border payment. This is a brand-new distribution channel, not the mechanical one of the existing giant ecosystem "+Stablecoin" TryTip

Welcome to follow @YBSBarker, Web3 native payment income PLUS. In 2008, amid the shadow of the financial crisis, Bitcoin gained its first wave of ordinary users disillusioned with the fiat currency system, emerging from the niche community of crypto-punks. Simultaneously, the term FinTech (financial technology) also gained popularity in 2008, almost around the same time as Bitcoin. This could be a coincidence. Even more coincidental: in 2013, Bitcoin's first bull run arrived, with its price exceeding $1,000. FinTech also began to go mainstream. Wirecard and P2P, once popular, subsequently fell, while Yu'e Bao defined the income system of the internet era. Twitter founder Jack Ma's new payment solution, Square, was valued at over $6 billion. This isn't artificial. Since 1971, the growth rates of gold prices and the size of US debt have been almost identical: 8.8% vs. 8.7%. Following the gold dollar came the petrodollar. Could the new energy dollar be a stablecoin? Regulators see Fintech as a salvation for the banking industry, using internet-based thinking to rebuild or supplement the financial system, hoping to recreate an internet-based financial system within the complex intertwined political and business landscape. Starting with payments, this has become a global consensus. Acquiring, aggregation, P2P, cross-border settlement, and micro-loan businesses, crossing borders and engaging in mixed operations, have created endless booms and crises. Unfortunately, the unexpected success story is that blockchain practices are truly transforming banks and the traditional financial system behind them, moving from the margins to the mainstream, all happening outside of regulation.

Payment is rooted in code, not finance

Yield-based stablecoins use USDT dividends as a sign of maturity. For hundreds of years, payments have been centered around the banking industry. All electronic, digital, and internet-based initiatives have served to further the banking industry, until the advent of blockchain. Blockchain, and especially stablecoins, have created an inverted world, completely reversing the order of payment, clearing, and settlement. Payments are only completed once clearing and settlement are confirmed. In the traditional banking system, payments are essentially a binary process of front-end transfers and back-end settlements, with the banking industry at the absolute center. In Fintech thinking, the payment process is an aggregation and B-side service. Internet-based customer acquisition requires no missed acquisition traffic. This traffic determines Fintech companies' confidence in banks. Fake it till make it, China UnionPay (NIPS) and margin trading are all ultimately accepted as a result. From a blockchain perspective, stablecoin systems like USDT, with Tron as the earliest stablecoin L1 and Ethereum as a large-value clearing and settlement system, achieve the "programmability" that should have been achieved on the internet. Their disconnection from each other is merely a superficial manifestation of platforms scrambling for market share. The core issue is the insufficient internet-based integration of the US dollar, whose internet access will always be a supplement to the fiat currency system. However, stablecoins are a native asset form for blockchains. USDT on any public chain is convertible, and friction costs are solely determined by liquidity. Therefore, given the characteristics of blockchain, pre-payment confirmation can only be completed after verification that clearing and settlement are possible. Gas fees are determined by market mechanisms, and once confirmed, transactions can be transferred in real time. Counterintuitively, blockchain didn't give rise to stablecoins due to unregulated arbitrage, but rather the efficiency brought about by programmability that has overwhelmed the traditional financial system. Payments are an open system rooted in code, not finance. As a counterexample, the time-consuming nature of traditional bank wire transfers stems from compliance requirements and outdated network architecture. The core reason is the participating banks' need to retain funds. This massive amount of funds generates continuous returns, and users' time becomes passive compounding interest for the banking industry. From this perspective, even after the Genius Act, the banking industry is still frantically blocking the entry of yield farming systems into the banking system. The ostensible reason is still that yield farming, or paying interest to users, would distort the banking industry's deposit and lending mechanisms, ultimately leading to a systemic crisis in the financial industry. The on-chain programmability of yield farming systems will ultimately replace the banking industry itself, rather than creating more problems than it does, because they will be open systems. Traditional banking earns its profit from the interest rate spread between user deposits and corporate/individual loans, which forms the cornerstone of all banking operations. This spread mechanism gives banks the power to select their users, allowing them to create an unbanked population on the one hand and select businesses that don't meet "standards" on the other. Ultimately, ordinary users bear the losses incurred by banks due to triangular debt or financial crises. In a sense, the same is true for USDT: users bear the risk of USDT, while Tether reaps the proceeds from its issuance. YBS (yield-bearing stablecoins) like Ethena are neither issued in US dollars nor operate under the traditional banking spread mechanism. Instead, they are entirely based on on-chain infrastructure like Aave and public chains like TON for payment. Today, yield-based stablecoin systems have created a globally liquid payment, interest-bearing, and pricing system. The banking industry has become a target for stablecoin transformation, not by changing how it participates in the payment process, but by altering its intermediary role in credit creation. Small banks are bearing the brunt of the impact of yield-based stablecoins. Minnesota Credit Union has already experimented with issuing its own stablecoin, and established neo banks are also rapidly transitioning to blockchain, with Nubank, for example, revisiting its stablecoin efforts. Even institutions like SuperForm are beginning to transform themselves into stablecoin banking systems, where users share in the profits generated by the banks, thereby rectifying the distorted banking system.

