IOSG Ventures: Prospects for Stablecoin Crypto Payment Track

Author: Frank @IOSG

Core View TL;DR

• Stablecoins are killer applications for encryption: Not NFT, nor Meme coin.They are already the “daily currencies” of the global south.The market is not about creating new currencies, but about how to truly integrate existing stablecoins into daily payment scenarios.

• Consumer value is powered by B2B: Although P2P remittances and crypto cards between individuals are important, the author believes that the largest TAM will occur in the cross-border payment field between enterprises.Those cryptographic orchestration layers and PSPs that abstract stablecoins and directly embedded in large-scale corporate transfer systems can capture the additional benefits of huge capital flows and capital precipitation.

• License + Corridor = Moat: Just as infrastructure shifts from technology competition to distribution, the real barriers in the B2B payment field are regulatory licenses (MSB/EMI/SVF, etc.), banking cooperation and cross-border corridors.(For example: Bridge owns the US MSB/MTL, RD Tech owns the Hong Kong SVF license).

• Orchestration>Aggregation: Aggregators are just market matching platforms, with very thin profit margins; orchestrators have compliance and settlement rights.The real defense comes from directly holding a license and being able to implement the flow of funds on its own.

• Competition is intensifying: From emphasizing “bottom-level technology” to competing for “actual use”: Similar to consumer applications, the market will reward real adoption and user scale.The rise in TRON fees has verified the strong demand for stablecoin transactions, and the next stage will be the stablecoin native chain (stablecoin issuers such as Plasma and Arc that have issuance and distribution channels). Like application-specific chains such as Hyperliquid, users will actively guide users to directly use their own stablecoin blockchain for transactions and settlements, thereby avoiding most transaction fees being taken away by the general public chain.At the same time, users can also directly use the transferred stablecoins to pay the handling fee, realizing the unity of payment media and network incentives.

1. Introduction

Stablecoins and blockchains built around stablecoins are becoming the focus and headlines of the industry almost every day.The Plasma and Stable launched by Tether.io, Circle’s Arc, Stripe’s Tempo, Codex PBC, 1Money, the new generation of L1 blockchain that Google is developing, and the projects that will appear in the future are all accelerating this trend.At the same time, as one of the most widely used self-custodial wallets in the world, Metamask has officially announced that it will launch its native stablecoin, marking the further expansion of wallet products to payment and value carrying functions.On the other hand, individual cross-border remittance giant Remitly announced the launch of a multi-currency fiat and stablecoin wallet – Remitly Wallet, which is currently in the beta stage and plans to officially launch with Circle in September.

These actions together show that more and more large payment companies and Web2 and Web3 technology giants are accelerating “vertical integration” and directly entering the stablecoin and blockchain payment track.They no longer rely solely on infrastructure provided by third parties, but choose to issue stablecoins themselves, create their own wallet products, and even launch exclusive payment blockchains.Stablecoins are rapidly expanding from crypto-native scenarios to a wider range of payment, remittance and financial services, becoming one of the most practical application directions for blockchain.Therefore, this article provides us with a good opportunity to discuss:

1. Current Stable Coin Payment Technology Stack

2. Tracks with PMF

3. Propose an investment framework for each payment track

2. Stablecoin payment infrastructure

Although there are various definitions on the market, the author believes that the technology stack of stablecoin payment can be decomposed from the following perspectives:

At the bottom of the entire payment map is that the blockchain itself is both the infrastructure and the foundation.

Recently, when Paradigm’s Matt Huang explained why Stripe chose to build a new L1 Tempo instead of building it on Ethereum L2, he gave a long list of reasons.Although many of the reasons have been criticized by the Ethereum community and various VC investors.But one of the things about Fast Finality clearly reveals the real problems facing Ethereum at present.

Source: Matt Huang from Paradigm

The “finality” in blockchain refers to: Once a transaction is confirmed, it cannot be reversed or changed, and it will not be revoked due to network fluctuations or on-chain reorganization.The so-called “fast finality” means that it can provide this guarantee in a few seconds or even sub-second levels, rather than letting users wait for more than ten minutes.Moreover, since the final confirmation of L2 depends on L1, no matter how fast the processing speed and the strong function of L2 are, its safety and final confirmation speed must still be based on L1.

