Original Article Title: "IOSG Weekly Brief | Reinventing Ten Sky Clouds, Stablecoin Crypto Payment Track Prospects #294"

Original Article Author: Frank, IOSG Ventures

Key Takeaways TL;DR

· Stablecoins are the Killer App of Crypto: Not NFTs, not meme coins. They are already the "everyday currency" of the global south. The market's focus is not on creating new coins but on how to truly integrate existing stablecoins into everyday payment scenarios.

· Consumer Value Driven by B2B: While P2P transfers and crypto cards between individuals are important, the author believes the largest TAM will occur in the realm of cross-border payments between enterprises. Those who abstract stablecoins and embed them directly into large corporate transfer systems through crypto orchestration layers and PSPs can capture huge additional revenue from massive fund flows and fund settling.

· License + Corridor = Moat: Just as infrastructure has shifted from technological competition to distribution, the real barrier in the B2B payment field is regulatory licenses (MSB/EMI/SVF, etc.), bank partnerships, and the first-mover advantage in cross-border corridors. (e.g., Bridge holds a US MSB/MTL, RD Tech holds a Hong Kong SVF license).

· Orchestration > Aggregation: Aggregators are merely market matching platforms with thin margins; orchestrators control compliance and settlement rights. The real defense comes from holding licenses directly and being able to execute fund flows themselves.

· Competition is Intensifying: From emphasizing "underlying technology" to competing in "actual usage": similar to consumer applications, the market will reward real adoption and user scale. The rise in TRON transaction fees has already validated the strong demand for stablecoin transactions, and the next phase will be stablecoin-native chains (such as Plasma, Arc, etc., stablecoin issuers with issuance and distribution channels), which will actively guide users to directly use their in-house stablecoin blockchains for transactions and settlements, similar to application-specific chains like Hyperliquid, thus avoiding most transaction fees being siphoned off by general-purpose blockchains. At the same time, users can also directly use the transferred stablecoin to pay transaction fees, achieving a unified payment medium and network incentive.

Introduction

Stablecoins and the blockchain built around stablecoins are almost daily becoming the focus of the industry and making headlines. Projects such as Tether.io's Plasma and Stable, Circle's Arc, Stripe's Tempo, Codex PBC, 1Money, Google's upcoming next-generation L1 blockchain, and many more to come are all accelerating this trend. At the same time, as one of the most widely used self-custodial wallets globally, Metamask has officially announced the launch of its native stablecoin, marking a further expansion of wallet products into payment and value transfer functions. On the other hand, personal cross-border remittance giant Remitly has announced the launch of a multi-currency fiat and stablecoin wallet—Remitly Wallet, currently in the testing phase and planning to officially launch in September in partnership with Circle.

These actions collectively indicate that more and more major payment companies and Web2 and Web3 tech giants are accelerating "vertical integration," directly entering the stablecoin and blockchain payment track. They are no longer solely reliant on third-party infrastructure but are choosing to issue stablecoins, build proprietary wallet products, and even launch dedicated payment blockchains. Stablecoins are rapidly expanding from the crypto-native scene to a broader payment, remittance, and financial services field, becoming one of the most practical applications of blockchain.

Therefore, this article provides us with a good opportunity to discuss:

1. The current stablecoin payment technology stack

2. Tracks that have achieved Product-Market Fit (PMF)

3. Propose an investment framework for each payment track

Stablecoin Payment Infrastructure

Although there are various definitions in the market, the author believes that the stablecoin payment technology stack can be broken down from the following perspectives:

* The mapping used in this article is from the author's compilation in July. For the latest market map, refer to ASXN's board (https://stablecoins.asxn.xyz/payments-market-map).

At the very bottom of the entire payment map is the blockchain itself, which serves as both the infrastructure and foundation.

Recently, when Paradigm's Matt Huang explained why Stripe chose to build a new L1 Tempo rather than building on Ethereum L2, he provided a long list of reasons. Although many reasons have been criticized by the Ethereum community and various VC investors, one reason about Fast Finality was a clear revelation of the current real-world issue facing Ethereum.

▲ Source: Matt Huang from Paradigm

In blockchain, "finality" refers to the concept that once a transaction is confirmed, it cannot be reversed or changed, and will not be undone due to network fluctuations or on-chain reorganizations. The so-called "fast finality" means providing this guarantee in seconds or even sub-seconds, instead of making users wait for tens of minutes. Additionally, since the finality of Layer 2 relies on Layer 1, no matter how fast or feature-rich Layer 2 is, its security and finality speed still need to be based on Layer 1.

