To some, Stripe’s $1.1 billion acquisition of stablecoin API provider Bridge.xyz might have come as a surprise. But in reality, stablecoins are making waves worldwide, with a year-over-year growth rate of more than 50%, and global transaction volumes that have already surpassed Visa by more than double.

As the saying goes, “Those who swim in the river know when spring has arrived.” As one of the top three payment giants in the U.S., Stripe has taken a bold step after aggressively experimenting with “Pay with Crypto” this year. Its $1.1 billion purchase of Bridge.xyz, a stablecoin API company founded just two years ago, marks the largest acquisition in the crypto industry to date.

This article will start by discussing the rise of stablecoins, then delve into Bridge’s business model, and finally, analyze Stripe’s acquisition strategy.

1. The Rise of Stablecoins

According to the recent A16z Crypto’s State of Crypto Report 2024, stablecoins have become one of the most significant “killer apps” in the Web3 space. With the widespread adoption of smartphones and the growing use of blockchain technology, stablecoins could represent one of the greatest financial empowerment movements in history.

Stablecoins have made transferring value simpler than ever before. Their quarterly transaction volume is already more than double Visa’s $3.9 trillion, and they settle trillions of dollars in assets each year, proving their immense utility. In terms of daily active addresses, stablecoins make up about 32% of daily cryptocurrency usage, second only to decentralized finance (DeFi), which accounts for 34%.

(Source: State of Crypto Report 2024: New data on swing states, stablecoins, AI, builder energy, and more)

Furthermore, Visa’s stablecoin report shows that the total supply of stablecoins is around $170 billion, with trillions of dollars in asset settlements each year. On-chain, around 20 million addresses are involved in stablecoin transactions monthly, and more than 120 million addresses hold a non-zero balance in stablecoins. These figures indicate that stablecoins operate alongside traditional financial systems — just five years ago, they were nearly non-existent.

Here are some other eye-opening statistics about stablecoins:

• Stablecoins are now the sixth-largest holder of U.S. Treasury bonds;
• 30% of cross-border remittances are conducted using stablecoins;
• Major companies like Visa, PayPal, Square, and Mastercard all have stablecoin projects;
• SWIFT and several sovereign nations are exploring stablecoin payment solutions;
• Stablecoins are increasingly used in non-crypto fields such as remittances, cross-border payments, payroll, trade settlement, and merchant transactions.

2. What is Bridge？

Bridge was founded by entrepreneurs Sean Yu and Zach Abrams and is a stablecoin API engine that provides software tools to help companies accept stablecoin payments. The two founders had previously sold Venmo competitor Evenly to Block in 2013; Abrams was also a former senior employee at Coinbase.

Bridge’s Orchestration API is an API that integrates stablecoin payments into the existing businesses of Web2 companies. Bridge handles all the complex issues related to compliance, regulation, and technology.

Bridge’s Issuance API helps users issue their stablecoins and offers an investment option in U.S. Treasury bonds with a current yield of 5% to enhance capital utilization.

This set of APIs, combined with Bridge’s self-developed solutions: 1) stablecoin cross-chain transactions, 2) fiat/crypto deposits and withdrawals, and 3) virtual bank accounts provided by Leed Bank, enables Web2 users to use stablecoin payments more conveniently, offering a smoother, seamless user experience.

Bridge claims that its APIs allow users to transfer funds globally within minutes, seamlessly send stablecoin payments, convert local fiat currency to stablecoins, and provide USD and EUR accounts for consumers and businesses worldwide, allowing them to save and spend in these currencies.

While this may not represent groundbreaking innovation, what stands out is that Bridge’s products make the interaction process for Web2 users much more convenient.

（https://www.bridge.xyz/#secSolution）

According to a report by Foresight News titled “What Exactly is Bridge, the Company Acquired by Stripe for $1.1 Billion?”: Bridge has attracted many customers, including SpaceX. According to Fortune magazine, SpaceX uses Bridge to receive payments in different currencies across various jurisdictions and transfers them into its global treasury using stablecoins.

Bridge has also partnered with blockchain networks such as Stellar and Bitcoin payment app Strike, providing infrastructure for their stablecoin payment functionalities. Additionally, Coinbase has adopted Bridge’s services to facilitate transfers between Tether on Tron and USDC on Base. Statistics show that Bridge has processed over $5 billion in annual payments.

According to Forbes, Bridge had previously raised $58 million from investors, including $40 million in Series A funding, at which point the company was valued at $200 million. Investors included Sequoia Capital, Ribbit Capital, Index Ventures, Haun Ventures, and 1confirmation, among others. The $1.1 billion acquisition price represents a 5.5x premium and is the largest acquisition in Stripe’s history and the biggest deal in the crypto industry to date.

The $1.1 billion acquisition price is not crazy compared to the multi-billion-dollar valuations of crypto protocols, whose only exit liquidity is often selling useless governance tokens to the market.

3. The Partnership Between Stripe and Bridge

Stripe’s collaboration with Bridge is essentially a continuation of the story of stablecoins’ rise. Their integration will further facilitate the implementation of Stripe’s “Pay With Crypto” strategy, allowing Stripe to handle stablecoins more easily, and making transactions more transparent and secure.

