The stablecoin market is continuously evolving. While traditional stablecoin solutions like USDC and USDT still hold a significant share, they face challenges such as low capital efficiency and centralization. At the same time, many new stablecoin solutions have emerged in the market, including high-yield USDe, the RWA decentralized stablecoin Usual Money, and WSPN, which is dedicated to building a payment ecosystem. These emerging solutions are intensifying market competition and promoting more options for users.

In this context, ChainFeeds has invited WSPN founder Raymond Yuan to discuss the development of stablecoins, including the concept of “Stablecoin 2.0,” the landscape of the stablecoin market, and regulatory compliance.

Highlights:

1. WSPN’s “Stablecoin 2.0” aims to promote broader global payment applications and leverage digital technology for large-scale market expansion.
2. Licensing is merely a threshold for entering the market, primarily serving to integrate into the local mainstream economic system. The key factor determining a project’s success is whether it can deliver real value to users.
3. As the stablecoin market grows to several trillion dollars, market share is expected to become more balanced. Even the largest stablecoin issuers may hold only 20% to 30% of the market share, with many smaller stablecoins each capturing around 1%.
4. The success of stablecoins relies on the flourishing of the entire ecosystem, including continuous innovation and development across various areas such as payment services, KYC, and AML tools. All efforts ultimately aim to maximize user experience value.

WSPN: Driving Stablecoin Adoption Through Payment Network Construction

WSPN (Worldwide Stablecoin Payment Network) is a digital payment company focused on building next-generation stablecoin infrastructure, dedicated to promoting the widespread use of stablecoins in the global financial system through the creation of a payment ecosystem. The company’s core team comprises industry experts, including Raymond Yuan, founder of CTH, Austin Campbell, founder of Zero Knowledge Consulting, and former Visa President John Partridge.

Currently, WSPN has launched its first stablecoin, WUSD, and plans to introduce the euro stablecoin WEUR. Founder Raymond Yuan explained that the “W” in WUSD represents “stability,” symbolizing its reliability. To ensure the stability of WUSD, WSPN has implemented several measures. For instance, during the issuance phase, it adheres to a fiat-collateralized stablecoin model, ensuring that every WUSD has 100% of its funds reserved in a bank account. During the storage phase, WSPN employs key sharding technology and collaborates with third-party custodial platforms to ensure security. Finally, in the redemption phase, WSPN has established a 24-hour operational system, with operational centers in North America, Asia, and Europe, ensuring a swift response to customer needs.

Additionally, WSPN has partnered with Visa and Mastercard to launch a stablecoin payment card, which has been tested in Japan. Users can utilize this card for payments at convenience stores and supermarkets. Furthermore, WSPN’s stablecoin has been adopted by some commodity traders and cross-border payment companies for transactions and settlements, and the company is actively expanding its stablecoin-based wealth management market.

On August 16 of this year, WSPN completed a $30 million seed round of funding, led by Foresight Ventures and Folius Ventures, with participation from Hash Global, Generative Ventures, Yunqi Partners, and RedPoint China. Raymond Yuan stated that part of the funds raised will be used to expand the team, while the other part will be invested in the ongoing development of infrastructure.

From “Stablecoin 1.0” to “Stablecoin 2.0”: WSPN’s Vision for a Payment Network

WSPN has introduced a new concept called “Stablecoin 2.0,” aimed at constructing a user-centric payment network powered by digital technology. Raymond Yuan states that while “Stablecoin 1.0,” represented by USDT, has exceeded a scale of over $160 billion, its application scenarios remain largely confined to the cryptocurrency domain, limiting growth potential. For instance, in the current payment systems, users still need to link their real-name accounts and bind bank cards, which restricts the freedom of payment on a global scale. In the future payment systems, stablecoins could play a more significant role, facilitating a shift from “electronic payments” to “digital payments.” As artificial intelligence and the smart internet evolve, the world will require a new digital payment tool, and stablecoins may come closest to fulfilling this need. Raymond Yuan predicts that the stablecoin market is expected to reach a size of $10 trillion in the next decade to realize this vision.

Raymond Yuan also elaborated on the differences between “Stablecoin 1.0” and “Stablecoin 2.0” in four key aspects:

• Product Maturity: “Stablecoin 1.0” exhibits low product maturity and presents a high entry barrier for users outside the industry. In contrast, WSPN envisions “Stablecoin 2.0” as a product matrix that should encompass dozens of products, ultimately driving large-scale adoption of stablecoins.
• Governance: The governance structure of “Stablecoin 1.0” is overly centralized, contradicting the decentralized ethos of Web3. “Stablecoin 2.0,” however, emphasizes community governance to ensure a decentralized management model.
• Application Scenarios: “Stablecoin 1.0” primarily focuses on cryptocurrency applications. “Stablecoin 2.0” aims for global asset allocation, covering a broader range of scenarios, including U.S. stocks, everyday consumption, and booking flights and hotels.
• User Incentives: “Stablecoin 1.0,” such as USDT and USDC, fails to provide any form of incentives for users. WSPN plans to introduce governance tokens to capture most of the ecosystem’s value and return it to users.

Survival Strategies in a Competitive Stablecoin Market: WSPN’s Compliance and Profitability Strategy

Compliance has always been a core issue in the development of stablecoins. Raymond Yuan emphasized that since its inception, WSPN has established a clear principle: business operations can only commence after obtaining permission from the relevant local regulatory authorities. In the balance between compliance and market expansion, WSPN prioritizes compliance, even at the cost of some efficiency and growth speed, to ensure the legality and safety of its operations.