The current mechanism of Ethereum is robust but somewhat slow. A block is produced every 12 seconds. Transactions can be included quickly, but the economic finality takes about 12–15 minutes, equivalent to two PoS epochs. During this period, validators continuously vote to seal the blocks and finalize the outcome. Although it has been sufficient so far, the market is increasingly demanding finality times to be reduced to under 2 seconds to meet commercial payment and institutional high-frequency settlement needs. If the underlying chain is slow, it cannot support fast payments; if network transfer costs are high, it cannot fulfill the promise of "low fees"; even the best user experience will be dragged down by poor infrastructure.

▲ Source: OKX Gas Tracker (July 23, 2025), Block Time & Finality Time: Token Terminal

Apart from the perspective of vertical integration, this is why we are seeing more and more stablecoin issuers and traditional payment giants starting to build their own blockchains. In addition to commercial profit considerations, the core reason lies in this: all upper-layer applications and user experiences ultimately rely on the underlying infrastructure. Only by achieving fees as low as a fraction of a cent, near-instant finality, and token designs that spare users from gas concerns can we truly bring a smooth and seamless user experience.

Common core foundational features include:

· Stable and low-cost fees, payable directly with stablecoins

· Permissioned validator node sets

· High throughput (TPS)

· Compatibility with other blockchains and payment systems

· Optional privacy features

However, what truly determines success or failure often lies beyond technology, including:

· A clear Go-To-Market (GTM) strategy

· Effective business development execution

· A robust partner ecosystem

· Efficient developer onboarding and support

· Marketing and external communication

For a detailed comparison between different blockchains, we will provide a more in-depth explanation in another article to follow. Therefore, this article will not delve into this topic further. Of course, Ethereum has long recognized the importance of Fast Finality without compromising decentralization. Community members are driving the Ethereum Foundation (EF) to expedite this process, and EF's Barnabé Monnot has shared the ongoing plans:

· Block time will be reduced from 12 seconds to 6 seconds, and relevant tests have already been conducted.

· With the introduction of a new "Fast Confirmation Rule," transactions will only need to wait for 1–3 blocks (approximately 10–30 seconds) to be securely confirmed, eliminating the need to wait idly for full finality.

· They are also experimenting with core protocol optimizations based on Vitalik's proposal and exploring next-generation consensus mechanisms, such as "Three-Slot Finality."

▲ Source: Barnabé Monnot from EF

In addition to the rapid development of stablecoin networks, the issuance volume of stablecoins itself is experiencing explosive growth. The stablecoin issuance platform M0 recently completed a $40 million Series B funding round led by Polychain Capital, Ribbit Capital, and Endeavor Catalyst Fund. M0's Stablecoin-as-a-Service platform enables institutions and developers to issue highly customized stablecoins, giving them full control over brand, functionality, and revenue. All stablecoins built on the M0 platform are interoperable by nature and share a unified liquidity pool. Through an open multi-issuer framework and a fully transparent on-chain architecture, M0 is breaking the boundaries of traditional stablecoin issuance.

Since its inception, M0 has been adopted by projects such as MetaMask, Noble, KAST, PLAYTRON, Usual, USD.AI, and USDhl to issue stablecoins for various purposes. Recently, the total issuance of stablecoins based on M0 surpassed $300 million, marking a 215% growth since early 2025.

Similar to the trend of stablecoin issuers vertically integrating with the underlying blockchain infrastructure, application chains with demand-driven creativity are now also beginning to vertically integrate at the stablecoin issuance level, aiming to establish deeper ties within the ecosystem.

Last Friday, Hyperliquid dropped a bombshell announcement on Discord: they plan to launch the native stablecoin USDH in their HyperEVM ecosystem and select the issuer through on-chain voting and a public bidding process. Throughout the following week, various stablecoin issuers submitted their bids, and the winning bidder will be determined by a majority vote of $HYPE stakers. To emphasize the decentralized governance feature, despite the significant $HYPE stake held by the Hyperliquid Foundation, they have chosen to abstain and fully delegate decision-making power to the community.

The motivation behind Hyperliquid's launch of USDH is quite straightforward: the platform currently holds around $5.6 billion in stablecoin assets, with 95% being USDC. This portion of the funds is held in reserve by the issuer Circle, earning interest, while Hyperliquid, as the creator of use cases and demand, cannot share in the profits. If this $5.6 billion stockpile can be replaced with USDH, calculated at the treasury bond rate, it is estimated that it could generate over $220 million in annual interest income, far surpassing the platform's existing HLP annual revenue (approximately $75 million). This additional revenue will be used for $HYPE buybacks and distribution, thereby nurturing the ecosystem.

