I’ve gotten a lot of questions about where I see the stablecoin market heading and which parts of the stack will accrue the most value, so I’m sharing some unfiltered thoughts here below 👇

To break it down, I look at the market in several categories—more than most frameworks I’ve seen (though not as complex as the VERY good @artemis__xyz market map)—because payments are inherently complex and nuanced. Understanding who does and owns what is extremely important, especially investors who often seem to overlook the nuances. These categories are: (1) settlement rails, (2) stablecoin issuers, (3) liquidity providers, (4) value transfer/money services, (5) aggregated APIs/messaging, (6) merchant gateways, and (7) stablecoin-powered applications.

You might ask: why so many categories, especially since I’m not even covering core infra like wallets or third-party compliance? It’s because each area has its own defensive “moat” and different ways it can capture value. Sure, there’s overlap between providers, but it’s crucial to understand what sets each part of the stack apart.

Here’s my take on how the value might shake out:

1. Settlement Rails:

These are all about network effects—think deep liquidity, low fees, quick settlement times, reliable uptime, plus inherent compliance and privacy. They’re likely to form winner-take-most markets. I strongly doubt that general-purpose blockchains can meet the scale and standards of major payment networks. I expect an extension or Layer 2 of a general-purpose chain can work, but the main point is that we need purpose-built solutions. The winners here will be incredibly valuable and will likely have a stablecoin / payments specific focus.

1. Stablecoin Issuers:

Right now, issuers (like @circle and @tether_to) have been the obvious winners as they have benefitted from huge network effects and high interest rates. But going forward, if they keep acting like asset managers instead of payment companies, they’ll hit a wall. They need to invest in fast, reliable infrastructure, high compliance standards, cheap mint/redeem processes, central bank and core banking integrations, and all-around better liquidity (like @withAUSD is doing). There’s a chance “stablecoin-as-a-service” platforms (like @paxos) will spawn endless competitors, but I still believe neutral non-bank and fintech-issued stablecoins will win big because competitive dynamics won’t allow closed systems to transact amongst themselves (and benefit others) without a credibly neutral third party in the middle. Issuers already hold a lot of value and some will continue to win incredibly big, but they need to evolve beyond just issuance.

1. Liquidity Providers (LPs):

Today these are often OTC desks or exchanges that either are large, successful crypto businesses or they are smaller ones that couldn’t compete as well in broad crypto capabilities and have pivoted to focusing on a stablecoin business. This space feels extremely commoditized with minimal pricing power – with the moats being entirely around access to cheap funding, uptime, and deep liquidity / lots of pairs. That means over time, the big players should dominate the stablecoin focused providers. I don’t see stablecoin-focused LPs carving out strong, lasting advantages.

1. Value Transfer / Money Services (The “PSPs” of Stablecoins):

Sometimes called “stablecoin orchestration” platforms, like @stablecoin and @conduitpay, and these companies win and build moats when they own proprietary rails and have direct relationships with banks instead of using third party providers. Their “moats” come from banking relationships and capacity, flexibility in handling different forms of payments, global reach, liquidity, uptime, and top-tier compliance. Many say they do this, but few actually have their own real proprietary infrastructure. Winners here will enjoy moderate pricing power, form regional duopolies or oligopolies, and supplement traditional PSPs to become very large businesses.

1. Aggregated APIs / Messaging Platforms:

These players often say they do the same thing as the PSPs, but they’re instead just wrapping or aggregating APIs. They don’t take on compliance or operational risk themselves—they’re more rightfully thought of as a marketplace of PSPs and LPs. They can charge high fees now, but eventually they’ll be squeezed (maybe disintermediated altogether) as they’re not handling the “hard” parts of the payment flows or infrastructure build. They call themselves “Plaid for stablecoins,” forgetting that blockchains already solve many of original pain points Plaid solved for traditional banking/payments. Unless they expand closer to the end customer and take on more of the stack, they’ll struggle to maintain their margins and business.

1. Merchant Gateways / Ramps:

These help merchants and businesses accept stablecoins or crypto. They sometimes overlap with PSPs, but mostly offer easy developer tools, while aggregating third party compliance and payment infrastructure, and packaging it into user-friendly interfaces. They hope to be like Stripe—winning on ease of integration and then expanding horizontally. But unlike Stripe’s early days, developer-friendly payment options are everywhere now, and distribution is king. Established payment players should be able to easily partner with orchestration companies to add stablecoin options, making it tough for crypto-only gateways to carve out a niche. While companies like Moonpay or Transak have historically enjoyed great pricing power, I don’t expect that to last. On the B2B side, there might still be some winners who add unique software features for managing big treasuries or large-scale stablecoin usage, but B2C is likely a losing category. Overall, though, I think this segment faces an uphill battle.

1. Stablecoin-Powered Fintechs and Applications:

It’s easier than ever to spin up a stablecoin-powered “neobank,” or “fintech,” so this space is going to be a knife fight. Who wins will depend on distribution, GTM chops, and differentiated product sense—just like regular fintech. But when established brands like Nubank, Robinhood, and Revolut can easily tack on stablecoin features, it’ll be hard for a startup to stand out, especially in developed markets. In emerging markets, there may be a bit more opportunity for unique offerings (take@Zarpay_app""> @Zarpay_app, for example) but developed markets are likely a losing proposition if your differentiation is just stablecoin powered finance. Overall, I expect failure rates here to be extremely high and for this category to remain challenged for crypto / stablecoin only consumer start-ups. Business focused may have more of an opportunity to carve out a niche, however.

Of course, there are edge cases and overlaps not covered here. But this framework has helped guide our thinking as investors who spend a lot of time in this space. As always, feedback is welcome. And please reach out if you want to chat about any of the above (or you’re a start up raising in the space).

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