Ethereum’s current mechanism is stable, but it seems a bit slow.Blocks are generated every 12 seconds.The transaction can be included soon, but the final confirmation at the economic level will take about 12–15 minutes, i.e. the two PoS eras (epoch).During this period, verifiers will continue to vote and stamp and lock the results.Although sufficient so far, the market is increasingly demanding that the final confirmation time be reduced to less than 2 seconds to meet commercial payments and institutional-level high-frequency settlement needs.If the underlying chain is very slow, it will not be able to support high-speed payments; if the cost of online transfer is high, it will not be able to fulfill the promise of “low fee”; no matter how good the user experience is, it will be dragged down by poor infrastructure.

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

Putting aside the vertical integration perspective, this is why we are seeing more and more stablecoin issuers and traditional payment giants starting to build their own blockchains.In addition to the consideration of commercial profit sharing, the more core reason is that all upper-level applications and user experience ultimately rely on the underlying infrastructure.Only by achieving low handling fees as low as cents, near-instant finality, and allowing users to avoid worrying about gas token design can we truly bring a smooth and seamless user experience.

Common core basic features include:

• Stable and low handling fees, and can be paid directly with stablecoins

• Licensed Verifier Node Set

• High Throughput (TPS)

• Compatibility with other blockchain and payment systems

• Optional privacy features

What can really determine success or failure is often beyond technology, including:

• Clear Market Entry (GTM) Strategy

• Effective business expansion execution

• A sound partner ecosystem

• Efficient introduction and support from developers

• Marketing and external communication

Regarding the specific comparison between different blockchains, we will explain it in more detail in another subsequent article, so this article will not go into details.Of course, Ethereum has long realized the importance of Fast Finality without affecting decentralization.Community members are pushing the Ethereum Foundation (EF) to speed up the process, and EF’s Barnabé Monnot shares the ongoing plans:

• The block blocking time will be shortened from 12 seconds to 6 seconds, and the relevant tests have been completed.

• After the new “Quick Confirmation Rule” is launched, transactions can be strongly confirmed by just waiting 1–3 blocks (about 10–30 seconds), and there is no need to wait for a complete final confirmation.

• We are also trying to optimize the core protocol based on the solution proposed by Vitalik, and explore the next generation consensus mechanism, such as “three-slot final confirmation”.

Source: Barnabé Monnot from EF

In addition to the rapid development of the stablecoin network, the issuance scale of the stablecoin itself is also ushering in a blowout growth.Stablecoin issuance platform M0 recently completed a US$40 million Series B financing led by Polychain Capital, Ribbit Capital and Endeavor Catalyst Fund.M0’s Stablecoin-as-a-Service platform allows institutions and developers to issue highly customized stablecoins with full control over brand, features and revenue.All stablecoins built on M0 are inherently interoperable and share unified liquidity.With an open multi-issuance framework and a completely transparent on-chain architecture, M0 is breaking through the boundaries of traditional stablecoin issuance.

Since its establishment, M0 has been selected by MetaMask, Noble, KAST, PLAYTRON, Usual, USD.AI, USDhl and other projects to issue stablecoins for different purposes.Recently, the total issuance of stablecoins based on M0 exceeded US$300 million, an increase of 215% since the beginning of 2025.

Similar to the trend of stablecoin issuers vertically integrating the underlying blockchain infrastructure, application chains with demand scenario creativity have also begun to carry out vertical integration at the stablecoin issuance level in order to establish deeper binding relationships at the ecological level.

Last Friday, Hyperliquid threw out a big news on Discord: it plans to launch the native stablecoin USDH in its HyperEVM ecosystem and select the issuer through on-chain voting and public tendering.In the following week, different stablecoin issuers successively submitted bidding plans, and the final winning bidder will be decided by the majority vote of the $HYPE pledger.To highlight the characteristics of decentralized governance, although Hyperliquid Foundation holds a large amount of $HYPE stake, it chooses to abstain from it and hand over the decision-making power to the community entirely.