▲ Source: PA News

Among the numerous bidding proposals, the proposal by Native Markets, a native project of Hyperliquid, emerged victorious. For more details, see here: Native Markets Team Wins Hyperliquid USDH Stablecoin Bid - Eyes Test Phase Within Days

▲ Source: PA News

Beyond the importance of blockchain and stablecoins, we can also clearly see the critical role that on/off-ramps (the fiat-to-crypto asset and crypto asset-to-fiat entry/exit channels) play in user experience. Whether users can smoothly and cost-effectively convert fiat into stablecoins or other crypto assets often directly determines whether the entire application can achieve true large-scale adoption.

Five years ago, IOSG was forward-thinking in investing in Transak, a global leading on/off-ramp service provider. Transak is committed to providing seamless fiat onramp and offramp channels for wallets, exchanges, and payment applications, serving users from over 150 countries and regions. Recently, in its latest funding round, Transak secured a $16 million investment led by Tether (the parent company of USDT) and IDG. In addition to Transak, IOSG also invested in Kravata, a project rooted in Latin America offering fiat and crypto on/off-ramp services to enterprise clients through a B2B API and a B2B2 API that can be integrated into third-party applications. As of Q2 2025, Kravata has acquired over 90 clients and is operational in three countries. This move not only demonstrates the market's long-term optimism towards the on/off-ramp track but also reaffirms IOSG's precise assessment of the value of industry infrastructure in the early investment stage.

It is foreseeable that as stablecoins and blockchain payments gradually move towards the mainstream, on/off-ramp infrastructure providers like Transak will become crucial pivot points: serving as both the entry point for users into the crypto world and the bridge for stablecoins to integrate into the global payment system.

Track with Product-Market Fit (PMF)

Once the payment infrastructure is mature, cross-border payments will become the most direct and obvious breakthrough. The global annual cross-border fund flow reaches up to $150 trillion, while the existing system often takes 3 days, incurs about 3% in fees, and involves multiple intermediaries. If replaced with stablecoin-based efficient "rails," the entire process would only take 3 seconds, cost as low as 0.01%, and enable peer-to-peer direct settlement. With such a stark efficiency gap, adoption is almost an inevitable trend.

B2B cross-border payments are currently a very perfect product-market fit (PMF) in the cryptocurrency field. Today, 40% of blockchain fees come from USDT transfers, with millions of emerging market users using it daily to combat their national currency devaluation and inflation. Setting aside infrastructure and speculative consumption cycles, payments (especially B2B cross-border payments) are the most likely area in the crypto realm to complement SWIFT. The real winners may not be new chains or generic stablecoin issuers, but rather orchestrators holding licenses and having distribution capabilities in key cross-border corridors.

This is also why we saw earlier that Airwallex, a Web2 cross-border payment giant, truly felt the threat of stablecoin cross-border payment companies. They posted defensive remarks on Twitter but openly recruited stablecoin developers on their hiring website.

The "Payment Orchestration Layer" integrates fiat and stablecoin, multiple payment methods, channels, processing services, and provides an end-to-end payment/settlement solution. It emphasizes the capability to "support stablecoins": not only supporting fiat receipts/payments but also supporting stablecoin receipts/cross-border transfers/stablecoin-to-fiat exchange.

Cross-border payments often form a "fiat → stablecoin → fiat" path, where local fiat is exchanged for stablecoin, then used for international transfers/settlements, and finally exchanged back to local fiat on the receiving end. The role of the Payment Orchestration Layer is to optimize this path, reduce friction, save time costs, and increase efficiency.

Although traditional large companies like Airwallex and Stripe are also actively deploying stablecoin payments, startups often have an advantage in innovation and execution speed. For example, Align focuses on the cross-border remittance needs of large multinational enterprises, while ArrivalX focuses on cross-border payments for Chinese merchants going global. The author believes that in the future, it is more likely to form regional core-based solutions rather than a single global unified model, similar to the competitive landscape on the on/off-ramp side.

Because each region is heavily influenced by local regulations, laws, and banking/financial infrastructure. Against the backdrop of the rapid development of stablecoin payments, if small and medium-sized startups can position themselves well in the "local + regional + orchestration layer" role, there is still ample space in specific payment corridors. In addition to licensing, a key differentiating factor is providing stablecoin-fiat bidirectional flow and highly compatible payment/settlement services. Compliance and risk control will be key to long-term success.

