WSPN discusses "Stablecoin 2.0": Can it usher in a new era for the stablecoin market?

All efforts ultimately point to a core goal: maximizing user experience value.

Written by: LindaBell

The stablecoin market is continuously evolving. While traditional stablecoin solutions like USDC and USDT still hold the majority market share, they are also facing challenges such as low capital efficiency and centralization. Meanwhile, many new stablecoin solutions have emerged in the market, such as the high-yield USDe, the RWA decentralized stablecoin Usual Money, and WSPN, which is committed to building a payment ecosystem network. These emerging solutions are intensifying market competition and driving the emergence of more choices.

Against this backdrop, ChainFeeds invited WSPN founder Raymond Yuan to discuss the development of stablecoins, including the concept of "Stablecoin 2.0," the stablecoin market landscape, and compliance topics.

Key Points:

1) WSPN's proposed "Stablecoin 2.0" aims to promote broader global payment applications and leverage digital technology to achieve large-scale market expansion.

2) Licenses are just a threshold for entering the market, mainly serving to integrate into the local mainstream economic system. The real key to a project's success lies in whether it can bring real value to users.

3) As the stablecoin market expands to several trillions of dollars, market share will become more balanced. Even the largest stablecoin issuers may only hold 20% to 30% of the market. At the same time, there will be many smaller stablecoins, each occupying about 1% of the market share.

4) The success of stablecoins depends on the prosperity of the entire ecosystem, including continuous innovation and development in areas such as payment services, KYC, and AML tools. All efforts ultimately point to a core goal: maximizing user experience value.

WSPN: Promoting Stablecoin Adoption by Building a Payment Network

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

Currently, WSPN has launched its first stablecoin, WUSD, and plans to launch a euro stablecoin, WEUR. Founder Raymond Yuan explained that the "W" in WUSD stands for "stability," symbolizing its steadiness. To ensure the stability of WUSD, WSPN has taken several measures. For example, in the issuance phase, it insists on a fiat-collateralized stablecoin path, ensuring that each WUSD has 100% reserve funds in bank accounts. In the storage phase, it adopts private key sharding technology and cooperates with third-party custody platforms to ensure security. Finally, in the redemption phase, WSPN has built a 24-hour operation system, with operation centers in North America, Asia, and Europe, ensuring a rapid response to customer needs.

In addition, WSPN has partnered with Visa and Mastercard to launch a stablecoin payment card, which has been tested in Japan. Users can use the card for payments at convenience stores and supermarkets. At the same time, WSPN's stablecoins have been used by some commodity traders and cross-border trade payment companies for payments and settlements, and it is actively expanding into the stablecoin-based wealth management market.

On August 16 this year, WSPN completed a $30 million seed round of financing, 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 continuously invested in infrastructure construction.

From "Stablecoin 1.0" to "Stablecoin 2.0": WSPN's Payment Network Vision

WSPN has proposed a new concept, "Stablecoin 2.0," aiming to build a user-centric payment network driven by digital technology. Raymond Yuan stated that although "Stablecoin 1.0" represented by USDT has exceeded $160 billion in scale, its application scenarios are mainly limited to the cryptocurrency field, with limited growth space. For example, in the current payment system, users still need to link real-name accounts and bind bank cards, and cannot make payments freely worldwide. Stablecoins can play a more important role in future payment systems, transforming from "electronic payments" to "digital payments." In the future, with the development of artificial intelligence and the intelligent internet, the world will need a new digital payment tool, and stablecoins may be the technology closest to this goal. Raymond Yuan predicts that in the next decade, the stablecoin market is expected to reach a scale of $10 trillion, thus realizing this vision.