In a nutshell, the yield-based stablecoin (YBS) is not a way to acquire customers, but a harbinger of reshaping the banking industry. The on-chain migration of credit creation is a more profound transformation than stablecoin payments. Fintech hasn't replaced the role of banks; rather, it improves areas that banks are unwilling or unable to engage in. However, blockchain and stablecoins will replace the very definition of banks and currency. We hypothesize that YBS will become the new dollar circulation system, with payment itself being synonymous with on-chain payment. Note again that this isn't simply putting the dollar on-chain, unlike the internet-based dollar. The on-chain dollar is the fiat currency system. Currently, traditional payment systems view stablecoins solely in the areas of clearing and settlement and cross-border transactions. This is a completely misguided, established mindset. Please give stablecoins their freedom and avoid embedding them in outdated payment systems. Blockchains inherently make no distinctions between domestic and foreign, card/account, individual/corporate, or payment/receipt. Everything is simply a natural extension and variation of transactions. As for stablecoin L1's corporate accounts or private transfers, these are merely adaptations of programming details, still adhering to the fundamental principles of blockchain transactions: atomicity, irreversibility, and immutability. Existing payment systems remain closed or semi-closed. For example, SWIFT excludes customers from specific regions, while Visa/Mastercard require specific software and hardware qualifications. An analogy: the banking industry refuses to unbank those without high profits, while Square and Paypal reject specific customer groups. Blockchains embrace all. Both closed and semi-open systems will eventually give way to open systems: either Ethereum will become stablecoin L1, or stablecoin L1 will become the new Ethereum. This isn't regulatory arbitrage on the blockchain, but rather a dimensionality reduction attack brought about by efficiency upgrades. Any closed system cannot form a closed loop. Transaction fees will be reduced at every stage to compete for users, either leveraging monopoly advantages to increase profits or exploiting regulatory compliance to exclude competition. In an open system, users have absolute autonomy. Aave didn't become the industry standard due to monopoly power, but rather because Fluid and Euler's DEX and lending models haven't fully taken off. Regardless, on-chain banking won't be tokenized banking deposits, but rather a tokenized protocol that rewrites the definition of banking. Replacing banks and payment systems won't happen overnight. Paypal, Stripe, and USDT were created 20, 15, and 10 years ago, respectively.

Current stablecoin issuance is around $260 billion, and we will see $1 trillion in issuance within the next five years.

Web2 payments are a non-renewable resource.

Credit card fraud processing relies heavily on empirical experience and manual operations.