▲ Source: ASXN

https://stablecoins.asxn.xyz/payments-market-map

Furthermore, in many articles on payments in the market, we can see Aggregation and Orchestration being jointly included in the same quadrant. However, we believe there are differences between the Aggregation layer and the Orchestration layer in terms of B2B transaction value capture. The Aggregation layer, lacking a license, can be understood as a wrapper of the Orchestration layer. Although it can access more regional platforms, in terms of price negotiation, it is constrained by its revenue share, which can be seen as a business model similar to Circle — the larger the scale, the harder it is to achieve high profits.

In addition to serving as the underlying service for the B2B aggregation layer, these orchestration players also further support the application side of the entire payment network, specifically decomposable into To C applications and To B applications.

To C applications currently mainly focus on P2P payment applications, such as Sling, as well as neobanks that provide more stablecoin interest-bearing scenarios for consumers, such as Infini, Yuzu.Money, and stablecoin card businesses that address the usage difficulties of stablecoin consumers in the real world.

IOSG has actually been strategically positioned in the To C application space for a while and has invested in Ether.fi. A yield-generating payment super app, its card transaction volume, cashback volume, number of transactions, and issuance volume all reached their historical highs in September.

▲ Source: Ether.fi Dune Dashboard

On-chain capital pursuit of profit is evident: around 45% of DeFi TVL (about $560 billion) is chasing yield, mainly distributed among protocols such as Aave, Morpho, and Spark. The market value of yield-bearing stablecoins is rapidly increasing, soaring from $15 billion to $110 billion, accounting for 4–4.5% of the entire stablecoin market ($255 billion). Projects revolving around DeFi yield continue to receive attention, including Ethena, Pendle, Aave, Spark, Syrup, and others.

As the number of DeFi protocols continues to increase, the complexity of operations also rises, making the user experience less friendly. To address this pain point, Coinbase has formally integrated Morpho into its exchange and launched the Coinbase Onchain Borrow lending product that integrates CeFi and DeFi. Users only need to complete collateralization and borrowing with one click on the front end, with underlying support provided by the Coinbase Smart Wallet, completely abstracting the steps of wallet creation and interaction with Morpho, greatly simplifying the user experience. Coinbase Onchain Borrow has provided Morpho with $1.4 billion in deposits and $730 million in active loans, accounting for 11% and 16% of Morpho, respectively. This has also propelled Morpho's total deposits to $12.7 billion, with active loans currently at $4.5 billion.

▲ Source: https://app.morpho.org/ethereum/explore https://dune.com/ryanyyi/coinbase-onchain-loans

Based on the same investment logic that simplifies user on-chain usage experience, we early on chose to invest in Ether.fi. Starting from its initial focus on ETH staking rewards, it gradually expanded to more complex third-party Vault strategies, significantly lowering the threshold for stablecoin users in DeFi operations, allowing users to easily earn rewards. Ether.fi even introduced a DeFi credit card, enabling users to repay credit card loans with future interest, achieving a true "Buy Now, Pay Never."

The immense potential of stablecoin digital banks and stablecoin credit cards lies in their direct relocation of credit issuance to on-chain, fundamentally weakening and to some extent replacing the traditional bank's intermediary role. In the traditional model, a bank's core revenue comes from the interest rate spread between deposits and loans, forming the foundation of the entire system. However, this model also gives banks excessive "screening rights": on the one hand, they exclude a large number of unbanked populations who cannot enter the deposit system; on the other hand, they reject enterprises and individuals who do not meet borrowing standards (those who can't qualify for loans or credit cards).

In contrast, the stablecoin system thoroughly reshapes this logic. Leveraging the blockchain's programmability, atomic settlement, and tamper-resistance, lenders and borrowers can directly interact on-chain, no longer constrained by traditional bank admission standards, thus rewriting the participation in payments and credit. Based on this, the new type of stablecoin digital bank further encapsulates stablecoins, cryptocurrencies, and DeFi lending protocols and combines the trustless model of overcollateralization to build nearly risk-free lending products on top of lending pools. This model can be manifested as the new type of lending bank Coinbase Onchain Borrow or can be implemented as a stablecoin credit card similar to Ether.fi.