（x.com/Stablecoin/status/1848390039975469094）

Let’s take a look at Bridge’s latest official announcement:

“Bridge and Stripe are teaming up to accelerate the adoption and utility of tokenized dollars, making it easier for everyone around the world to move, store, and spend money.

When we launched our API 18 months ago, the world was very different. Many were questioning the practicality of the entire digital asset space, and stablecoins were affected as well. Regulators, banks, and fintech companies were either unable or unwilling to deeply engage with this new medium of exchange.

Since then, some of the world’s largest financial institutions, such as Visa and SWIFT, have begun natively supporting stablecoins. Policymakers worldwide are working hard to provide clarity and support for stablecoin infrastructure, recognizing the strategic importance of this technology to the current financial system.

Behind the scenes, stablecoin adoption and usage have been rapidly accelerating.

Shortly after launching, several cross-border payment companies integrated our API, proving that stablecoins can be used to make global money transfers faster and cheaper. We then partnered with government agencies to distribute aid payments, supporting thousands of frontline workers in Latin America. Afterwards, we established virtual accounts, enabling fintech companies like Dolar App and Chipper Cash to allow global consumers and businesses to hold and spend USD.

With each use case, we’ve proven to ourselves and those outside the company that stablecoins can become the core infrastructure for global money movement, representing an entirely new payment platform. This isn’t because consumers or businesses inherently want ‘crypto,’ but because stablecoins solve key financial problems. They make money easier to move, cheaper to hold, and more affordable to transfer.

Stripe and Bridge share a common vision: our increasingly globalized world needs better money. We need a currency that can move across borders, be freely accessible to anyone in any country, and be transferred almost for free. And most importantly, we both believe that significant change in financial services doesn’t happen overnight. Change requires years of accumulation. Continuous improvement of products and platforms, and ongoing trust-building with customers, regulators, and partners.”

4. Stripe’s Crypto Strategy

Previously, on October 10, Stripe announced that it had reintroduced its crypto payment gateway (Pay With Crypto) for U.S. businesses, allowing them to:

• Accept USDC and USDP payments from over 150 countries via Ethereum, Solana, and Polygon (Crypto Payin);
• Receive payouts in USD (Crypto Payouts);
• Integrate solutions for checkout, payment elements, and payment intent APIs, with subscription functionality coming soon.

In 2014, Stripe became the first major payment company to offer Bitcoin payments. However, due to slow confirmation times, high fees, and price volatility leading to declining demand, this feature was gradually phased out in 2018.

However, this is not Stripe’s first time integrating crypto services in recent months. In July, Stripe’s EU operations allowed users to buy cryptocurrencies like BTC, ETH, and SOL.

In June, Stripe also signed a partnership with Coinbase, incorporating Coinbase’s Base Layer 2 into its crypto payment products, while Coinbase allowed users to use Stripe’s fiat-to-crypto onramp to buy crypto for their Coinbase Wallet.

（docs.stripe.com/crypto/pay-with-crypto）

The essence of Stripe’s business—whether it’s receiving payments or transferring funds—is 1) on/off ramps, and 2) cross-chain settlement for crypto/stablecoins. Therefore, the acquisition of Bridge:

• Quickly fills in the functional requirements for this part of the business;
• Better serves Stripe’s existing customer base;
• Expands beyond the Stripe ecosystem. Bridge’s star client is the U.S. government. Yes, you read that correctly. Uncle Sam has also joined the stablecoin party.

5. Response to PayPal PYUSD

Last October, when writing the “Web3 Payments Report: Industry Giants Moving In, Set to Reshape the Crypto Market,” the focus was still on the utility and adoption of stablecoin payments. Fast forward to today, and several major payment companies have jumped in.

Since PayPal first launched its stablecoin PYUSD on Ethereum in August last year, it expanded to Solana this June. Beyond PayPal’s ecosystem, the company has been actively nurturing the PYUSD developer community.

According to DeFiLlama, PYUSD on Solana held 64% of the market share this August, while Ethereum accounted for just 36%. PYUSD’s overall market cap hit $1 billion in August.

PayPal outlined a roadmap for the mass adoption of stablecoin payments:

• Awareness through Introduction
• Utility through Integration
• Ubiquity through Assimilation

We’re in the second phase now, edging toward the third. (Analyzing the logic behind PayPal’s stablecoin payments and their path toward mass adoption)

（Analyze the internal logic of Paypal stablecoin payment and the evolution towards Mass Adoption）

Another major player in payments, Block (formerly Square) led by Jack Dorsey, is a staunch advocate of Bitcoin, holding 8,027 BTC and making several moves in the crypto space.

1. Final Thoughts

As Anna @gizmothegizzer said, “In the land of the blind, the one-eyed man is king.” And in the crypto space, the company with the most obscure APIs and the best connections may well be the emperor. My first thought was Tether, and Bridge might be one of them too. We are just getting started.

Future acquisition deals will only get crazier.

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