Hyperliquid’s motivation for launching USDH is very direct: the platform has settledAbout US$5.6 billion stablecoin assets,in95% is USDC.This part of the reserves of funds are escrowed by the issuer Circle and earn interest, while Hyperliquid, as the creator of application scenarios and demands, cannot share the benefits.If the $5.6 billion in stock funds can be replaced with USDH, it is expected to generate more than $220 million in interest income per year based on the Treasury bond interest rate, far exceeding the platform’s existing HLP annual income (about $75 million).This new income will be used to repurchase and allocate $HYPE, thereby feeding back to the ecosystem.

Among the numerous bidding proposals, the proposal of the Hyperliquid native project Native Markets was finally won. The details can be found here: https://www.theblock.co/post/370570/native-markets-team-wins-hyperliquid-usdh-stablecoin-bid-eyes-test-phase-within-days

In addition to the importance of blockchain and stablecoins, we can also clearly see the key role of on/off ramp (the deposit and exit channel between fiat currency and crypto assets) in user experience.Whether users can smoothly and at low cost to exchange fiat currencies into stablecoins or other crypto assets often directly determines whether the entire application can achieve real large-scale adoption.

IOSG invested forward-lookingly five years ago Transak, this world’s leading on/off ramp service provider.Transak is committed to providing seamless fiat currency entry and exit channels for wallets, exchanges, and payment applications, supporting users in more than 150 countries and regions.Recently, in the latest round of financing, Transak received a $16 million financing led by Tether (USDT parent company) and IDG.In addition to Transak, IOSG has invested in projects rooted in fiat and cryptocurrency deposits and exits in Latin America, Kravata, which provides B2B APIs to enterprise customers and provides B2B2 APIs that can be integrated by third-party applications.As of Q2 2025, there are more than 90 customers around the world and operate in three countries.This move not only proves the market’s long-term optimism about the on/off ramp track, but also once again confirms IOSG’s accurate judgment on the value of industry infrastructure in the early investment stage.

It can be foreseen that as stablecoins and blockchain payments gradually move towards the mainstream, on/off ramp infrastructure like Transak will become a key hub connecting the past and the future: it is not only the entrance for users to enter the crypto world, but also the bridge for stablecoins to integrate into the global payment system.

three,Tracks with PMF

Once the payment infrastructure is improved, cross-border payments will become the most direct and obvious breakthrough.The global cross-border capital flows annually amount to US$150 trillion, while the existing system oftenIt takes 3 days, paying about 3%and through multiple intermediaries.If you switch to a stablecoin based on efficient “track”, the entire process takes only 3 seconds, the fee is as low as 0.01%, and direct point-to-point settlement can be achieved.With such a huge gap in efficiency, adoption is almost an inevitable trend.

B2B corporate cross-border payments are a perfect product market fit (PMF) currently in the cryptocurrency field.Today 40% of blockchain fees come from transfers USDT, which hundreds of millions of emerging market users use every day to fight depreciation and inflation of their own currencies.Putting aside infrastructure and speculative consumption cycles, payments (especially B2B cross-border payments) are the areas in which SWIFT is most likely to complement SWIFT in crypto reality.The real winner may not be the new chain or the general stablecoin issuer,Instead, Orchestrators who have licenses and have distribution capabilities in key cross-border corridors.

This is why we saw earlier that Airwallex, a cross-border transfer giant in Web2, really felt the threat of cross-border payment companies from stablecoin, and made defensive remarks on Twitter, but did publicly recruit stablecoin developers on its recruitment website.

“Payment Orchestration Layer” means integrating legal currency and stablecoins, multiple payment methods, channels, and processing services to provide end-to-end payment/settlement solutions.Emphasize the ability of “compatible stablecoins”: not only supports fiat currency collection/payment, but also supports stablecoin collection/cross-border transfer/stable currency exchange back to fiat currency, etc.

Cross-border payments often form the path of “fiat currency → stablecoin → fiat currency”, that is, local fiat currency exchange for stablecoins → international transfer/settlement with stablecoins → the receiving end is then exchanged into local fiat currency.The role of the payment orchestration layer is to optimize this path, reduce friction, save time and cost, and improve efficiency.

Although traditional large companies like Airwallex and Stripe are also actively deploying stablecoin payments, startups tend to have more advantages in innovation and execution speed.For example, Align focuses on the cross-border remittance needs of large multinational enterprises, while ArrivalX focuses on the overseas payment scenarios of Chinese merchants.The author believes that what is more likely to be formed in the future isRegional-centric solutions, rather than a single global unified model, are similar to the competitive landscape on/off ramp side.

