Source: PANews
As the stablecoin ecosystem continues to develop, market attention to its future development direction and value distribution is increasing day by day. This article will delve into various tracks of the stablecoin market and their value potential from multiple dimensions.
Compared to traditional structures, this analysis adopts a more detailed classification method, which stems from the complexity and subtle differences inherent in the payment industry itself. For investors, accurately grasping the roles and ownership structures of various participants is particularly important. The main classifications include:
Settlement Rails
Stablecoin Issuers
Liquidity Providers
Value Transfer/Currency Services
Aggregation API/Messaging Platforms
Merchant Gateways
Stablecoin-driven Applications
One might ask: Why so many categories, especially since core infrastructure like wallets or third-party compliance is not yet covered? This is because every industry has its unique defensive 'moat' and different ways of value capture. Although there is overlap among providers, understanding the uniqueness of each layer is crucial. The following is an analysis of the value distribution across various industries:
1. Settlement Rails
This is a typical industry dominated by network effects, with core competitiveness manifested in:
Deep Liquidity
Low Cost Structure
Fast Settlement
Stable System Availability
Native Compliance and Privacy Protection
This is likely to form a winner-takes-all market. General-purpose blockchains struggle to meet the scalability needs of mainstream payment networks, while Layer 2 or dedicated solutions may have greater development potential. The winners in this industry will be highly valuable and are likely to focus on the stablecoin/payment industry.
2. Stablecoin Issuers
Currently, issuers like Circle and Tether have achieved significant success due to strong network effects and a high-interest rate environment. However, future development requires:
Building efficient and reliable infrastructure
Enhancing Compliance Standards
Optimizing Minting/Redeeming Processes
Strengthening integration with central banks and core banking systems
Enhancing overall liquidity (e.g., Agora)
While SaaS (Stablecoin as a Service) models like Paxos may spawn more competitors, neutral non-bank institutions and fintech-issued stablecoins may have more advantages, as transactions between closed systems require a trusted neutral third party. Issuers already possess substantial value, and some will continue to win big, but they need to develop more comprehensive businesses rather than just issuing.
3. Liquidity Providers (LPs)
Currently, the market is mainly dominated by OTC and exchanges, exhibiting highly commoditized characteristics. Competitive advantages primarily rely on:
Low-Cost Fund Acquisition
System Stability
Deep liquidity and trading pair support
In the long term, large institutions will dominate the market, and stablecoin-focused LPs will struggle to establish lasting advantages.
4. Value Transfer/Currency Services (the 'PSPs' of Stablecoins)
The moat of these 'stablecoin orchestration' platforms (such as Bridge and Conduit) comes from:
Proprietary Payment Rails
Direct Banking Partnerships
Global Coverage Capability
Sufficient Liquidity
High Compliance Standards
There are few platforms that truly own proprietary infrastructure, but the successful ones are likely to form an oligopoly in regional markets, supplementing traditional PSPs (Payment Service Providers) and becoming very large enterprises.
5. Aggregation API/Messaging Platforms
These market participants often claim to offer the same services as Payment Service Providers (PSPs), but in reality, they are only packaging and aggregating APIs. These platforms do not bear compliance risks or operational risks; rather, they should be viewed as market platforms for PSPs and Liquidity Providers (LPs).
Although these platforms can currently charge high service fees, they face the risk of profit compression or even complete elimination in the end because they do not truly address the core challenges in the payment process or participate in infrastructure building. These platforms often tout themselves as the 'Plaid of the stablecoin industry,' overlooking a key fact: blockchain technology has already addressed most of the pain points that Plaid resolved in traditional banking and payment industries. Unless they can expand functionalities towards end users and take on more responsibility in the tech stack, it will be difficult to maintain their profit margins and business sustainability.
6. Merchant Gateways/Entrances
These platforms help merchants and businesses accept stablecoin or cryptocurrency payments. Although there are sometimes overlaps with PSPs, they primarily focus on providing convenient developer tools while integrating third-party compliance and payment infrastructure, packaging it into user-friendly interfaces. They hope to emulate Stripe's path to growth—capturing the market through easy access and then expanding their functionalities horizontally.
However, unlike the early market environment for Stripe, developer-friendly payment solutions are now ubiquitous, and channel distribution capability is the key to winning. Existing payment giants can easily collaborate with payment orchestration companies to add stablecoin payment options, making it difficult for purely cryptocurrency gateways to find their market positioning. Although companies like Moonpay or Transak had strong pricing power in the past, this advantage is expected to be hard to sustain.
There are still opportunities in the B2B industry, especially in large fund management and scaled stablecoin applications, but the B2C industry is fiercely competitive and faces severe challenges.
7. Stablecoin-driven Fintech and Applications
Creating a stablecoin-based 'digital bank' or 'fintech' product is now easier than ever, making competition in this industry exceptionally fierce. Success will depend on distribution capabilities, marketing strategies, and differentiated product insights—similar to traditional fintech.
In developed markets, traditional fintech giants like Nubank, Robinhood, and Revolut can easily integrate stablecoin functionalities, while startups need to seek unique value propositions.
In emerging markets, there may still be unique product opportunities (such as Zarpay), but if one relies solely on stablecoin-supported financial services as a differentiation advantage, it will be challenging to succeed in developed markets.
Overall, startups in this category that focus purely on cryptocurrency/stablecoin consumers may face extremely high failure rates and will continue to encounter challenges. However, B2B businesses may still find opportunities to carve out their niche.
Conclusion
Although this structure does not cover all edge cases and overlapping industries, it provides a beneficial framework for investors deeply engaged in the industry. As the market continues to evolve, new opportunities and challenges will constantly emerge, and understanding these market dynamics is crucial for industry participants.
[Disclaimer] The market is risky, and investment should be cautious. This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investing based on this is at one's own risk.
This article is reproduced with permission from: (PANews)
Original Author: Rob Hadick, General Partner at Dragonfly
'Stablecoins are the future of the industry! Analyzing the 'Seven Key Indicators', who are the real winners?' This article was first published in 'Crypto City'