Due to the lack of real users, the cryptocurrency industry has been criticized. However, several non-custodial consumer products/services have quietly emerged, including "cryptocurrency debit cards that can be used to buy coffee", "peer-to-peer self-custody payment systems", "native cryptocurrency wallets", and "cross-border withdrawal services for enterprise users".

Regardless of their specific implementation, they all have a common feature, which is "bridging the on-chain and off-chain", which allows us to see another possibility of the intersection between the cryptocurrency industry and reality beyond RWA.

Low-cost, compliant, and natively encrypted but with a smooth user experience like WeChat Pay, non-custodial encrypted wallets are gaining popularity in the cryptocurrency industry, perhaps starting with everyday activities like buying coffee with cryptocurrency.

Unmanaged P2P Payment System Beam

Beam is a self-hosted payment wallet that supports stable coins and ECO tokens. Its appearance is no different from Web2 P2P applications, and it is very smooth to use. It supports users to make peer-to-peer payments and hopes to become the on-chain version of Venmo.

The key advantage of Beam is that it not only provides a smooth native encrypted payment experience, but also reduces payment costs to a negligible level.

Using the ERC-4337 account abstraction standard, Beam eliminates a series of complex concepts such as wallet addresses, blockchain, keys, mnemonic phrases, and ETH gas fees. Even novice users who have never dealt with cryptocurrencies can use them to remit money without any worries. Beginners can create a wallet by visiting the official website, and then associate their Twitter account to save wallet login and access permissions.

Related reading: "Understanding the newly launched 'ERC-4337': No more need for mnemonic words, is Web3 adoption on a large scale coming?"

In addition, Beam supports users to pay transaction fees by sending tokens. For example, if you transfer USDC, the transaction fee will be paid in USDC (without ETH). Built on the Optimism and Base networks, Beam's transaction fees are also very low.

In the early stages, Beam aimed at the peer-to-peer payment scenario, hoping to create a global on-chain version of Venmo, especially in USD areas outside the United States. The ultimate goal is to become the global version of Visa.

This application "can be used immediately worldwide", while traditional financial products "need to be launched in each country one by one, because you have to touch each country's banking rails."

Beam was launched by Eco, a cryptocurrency payment startup supported by a16z. Eco has raised a total of $95 million in funding, with other investors including Coinbase Ventures, Founders Fund, Lightspeed Venture Partners, and Pantera Capital.

Gnosis Card: Visa Debit Card Bound to Wallet

Gnosis Card is a cryptocurrency debit card issued by Gnosis. It is directly linked to the user's on-chain account and is a Visa debit card that supports the use of digital assets in the user's wallet to make purchases at any store that accepts Visa cards. Its goal is to enable Web3 users to use stablecoins to pay for everyday goods, just like using fiat currency.

Perhaps the adoption of offline physical world is still far away, but through this real-time conversion of fiat currency to physical assets, ordinary users can also achieve freedom of consumption of encrypted assets in the real world.

底层技术网络 Gnosis Pay

Underlying Technology Network Gnosis Pay

Gnosis Card is supported by Gnosis Pay, a decentralized payment network developed by Gnosis. It is based on Polygon's zkEVM and serves as a layer 2 chain that supports any EVM-compatible layer 1 network, enabling faster and cheaper transactions compared to layer 1 chains.

Whether it's offline banking systems, Visa, MasterCard, Alipay, etc., they can all directly interact with this L2 payment network. The user's Safe contract payment wallet runs on this L2 layer.

It is worth noting that as one of the important partners of Gnosis Card, the Euro stablecoin EURe issued by Monerium will be used by Gnosis Pay for on-chain and off-chain payments to reduce bridging risks. At the same time, Monerium supports users to link their cryptocurrency wallets with international bank accounts or IBANs. Correspondingly, each Gnosis card will be associated with a Safe wallet account.

When users transfer money from their bank account to an IBAN related to their wallet, EURes stablecoins will be automatically minted on blockchain platforms such as Ethereum and Gnosis, and displayed in the wallet. Conversely, when users spend from their wallet, the stablecoin EURe will be burned and the corresponding euros will be sent to the user's bank account.

Although there is such a complex operation process behind it, connecting the "on-chain" and "off-chain", "fiat currency" and "physical" worlds, involving settlement and payment on the first and second layers, for consumer users, the experience is as smooth and convenient as using credit cards and WeChat Pay. According to the team's demonstration at the EthCC presentation, the transfer transaction can be completed in about one to two seconds, and the gas fee cost is less than 0.1 US dollars.

DeFi compliance issues, how to solve?

Non-custodial does not mean non-compliant or in violation of any current regulations. On the contrary, this trend of achieving decentralized financial payments in a compliant manner is becoming more prevalent, indicating that DeFi is moving in the right direction and is a positive development for the entire industry.