Because each region is greatly affected by local regulation, laws, banking/financial infrastructure.Against the backdrop of the rapid development of stablecoin payment,If small and medium-sized startups can do a good job in positioning “local + regional + orchestration layer”, there will still be broad space in the specific payment corridor.In addition to the core advantagesIn addition to the license, it also provides payment/settlement services with two-way circulation of stablecoins and strong compatibility.It is a key differentiation point.Compliance and risk controlIt will be the key to determining whether you can succeed in the long term.

Source: ASXN

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

In addition, in many articles on payments on the market, we can see that Aggregation and Orchestration are included in the same quadrant together, but we believe that there are differences in the aggregation layer and orchestration layer in terms of B2B transaction value capture.Since the aggregation layer does not have a license, it can be understood as a wrapper (packaging layer) of the Orchestration layer. Although it can access more regional platforms, in terms of price bargaining, it is subject to its profit sharing side. This can be seen as a business model similar to Circle – the larger the scale, the harder it will be to achieve higher profits.

In addition to being the underlying service of the B2B aggregation layer, these orchestrators are also further supporting the application side of the entire payment network, which can be specifically decomposed into To C applications and To B applications.

ToC applications currently focus on P2P payment applications, such as Sling, and neobank that provides more stablecoin interest-generating scenarios for consumers, such as infini, Yuzu.Money, and stablecoin cards that solve their problems in the real world.

IOSG has actually been making some arrangements in the ToC application side and has invested in Ether.fi.A super payment application that can generate interest has its highest card transaction volume, cash back volume, transaction number and card issuance all reached its historical highest in September.

Source: Ether.fi Dune Dashboard

On-chain funds are pursuing profits: about 45% of DeFi TVL (about 56 billion US dollars) are pursuing profits, mainly distributed in Aave, Morpho, Spark and other protocols.The market value of income stablecoins is growing rapidly, soaring from $1.5 billion to $11 billion, accounting for 4–4.5% of the entire stablecoin market ($255 billion).Projects surrounding DeFi revenue continue to attract attention, including Ethena, Pendle, Aave, Spark, Syrup, etc.As the number of DeFi protocols continues to increase, the complexity of operations also increases, and the user experience becomes less friendly.To alleviate this pain point, Coinbase officially integrated Morpho on its exchange and launched Coinbase Onchain Borrow, a lending product that combines CeFi and DeFi.Users only need to complete mortgages and loans in one click on the front end, while the underlying layer is powered by Coinbase Smart Wallet. The entire process completely abstracts the user’s wallet creation and interaction with Morpho, greatly simplifying the user experience.Coinbase Onchain Borrow provides Morpho with $1.4 billion in deposits and $730 million in active loans, accounting for 11% and 16% of Morpho, respectively.This also helped Morpho’s total deposits reach $12.7 billion, and active loans currently reach $4.5 billion.

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

Based on the investment logic that also simplifies user experience on the chain, we chose to invest in Ether.fi in the early stages.It gradually expanded from initially focusing on ETH staking income to a more complex third-party Vault strategy, which greatly reduced the threshold for stablecoin users in DeFi operations, allowing users to easily obtain profits. It even launched a DeFi credit card, allowing users to repay credit card loans with future interest, realizing the true “Buy Now, Pay Never”.

The reason why stablecoin digital banks and stablecoin credit cards have great potential is that they move credit creation directly to the chain, fundamentally weakening or even replacing the intermediary status of traditional banks to some extent.Under the traditional model, the core income of the bank comes from the interest rate spread between deposits and loans, which is the basis of the entire system.But this model also gives banks excessive “screening rights”: on the one hand, they will eliminate a large number of inaccessibleDeposit systemUnbanked populations; on the other hand, they will refuse to lose the incompatibilityBorrowing standardsthose who can’t qualify for loans or credit cards.

In contrast, the stablecoin system completely reshapes this logic.Relying on the programmability, atomic settlement and immutability of blockchain, lenders and borrowers can directly connect on the chain and are no longer subject to the access standards of traditional banks, thus rewriting the way of payment and credit participation.Based on this, the new stablecoin digital bank has built almost risk-free lending products based on the lending pool through further encapsulation of stablecoins, cryptocurrencies and DeFi lending protocols, combined with over-collateralization, a trustless model.This model can be manifested as a new bank that provides lending, Coinbase Onchain Borrow, or as a stablecoin credit card similar to Ether.fi.

