Partner @Ryan__Barney and Junior Partner @masonnystrom explore Stablecoins as the Trillion Dollar Opportunity in their recent article. Let’s dive into why!
veradiverdict.com/p/the-trillion-dollar-opportunity
Stablecoins have gone from 3% of blockchain transactions in 2020 to now consistently representing over 50% of blockchain transactions. 2024 has been a breakout moment for stablecoins, transacting over ~$5 trillion in adjusted volume, over $1 billion transactions, across nearly 200 million accounts.
In 2024 there will be ~$40 trillion cross-border B2B payments made via traditional payment rails. Stablecoins are a better, faster, and cheaper alternative to move money around the world.
Better: Stablecoins offer a more accessible product, one that’s available 24/7, 365 days a year. They can be transmitted globally, across borders with ease and offer a programmability that makes stablecoins a superior product to fiat.
Faster: Stablecoins are unquestionably faster, settling instantly versus T-minus 2 or T-minus 1 days to settle.
Cheaper: Stablecoins are cheaper to issue, transfer, and maintain than fiat. In 2023, Stripe facilitated techcrunch.com/2024/03/13/stripes-growth-payment-1t-fintech/ over $1 trillion in payments volume with a fee structure that starts at 2.9% with an added 30 cent charge for domestic card-based transactions. On high throughput blockchains like Solana or Ethereum L2’s like Base, average stablecoin payments cost less than a cent.
Although the stablecoin stack is ever-evolving, there are emerging layers:
• Merchant Layer – Applications and interfaces that originate retail or business transactions
• Stablecoin Orchestration - Providers that offer last mile on and off ramp, virtual accounts, cross-border stablecoin transfers, or stablecoin to fiat conversion
• FX and Liquidity - Providers that offer cross-border stablecoin interchange to other USD-pegged stablecoins, fiat, or regional stablecoins.
Stablecoin Issuance - Companies or protocols that offer white-label stablecoins or first-party stablecoins with differentiated features
Just like in traditional finance and payments, building moats at each part of the stack is important to expand business opportunities beyond the initial value proposition.
• Merchant Layer – Moats are made by owning a user’s or business’s stablecoin flow, plus upselling other services.
• Stablecoin Orchestration - Licenses, reliability, global access, cheapest rates, developer friendliness.
• FX and Liquidity - Sourcing proprietary liquidity and prices, and a transition from OTC style FX to exchange style FX to onchain style FX will facilitate faster payment and transactions at this layer
• Stablecoin Issuance - Issuance will commoditize over time and lead towards the inevitable launch of dozens of large brand stablecoins to capture yield, build their branded stablecoin, or build proprietary stablecoin liquidity and flows. These layers merge over time as the layers of the stack get bundled.
Moreover, we anticipate that stablecoin issuance will become increasingly common for large fintechs and ecommerce providers that facilitate significant flows. The next generation of neobanks and fintechs will be defined by stablecoins. As recently as this month we have heard interest in large card networks like Visa, banks like JPM, and asset managers like Blackrock to explore stablecoin projects of their own.
Some ideas we’ve been excited about:
• Stablecoin Neobank: They’ll enable the next generation of consumer financial apps that aggregate payments, trading, yield, lending, and other core financial services
• Onchain FX: We expect more currencies to come on-chain. With the current abundance of USD-pegged yield bearing stablecoins offering varying yields and value propositions, we anticipate a need for a FX layer for these initial USD-pegged stablecoins.
• Telegram payment rails: Telegram offers a native wallet for payments, but Telegram mini-apps may create a payment layer on top of Telegram.
• Remittances on Crypto Rails: “The remittance margin is the stablecoin opportunity.” - Jeff “Stables” Besos. Current players earn hundreds of millions to billions in annual revenue. Stablecoins reduce the cost and make the process seamless.
• Global Venmo: Remittance is typically a one sided flow, this would be serving the social commerce use case in a more two sided flow.
Stablecoin powered treasury management and operations: Opportunities to disrupt wealth management, personal finance, payroll, business spend and expense management, Neobanks, financial accounting and reporting, lending/mortgages, among others.
If you are a founder building stablecoins, a current operator at a traditional fintech or payments company interested in working with stablecoins, or anyone with views on the space – please don’t hesitate to reach out to ryan.barney@panteracapital.com mailto:ryan.barney@panteracapital.com and mason@panteracapital.com mailto:mason@panteracapital.com.
In addition, Pantera is looking to host stablecoin focused events in SF and New York over the next year. Spots are limited but if you are interested please sign up below:
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