Fractal provides KYC process-related service support for Gnosis Pay. Specifically, when a user applies for a Gnosis Card using a Monerium bank account, Fractal's system allows the user to share verified identity with Gnosis through on-chain message signing.

The focus of compliance is to meet data privacy regulations. This requires the development of a solution that can distribute data between private but unlicensed node alliances (meaning no entity can control the blockchain). Unlike the InterPlanetary File System (IPFS), this requires Fractal to "ensure data coverage, thereby complying with the right to be forgotten."

The right to be forgotten, also known as the right to erasure, is a key provision of the General Data Protection Regulation (GDPR) that gives individuals the right to request organizations to delete their personal data and requires organizations to comply with these requests within a specified time frame.

In other words, the solution provided by Fractal allows users to control their own data and provide access to designated entities within a specified time frame as required by law. These obligated entities are subject to scrutiny by financial regulatory agencies, which may require them to provide information about the parties behind the IBAN number.

In addition, Gnosis Pay will also screen for fraudulent activities with its partners.

Each user has a Safe account on the Gnosis Layer 1 chain, and a corresponding account on zkEVM (a Layer 2 Ethereum scaling solution built by Polygon), similar to savings and spending accounts.

Gnosis Pay's compliance partners will conduct anti-money laundering (AML) and counter-terrorism financing (CFT) screening on funds entering the L2 account. This means that all funds entering L2 are screened and can be immediately spent through the Visa network. Users have full control over both Safe accounts and can transfer back to L1 at any time. In other words, the role of L2 is to ensure compliance while allowing the network to process a large volume of payments, which is the fundamental purpose of the L2 solution.

Integrating with Existing Financial Systems

Gnosis Pay provides users with a smooth native cryptocurrency payment experience. However, behind this lies a series of highly complex processes. In fact, Gnosis Pay needs to integrate with existing financial systems in order to truly enable transactions, such as becoming a member of Visa and Mastercard.

It is worth noting that as one of the important partners of Gnosis Card, the Euro stablecoin EURe issued by Monerium will be used by Gnosis Pay for on-chain and off-chain payments to reduce bridging risks. At the same time, Monerium supports users to associate their cryptocurrency wallets with international bank accounts or IBANs. After associating the wallet address, users can obtain an IBAN account that can be used to send and receive Euros in the SEPA system (including CEX).

As the world's first Web3 IBAN, Monerium is an authorized and regulated electronic money institution (EMI) that issues authorized and regulated Web3 Euro tokens "EURe". These tokens are supported on Ethereum, Polygon, and Gnosis, and can be sent and received between any bank account and Web3 wallet (Metamask, Safe, and Argent).

IBAN is a standardized system widely used in Europe for identifying cross-border bank accounts. When a user remits from a bank account to an IBAN associated with a wallet, stablecoin EURes will be automatically minted on blockchains such as Ethereum and Gnosis and displayed in the wallet. Conversely, when a user spends from the wallet, stablecoin EURe will be burned and the corresponding Euro will be sent to the user's bank account.

Holyheld: Web3 Debit Card

Holyheld is a Web3 debit card supported by Polygon's zkEVM. Register on the official website (http://holyheld.com) to obtain an encrypted payment card with an International Bank Account Number (IBAN), providing exchange services between virtual currency and fiat currency, as well as virtual currency wallet services. It supports stablecoin USDC and most mainstream encrypted wallets. Android and iOS applications will be launched in the future, and physical cards have not yet been released.

Holyheld can connect with multiple non-custodial wallets including Argent, Coinbase Wallet, MetaMask, and Rainbow, supporting various networks such as Arbitrum, Gnosis Chain, Optimism, and Polygon without the need for bridging or centralized compromises.

Holyheld supports users to access http://holyheld.com or subscribe to application cards, and the accompanying virtual card is immediately available. Users can also add it to Google Pay (Apple Pay coming soon) and start using Holyheld without a physical card.

Utopia Labs: USDC Withdrawal Service for Enterprise Users

This product supports global corporate entities to send USDC to US bank accounts, bridging the gap between fiat and cryptocurrency, and improving transaction speed and convenience by avoiding centralized exchanges.

This is especially applicable to enterprises that receive wages and fundraising in cryptocurrency, such as paying fees to service providers with USDC who have US bank accounts, such as office rent. Other potential use cases include venture capital funds paying investments to project parties or cryptocurrency projects processing on-chain revenue withdrawals.

How to apply?

Enterprise users can submit KYB and KYC verification applications to Utopia Labs and receive approval within 2 business days. Once approved, enterprise users can exchange USDC for USD at a 1:1 exchange rate, with Utopia Labs charging a 0.3% fee. USDC transfers are unique to the Ethereum blockchain and have no restrictions, and are compliant with ACH (Automated Clearing House) transfers, typically received within three business days.