We have also observed some new opportunities in the commercialization of To B.For example, help online and offline merchants directly access stablecoin payments, thereby avoiding interchange fees of acquisition bank institutions.At the same time, the more convenient invoicing and global payment platforms for corporate customers also have broad development potential.However, especially this emphasisProducts with enterprise-side user experience may face certain competition in the process of gradual vertical integration of the payment orchestration layer in the future.

4. A new paradigm for on-chain payments driven by AI

In the future, in to B applications, another very interesting potential area is AI Agent. As a payment application customer, with the emergence of trading and yield farming applications of automated AI Agent, such as Theoriq, Giza and Almanak, we can see more fully automated AI Agents in the future, and will continue to look for new yields 24/7.At the same time, these automated ai agents require a wallet to purchase the data, computing power and even human services they need.

The development of AI Agent requires new on-chain infrastructure, which may also be a potential investment opportunity.The traditional payment system has slow settlement, high rejection rate, and often relies on labor, which is obviously not suitable for autonomous agents.To this end, Google launched the AP2 protocol and released the A2A x402 with Coinbase.If MCP is the “tenta” and A2A is the “language”, then AP2 and x402 are the “last mile” for AI to achieve full automation – autonomous payment and value exchange.

AP2’s mission is to make AI credible, controllable and traceable in financial transactions.Instead of replacing Visa or Mastercard, it builds a common trust layer on top of it.Through a licensing mechanism based on Verifiable Credentials, AI can hold cryptographically signed digital authorization letters to ensure transactions are secure and auditable.

Its Mandates mechanism has two modes:

• Real-time authorization: After AI finds the product, the user needs to confirm it on the spot.

• Authorization: Users can set complex conditions in advance (such as “hotels under $200”), and AI will only automatically execute when the condition is triggered.

All transactions form an immutable chain of evidence, and Verifiable Credentials ensures security and auditability, thereby avoiding “black box” payments.Google’s strategy is clear: uniting financial and crypto giants does not directly issue coins or clear them, but defines the “trust” rule.

The most notable of these is the A2A x402, an extension component specially created by Google for crypto payments. It has worked in-depth with Coinbase and the Ethereum Foundation to enable AI to seamlessly process on-chain assets such as stablecoins and ETH, and support Web3 native payments.In a sense, Google’s AP2 wants to introduce AI into the existing financial system, while Coinbase and Ethereum Foundation’s A2A x402 extensions hope to create a new economic environment that is crypto-native for AI.

Google’s A2A standard allows AI agents to be interoperable for different projects, but only if it is a “mutual trust environment.”To this end, Ethereum Foundation’s ERC-8004 has added a layer of trust mechanism, similar to a digital passport system, allowing agents to securely discover, verify and interact with unfamiliar opponents on Ethereum or other L2.

The name of x402 is derived from the HTTP status code “402 Payment Required”.Its idea is to integrate payment into Internet communication: when the AI ​​calls the API, the server returns a “402 bill”, and the AI ​​can complete the payment with stablecoins on the chain and obtain services instantly.This not only makes automated and high-frequency transactions between machines possible, but also allows AI services to be billed finely based on requests, duration or computing power, which is difficult for traditional payments to achieve.

Source: Google

Onchain Agentic Commerce is accelerating its formation under the dual innovation of stablecoin payments and AI Agent.At present, emerging companies such as Skyfire and Crossmint have also begun to abstract the AP2 and x402 standards into SDKs and APIs that are easy for developers to call.The ChaosChain team has taken the lead in completing the prototype, combining AP2 with Ethereum’s latest ERC-8004 “trusted no proxy” standard, which is just the prologue.The Ethereum dAI team, built and led by Davide Crapis, is further advancing this process.As the underlying layer of AI proxy collaboration in the future, Ethereum is expected to help us move from the current AI highly centralized system to a censorship-resistant and truly decentralized future.At that time, from payment chain, stablecoin settlement and AI-driven value innovation, this link will give birth to more interesting super application SuperApps.