Web2 payments will become the fuel for Web3 payments, ultimately completely replacing them rather than supplementing or coexisting. Stripe's involvement in the future based on Tempo is the only correct choice. Any attempt to integrate stablecoin technology into the existing payment stack will be killed by the flywheel—again, it's a matter of efficiency. On-chain YBS offers both revenue and usage rights, while off-chain stablecoins only offer usage rights. Capital naturally flows to value-added channels. While stablecoins strip the banking industry of its social identity, they are also liquidating established thinking about Web2 payments. As mentioned earlier, the issuance of stablecoins is gradually moving away from simple imitation of USDT. While completely breaking away from the US dollar and the banking system is still a distant dream, it's no longer entirely unrealistic. From SVB to Lead Bank, banks willing to engage in cryptocurrency business will always be found. This is a long-term journey. By 2025, stablecoins will be embraced not only by the banking industry, but also by the gradual thawing of several major obstacles that previously plagued blockchain payment services. Bitcoin's influence has become the undeniable voice of stablecoins. Deposits and Withdrawals: People are no longer pursuing the finality of fiat currency. They are willing or inclined to hold USDC/USDT for yield, direct use, or as a hedge against inflation. For example, MoneyGram and Crossmint have partnered to process USDC remittances. Clearing and Settlement: Visa has completed $1 billion in stablecoin clearing volume, with Rain as a pilot program and Samsung as a co-investor. The anxieties of established giants will become a source of funding for stablecoin payments. Major banks: RWAs or tokenized deposits are just appetizers; competition with DeFi isn't far off. Evolution is a passive adaptation of traditional finance, while internet alliances like Google AP2 and GCUL reflect the reluctance and struggle of the old-world hegemons. Issuance: From Paxos to M0, traditional compliance models and on-chain parcel models have progressed in parallel, but both take revenue-generating systems into consideration. Although Paxos' USDH proposal failed, user empowerment and tokens are common choices. In short, the competition for stablecoin on-chain payments has ended, and the competition for integration has begun: how to bring the network scale effects of stablecoins to the world. In a sense, USDT has already pushed stablecoins into Asia, Africa, and Latin America, leaving no room for new growth in that region. The only real opportunity lies in "scenarios." If existing scenarios are replaced by payment players "plus blockchain," then the only option is to seek new "blockchain plus"/"stablecoin plus" scenarios. This is a clever application of Web3 in the internet's strategy: buying traffic for growth and cultivating new behaviors. The future will define today's history, and Agentic Payment will certainly make it a reality. After transforming the banking and payment systems, let's delve into the future of agent-driven payment systems. Please note that the following discussion completely disregards "+ blockchain" or "+ stablecoin" scenarios; this is a complete waste of time and will not create any market space for existing payment giants. Revenue systems can incentivize end-user usage, but new payment behaviors require supporting consumption scenarios. For example, using cryptocurrency in Binance's built-in mini-program is perfectly reasonable, but using a bank card in a WeChat mini-program is quite strange. Google, Coinbase, and even Ethereum consider this new scenario to be exclusively A2A (Agent 2 Agent), completely eliminating the need for deep human involvement. Web2 payments are a non-renewable resource, as payments will be ubiquitous in the future.

Simply put, in the future, people will have multiple agents handling different tasks, and MCP (Model Context Protocol) will configure resources or call APIs within the agent, ultimately presenting us with agents matching each other and creating economic value.

Human behavior will be more reflected in instructions rather than authorization. You must transfer your multi-dimensional data to allow the AI ​​Agent to meet your inner needs.

• The value of people lies in authorization

• Machines operate tirelessly

Existing pre-authorization and prepayment, buy now, pay later, acquiring/issuing, and clearing/settlement will occur on-chain, but the operators are agents. For example, traditional credit card fraud requires manual processing, but agents will be smart enough to identify malicious behavior.

From the perspective of the existing payment stack and the "central bank-bank" system, the above ideas may indeed be considered overreaching, but don't forget that the digital RMB's "instant payment and transfer" is also a compromise made to the banking system from a profit perspective. It's not that we don't want to do it, but we simply can't. Google has leveraged the AP2 protocol developed by Coinbase, EigenCloud, and Sui, and has already achieved a high degree of integration with Coinbase's x402 gateway protocol. Blockchain + stablecoin + internet is currently the optimal solution, targeting microtransactions. Its vision includes real-world scenarios like real-time cloud usage and article paywalls. We can be confident that the future belongs to AI agents, surpassing clearing and settlement channels, but the specific path they will take to transform humanity remains unknown. The DeFi sector currently lacks a credit market, making it a natural fit for enterprise development. However, for a long time, retail investors or individuals have dominated the market, relying on over-collateralization mechanisms. This is itself an anomaly. Technological development has never been about imagining the path to realization; we can only outline its basic definition. This is true for Fintech, DeFi, and agentic payments. The irreversible nature of stablecoin payments will also spawn new arbitrage models, but we are unable to imagine their potential harm. Furthermore, existing distribution channels will not be the core battlefield for large-scale stablecoin adoption. While they may have usage, this will undermine their potential for profit from interacting with the on-chain DeFi stack. This is still a fantasy: the emperor will use a golden hoe to dig vegetables. Only when stablecoin payments replace banks and existing distribution channels can they be called a Web3 payment system. Conclusion: My imagined path to a future non-bank payment system: revenue + clearing and settlement + retail investors (network effects) + agent streaming payments (after breaking free from the self-rescue of the old giants). The current impact is still concentrated on the Fintech and banking industries, with few options for replacing the central bank system. This isn't because it's technically infeasible, but rather because the Federal Reserve still plays the heavy responsibility of being the lender of last resort (the scapegoat). In the long run, distribution channels are only an intermediate step. If stablecoins can replace bank deposits, and there are no channels to lock up liquidity, but on-chain DeFi has no access and no user restrictions, will it trigger an even more violent financial crisis? The Soviet Union could not eliminate the black market, and the United States cannot ban Bitcoin. Whether it is a torrential flood or a happy other side, there is no turning back for mankind.