Utopia Roadmap includes withdrawal services for any token (not just USDC), and will support other blockchain networks in the future, as well as providing fiat deposit services. The service supports most countries/regions around the world except for Cuba, North Korea, Iran, Syria, Belarus, and Russia. In addition to crypto payments, Utopia Labs also offers vault management for Safe (formerly known as Gnosis Safe) users, and provides token exchange services for users through integration with the 0x protocol, spanning liquidity across over 100 decentralized exchanges.

Previously, Utopia Labs focused on developing a DAO payroll payment system. In 2022, it received a Series A funding of $23 million led by Paradigm, with participation from Circle Ventures and Coinbase Ventures, valuing the company at $115 million.

Trends and Characteristics Summary

Although the implementation methods of the above products are different, we can see some consistency in the current stage of unmanaged consumer products. The summary is as follows:

1) Account abstraction brings a smooth user experience, providing users with a seamless experience of using cryptocurrency like using traditional credit cards.

Without exception, these products are dedicated to user experience. Although they are native and non-custodial wallets for encryption, they are as smooth as traditional payment tools in terms of experience. This is mainly due to the application of the ERC-4337 account abstraction standard, which abstracts the complexity of the underlying implementation technology, removes a series of complex concepts such as wallet addresses, blockchains, keys, mnemonic words, and ETH gas fees, allowing novice users to use cryptocurrency payments and transfers without any worries.

3) Non-custodial wallets mean that centralized entities such as banks or exchanges cannot access users' funds. For consumers, this is an increasingly attractive practical demand, especially after the FTX incident. Non-custodial does not mean non-compliant. On the contrary, compliance is necessary to be adopted and move in the right direction. And this is also a trend we see. Fractal provides KYC identity verification services to ensure compliance with data privacy laws. In addition, Gnosis Pay's partners will screen funds entering L2 accounts for anti-money laundering (AML) and counter-terrorism financing (CFT). For Gnosis Pay, the L2 solution built on Polygon zkEVM can not only process a large number of payments at low cost, but also ensure final compliance.

4) The freely combinable underlying technology stack is equivalent to developing products on the shoulders of giants.

One of the benefits brought by blockchain technology is "permissionless openness and composability", which means that most of the time building an application does not require starting from scratch, but rather making the most of the existing foundational building blocks that can be reused.

This is a typical feature of most Web3 products. The Lens Protocol, a Web3 social graph protocol, is a representative example. It has formed a thriving ecosystem based on multiple technology stacks that are compatible with each other, freely combinable, and willing to use each other's existing components. This approach can greatly improve production efficiency.

As a type of consumer product, non-custodial wallets are no exception. In order to reduce transaction fees, they generally use second-layer scaling solutions. In order to optimize user experience, they need to use account abstraction standards, as well as the very important standardized compliance services provided for decentralized finance.

Using Gnosis Pay as an example, the founder shared the underlying technology stack diagram of Gnosis Pay, which includes: Safe for implementing account abstraction, Gelato for implementing gas-free transactions, a layer 2 chain developed using Polygon zkEVM, and Monerium for providing solutions for deposits and withdrawals.

ethcc makes us feel that "the underlying performance optimization is ready, waiting for users to come." With the gradual maturity and improvement of blockchain infrastructure, as well as the emergence of various protocol layers and middleware, this way of developing products that is equivalent to standing on the shoulders of giants may change the current situation of scarce consumer products.

5) Integrated with existing financial systems.

Behind the smooth native encrypted payment experience, there is a series of very complex processes, including integration with traditional financial systems such as Visa and Mastercard members.

In addition, regulated electronic money institutions (EMIs) such as Monerium also act as a bridge. As the world's first Web3 IBAN, Monerium users can obtain an IBAN account that can be "used to send and receive euros in the SEPA system (including CEX)" after associating their wallet address. It supports users to use their authorized and regulated Web3 euro tokens "EURe" issued on Ethereum, Polygon, and Gnosis, and send and receive euros between any bank account and Web3 wallet (Metamask, Safe, and Argent).

Reference source:

https://techcrunch.com/2023/07/27/a16z-eco-beam-p2p-crypto-transfer-service-global-venmo/?tpcc=tcplustwitter

https://www.theblockbeats.info/flash/159950?search=1

https://twitter.com/andy_bromberg/status/1684605161308925952

https://beam.eco/about

https://echo.mirror.xyz/FbaqedtGg7SZuwOXesLnO8-Gk-Nzpna5ZvLZiw2TIFs

https://www.theblockbeats.info/news/43596?search=1

https://www.theblock.co/post/240880/paradigm-utopia-labs-usdc-bank-transfers

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