As of now, WSPN has successfully obtained key licenses and permits in the U.S. and the Netherlands, including the Money Transmitter License (MTL) in the U.S. and the Electronic Money Institution (EMI) license in the Netherlands. In Asia, WSPN is actively applying for sandbox licenses in Hong Kong and has submitted an application for the stablecoin payment license (DTP) to the Monetary Authority of Singapore (MAS). Additionally, WSPN is in discussions with regulatory authorities in Thailand and other Southeast Asian countries, with further progress expected within the next three to six months. In offshore markets, WSPN anticipates obtaining a license in the British Virgin Islands shortly and is applying for relevant licenses in Dubai and Abu Dhabi, with plans to complete these applications by the first quarter of 2025.

Raymond Yuan also stressed that licenses are merely entry barriers to the market and are not the sole key to success. The main function of a license is to integrate into the local mainstream economic system. In many mature regulatory markets, only licensed enterprises can open bank accounts and are accepted as partners or payment service providers by mainstream institutions, effectively raising the “ceiling” for the company’s development. Ultimately, the key to a project’s success lies in delivering real value to users, including product usability, a rich variety of application scenarios, and effective user incentives.

Of course, ensuring compliance is essential, but how to ensure sustainable development amid an increasingly competitive stablecoin market is also crucial. Raymond Yuan explained that WSPN’s revenue model is diversified, with income growth stemming from the widespread adoption of its stablecoin rather than passive income generated from users not redeeming their stablecoins.

The revenue from underlying assets is the most common profit model for stablecoins, typically achieved through interest income from collateral. However, Raymond Yuan pointed out that recent events (such as the decoupling of stablecoins caused by the Silicon Valley Bank incident) have exposed potential risks associated with bank deposits. To mitigate this risk, some companies have begun shifting funds to government bonds for relatively stable returns. It’s important to note, though, that the prices of government bonds are still subject to interest rate fluctuations. To address this, WSPN is adopting a more cautious strategy, aiming to build a diversified portfolio of high-liquidity assets, including government bonds from different countries and other high-yield financial products, thereby spreading risks and optimizing returns.

In addition to returns from underlying assets, WSPN is actively exploring other revenue sources, such as collaborating with multiple public chains to deploy its stablecoin. Currently, WSPN has successfully integrated with six public chains and plans to expand to 20 public chains in the future. As the stablecoin sees widespread use across these chains, a significant volume of transfer activities will generate fee income. Raymond Yuan also mentioned that a portion of these fee revenues may be returned to users in some manner to enhance user engagement and loyalty. Furthermore, platform revenue will be another important income source for WSPN in the future. The company plans to integrate its stablecoin into various user platforms, such as e-commerce and gaming, to earn transaction fee shares from these platforms’ activities.

Market Insights on the Stablecoin Landscape: Projected Growth into Trillions with More Balanced Share Distribution

According to DefiLlama data, the total market capitalization of global stablecoins currently exceeds $168.3 billion, with USDT holding a dominant market share of 70.09%. Raymond Yuan acknowledges that the current market landscape indeed presents risks of excessive centralization but expresses optimism about the future development of the stablecoin market. He believes that as the stablecoin market expands to trillions of dollars, market share will tend toward a more balanced distribution. Even the largest stablecoin issuers may only hold a market share of 20% to 30%. Additionally, numerous smaller stablecoins will each account for about 1% of the market share. Raymond Yuan cited a principle from the traditional U.S. banking industry that limits any single bank’s deposit concentration within the industry to no more than 16%. Similar rules or distribution patterns may emerge in the future stablecoin market.

When discussing DeFi stablecoins that also offer users more application scenarios and returns, Raymond Yuan stated that WSPN’s primary competitors are not these decentralized stablecoins but rather traditional payment sectors. WSPN’s long-term goal is to build a compliant, secure, and transparent payment network infrastructure, while decentralized stablecoins focus more on providing users with high yields based on cryptocurrency. However, this yield model heavily relies on market growth, and once the market enters a bear phase, these yields may not be sustainable.

WSPN’s Future Vision: Core Objective of Maximizing User Experience Value

WSPN is actively addressing the intensifying competition in the stablecoin market. Raymond Yuan elaborated on the company’s future plans across various domains. In terms of productization and user experience, WSPN has launched its wallet application, StableWallet, and plans to further expand its product line by introducing over ten applications. These applications will form a product matrix to enhance user experience. Additionally, Raymond Yuan stated that WSPN is actively exploring the incorporation of AI technology into its products.

Regarding community governance, Raymond Yuan emphasized that many stablecoins’ governance still relies on long-term trust in specific projects from the industry. For instance, USDT has gained trust due to its long-standing presence in the market, despite experiencing several decouplings, while USDC’s trust primarily stems from its compliant positioning. Raymond Yuan asserts that in the Web3 era, trust should not be based on the ethics of individuals or institutions but rather on transparent rules and technology. Therefore, WSPN plans to create an API-first platform that utilizes oracle technology to record asset configuration information in real-time, along with implementing an on-chain voting mechanism to ensure community members can truly participate in the decision-making process, further enhancing governance transparency and security. Moreover, in terms of user incentives, WSPN plans to use governance tokens to capture and distribute the ecosystem’s value.

In summary, Raymond Yuan emphasized that stablecoins go beyond merely issuing tokens; their success hinges on the health of the entire ecosystem. This includes ongoing innovation in areas such as payment services, KYC, and AML tools. Ultimately, all efforts aim at a central goal: maximizing user experience value through continuous infrastructure improvements, securing global licenses, and expanding into new markets and exchanges.

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