In terms of To B commercialization, we have also observed some new opportunities. For example, helping online and offline merchants directly access stablecoin payments to avoid acquiring bank institutions' interchange fees. Additionally, there is significant development potential for more convenient invoicing and global fund payment platforms for enterprise clients. However, especially for products that emphasize the enterprise-side user experience, they may face some competition as they gradually integrate into the vertical integration process of the payment orchestration layer in the future.

AI-Driven On-Chain Payment New Paradigm

In the future, in B2B applications, another very interesting potential area is AI agents acting as clients of payment applications. Currently, with the emergence of automated AI agents for trading and yield farming applications, such as Theoriq, Giza, and Almanak, we can expect to see more fully automated AI agents in the future, constantly seeking new yields 24/7. At the same time, these automated AI agents will need a wallet to purchase the data, computing power, or even human services they require.

The development of AI agents requires new on-chain infrastructure, which may also present a potential investment opportunity. The traditional payment system is slow to settle, has a high chargeback rate, and often relies on manual processes, making it clearly unsuitable for autonomous agents. To address this, Google has introduced the AP2 protocol and partnered with Coinbase to release A2A x402. If MCP is the "tentacles," A2A is the "language," then AP2 and x402 represent the "last mile" of AI's full automation—autonomous payment and value exchange.

The mission of AP2 is to make AI trustworthy, controllable, and traceable in financial transactions. It does not aim to replace Visa or Mastercard but to build a universal trust layer on top of them. Through an authorization mechanism based on Verifiable Credentials, AI can hold digitally signed authorization certificates to ensure transaction security and auditability.

Its Mandates mechanism has two modes:

· Real-time Authorization: AI needs immediate user confirmation upon finding a product.

· Delegated Authorization: Users can set complex conditions in advance (e.g., "hotels under $200"), and AI will only execute automatically when the conditions are met.

All transactions will form an immutable chain of evidence and be secured and auditable through Verifiable Credentials, thus avoiding "black box" payments. Google's strategy is clear: to collaborate with financial and crypto giants to define the "trust" rules instead of directly issuing coins or settling.

Of particular note is A2A x402, a Google-developed extension component tailored for crypto payments, deepening cooperation with Coinbase and the Ethereum Foundation, enabling AI to seamlessly handle stablecoins, ETH, and other on-chain assets, supporting Web3 native payments. In a sense, Google's AP2 aims to integrate AI into the existing financial system, while Coinbase and the Ethereum Foundation's A2A x402 extension aim to establish a crypto-native entirely new economic environment for AI.

Google's A2A standard allows AI agents from different projects to interoperate, but under the condition of a "trustful environment." To achieve this, the Ethereum Foundation introduced ERC-8004, adding a layer of trust mechanism akin to a digital passport system, enabling agents to securely discover, authenticate, and interact with unfamiliar counterparties on Ethereum or other Layer 2 solutions.

The name x402 is derived from the HTTP status code "402 Payment Required." Its concept envisions integrating payments into internet communications: when an AI calls an API, the server responds with a "402 Bill," allowing the AI to make a payment on-chain with a stablecoin and receive the service instantly. This not only enables automation and high-frequency transactions between machines but also allows AI services to be precisely billed based on requests, duration, or computing power, something traditional payment systems struggle to achieve.

▲ Source: Google

Onchain Agentic Commerce is rapidly taking shape with the dual innovation of stablecoin payments and AI agent. Currently, emerging companies like Skyfire and Crossmint have begun abstracting the AP2 and x402 standards into easy-to-use SDKs and APIs for developers. The ChaosChain team has taken the lead in creating a prototype that combines AP2 with Ethereum's latest ERC-8004 "trustless agent" standard, and this is just the prologue. Led by Davide Crapis, the Ethereum dAI team is further advancing this process. As the foundation for future AI agent collaboration, Ethereum is poised to help us transition from the current highly centralized AI system to a censorship-resistant, truly decentralized future. At that point, from payment chains, stablecoin settlements to AI-driven value innovation, this path will give birth to more intriguing SuperApps.

References:

· Designing the Ultimate Stablecoin Credit Card - Doğan Alpaslan, Cyber Fund (https://cyber.fund/content/stablecoincreditcard)

· Stablecoin Onchain Payments, Settlement Web2 Thinking - Zuoye (https://x.com/zuoyeweb3/status/1969367029011644804)

· The Final Battle of AI Payments: The Three-Body Game of Google, Coinbase, and Stripe - Luke, Marsbit (https://news.marsbit.co/20250919092805091063.html?utm_source=substack&utm_medium=email)

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