Multi-dimensional analysis of Stablecoin's seven key tracks and value potential

This article delves into the various tracks and their potential value in the Stable Coin market from multiple dimensions. It originates from an article by Rob Hadick, a general partner at Dragonfly, and is organized and compiled by PANews. (Background: Hong Kong "HKD Stable Coin Bill": Licensing from the HKMA required for engaging in these three Fiat Currency businesses) (Background: Decentralized Finance Stable Coin monthly volume first "breaks 700 billion US dollars", comparable to Visa, Standard Chartered Bank: Trump's inauguration will lead to a tenfold rise) With the continuous development of the Stable Coin ecosystem, the market's attention to the future development direction and value distribution is increasing day by day. This article will delve into the various tracks of the Stable Coin market and their potential value from multiple dimensions. Compared to the traditional framework, this analysis adopts a more detailed classification method, which stems from the complexity and subtle differences in the payment field itself. For investors, accurately grasping the role positioning of each participant and ownership structure is particularly important. The main categories include: Settlement Rails, Stable Coin issuance party, Liquidity Provider, value transfer / coin service, aggregated API / messaging platform, and merchant access. Some may ask: Why the need for so many categories, especially when core infrastructure such as Wallet or third-party Compliance is not yet covered? This is because each area has its unique defense "moat" and different ways of obtaining value. Although there is overlap between providers, understanding the uniqueness of each aspect is crucial. The following is an analysis of the value distribution in each area: 1. Settlement Rails This is a typical area dominated by network effects, with core competitive strengths in: DepthLiquidity, 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 Block chains may not meet the scalability requirements of mainstream payment networks, and Layer 2 or dedicated solutions may have more development potential. The winner in this area will be highly valuable and likely to focus on Stable Coin / payment fields. 2. Stable Coin issuance party Currently, issuers such as Circle and Tether have achieved significant success with their strong network effects and high interest rate environment. However, future development requires: building efficient and reliable infrastructure, improving Compliance standards, optimizing mint / redemption processes, enhancing integration with Central Banks and core banking systems, and improving overall Liquidity (such as Agora). While SaaS (Stable Coin as a Service) models like Paxos may spawn more competitors, non-bank financial technology issuers of Stable Coin may have the advantage, as transactions between closed systems require a trusted neutral third party. Issuers already possess a large amount of value, and some issuers will continue to dominate, but they need to develop a more comprehensive business beyond just issuance. 3. Liquidity Providers (LPs) Currently dominated by OTC and exchanges, presenting highly commercialized characteristics. Competitive advantages mainly rely on: low-cost fund acquisition, system stability, DepthLiquidity, and support for trading pairs. In the long term, large institutions will dominate the market, and it will be difficult for LPs focusing on Stable Coin to establish lasting advantages. 4. Value transfer / coin service (Stable Coin's "PSPs") The moat of these "Stable Coin allocation" platforms (such as Bridge and Conduit) comes from: proprietary payment rails, direct bank cooperation relationships, global coverage capabilities, ample Liquidity, and high-level Compliance capabilities. Platforms with truly proprietary infrastructure are few, but successful ones are expected to form an Oligopoly pattern in regional markets, and complement traditional PSPs (payment service providers) to become very large enterprises. 5. Aggregated API / messaging platform Participants in this market often claim to provide the same services as payment service providers (PSPs), but in reality, they are only packaging and aggregating APIs. These platforms do not bear Compliance or operational risks, and more accurately, they should be seen as market platforms for PSPs and Liquidity Providers (LPs). Although these platforms can currently charge higher service fees, they will ultimately face compressed profits and even the risk of complete elimination because they do not truly address the core challenges in the payment process or participate in infrastructure construction. These platforms often tout themselves as the "Plaid of the Stable Coin field", but they overlook a key fact: Block chain technology itself has already solved most of the pain points addressed by Plaid in traditional banking and payment fields. Unless they can expand towards end users and take on more responsibilities in the technical stack, it will be difficult for them to maintain their profit margins and business sustainability. 6. Merchant access These platforms help merchants and businesses accept Stable Coin or Cryptocurrency payments. Although there is sometimes business overlap with PSPs, their main focus is on providing convenient developer tools, integrating third-party Compliance and payment infrastructure, and packaging them into user-friendly interfaces. They hope to follow the development path of Stripe - gaining market access through simple access and then expanding horizontally into extension businesses. However, unlike the early market environment of Stripe, developer-friendly payment solutions are now readily available, and channel distribution capabilities are the key to winning. Existing payment giants can easily cooperate with payment allocation companies to add Stable Coin payment options, making it difficult for pure Cryptocurrency gateways to find their market position. Although companies like Moonpay or Transak have enjoyed strong pricing power in the past, this advantage is expected to be difficult to sustain. There are still opportunities in the B2B field, especially in large-scale fund management and scaling Stable Coin applications, but the B2C field is highly competitive and faces severe challenges. 7. Stable Coin-driven financial technology and applications It is now easier than ever to build a "digital bank" or "financial technology" product based on Stable Coin, making the competition in this field extremely fierce. Success will depend on distribution capabilities, market promotion strategies, and differentiated product insights - not much different from TradFi technology. In developed markets, TradFi technology giants like Nubank, Robinhood, and Revolut can easily integrate Stable Coin functionality, while startups need to find unique value propositions. In emerging markets, there may still be opportunities for some unique products (such as Zarpay), but it will be difficult to succeed in developed markets solely relying on Financial Service supported by Stable Coin as a differentiating advantage. Overall, pure Cryptocurrency / Stable Coin consumer startups in this category may face extremely high failure rates and continue to face challenges. However, there may still be opportunities for B2B businesses to find their niche markets. Conclusion Although this framework does not cover all edge cases and overlapping areas, it provides a useful thinking framework for investors deeply involved in this field. As the market continues to evolve, new opportunities and challenges will continue to emerge, and understanding these market dynamics is crucial for industry participants. 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