Raymond Yuan also elaborated on the differences between "Stablecoin 1.0" and "Stablecoin 2.0" from four aspects:

• Productization: "Stablecoin 1.0" has a low degree of productization and a high threshold for users outside the industry. WSPN envisions "Stablecoin 2.0" as a product matrix, with a dozen, twenty, or even dozens of products, ultimately driving large-scale adoption of stablecoins;
• Governance: "Stablecoin 1.0" governance structures are overly centralized, which does not align with the decentralized spirit of Web3. "Stablecoin 2.0" emphasizes community governance to ensure a decentralized management model;
• Application Scenarios: "Stablecoin 1.0" application scenarios are mainly concentrated in the cryptocurrency field. The goal of "Stablecoin 2.0" is global asset allocation, covering US stocks, daily consumption, booking flights and hotels, and other broader scenarios;
• User Incentives: "Stablecoin 1.0" such as USDT and USDC do not provide any form of incentive to users. WSPN plans to launch governance tokens to capture most of the ecosystem's value and return it to users.

Survival Strategies in Stablecoin Market Competition: WSPN's Compliance and Profitability Approach

Compliance has always been a core issue in the development of stablecoins. Raymond Yuan emphasized that since its establishment, WSPN has set a clear principle: business can only be conducted after obtaining permission from relevant local regulatory authorities. Between compliance and market expansion, WSPN prioritizes compliance, even at the expense of some efficiency and development speed, to ensure the legality and security of its operations.

So far, WSPN has successfully obtained key licenses and permits in the United States and the Netherlands, including the US MTL (Money Transmitter License) and the Dutch EMI (Electronic Money Institution) license. In Asia, WSPN is actively applying for Hong Kong's sandbox license and has submitted a stablecoin payment license (DTP) application to the Monetary Authority of Singapore (MAS). In addition, WSPN is in communication with regulatory authorities in Thailand and other Southeast Asian countries, expecting further progress in the next three to six months. In offshore markets, WSPN expects to obtain a license in the British Virgin Islands soon and is applying for relevant licenses in Dubai and Abu Dhabi, UAE, with plans to complete these applications in the first quarter of 2025.

Raymond Yuan also emphasized that licenses are just a threshold for entering the market, but they are not the only key to success. The main role of licenses is to integrate into the local mainstream economic system. In many mature regulatory markets, only licensed companies can obtain bank accounts and be accepted by mainstream institutions as partners or payment providers. This is equivalent to opening a "ceiling" for the company's development. However, the real key to a project's success lies in whether it can bring real value to users, including product usability, richness of application scenarios, and effectiveness of user incentives.

Of course, on the basis of ensuring compliance, it is also important to ensure sustainable development in the face of increasingly fierce competition in the stablecoin market. Raymond Yuan explained that WSPN's revenue model is diversified, and revenue growth comes from the widespread adoption of its stablecoins, rather than passive income from users not redeeming stablecoins.

The yield from underlying assets is the most common profit model for stablecoins, usually achieved through interest income from collateral. However, Raymond Yuan pointed out that some recent events (such as the Silicon Valley Bank incident leading to stablecoin depegging) have exposed the potential risks of bank deposits. To avoid such risks, some companies have begun to transfer funds to government bonds to obtain relatively stable returns. However, it should be noted that the price of government bonds is still affected by interest rate fluctuations. To this end, WSPN has adopted a more prudent strategy, aiming to build a diversified, highly liquid asset portfolio, including government bonds from different countries and other financial products with high-yield characteristics, thereby diversifying risks and optimizing returns.

In addition to returns from underlying assets, WSPN is also actively exploring other sources of income, such as deploying its stablecoins on multiple public blockchains. Currently, WSPN has successfully integrated with six public chains and plans to expand to 20 public chains in the future. As stablecoins are widely used on these blockchains, a large number of transfer activities will generate fee income. Raymond Yuan also mentioned that in the future, part of these fee incomes may be returned to users in some way, further enhancing user engagement and loyalty. In addition, platform income is also an important future revenue source for WSPN. The company plans to integrate stablecoins into various user platforms, such as e-commerce and gaming, thereby earning a share of transaction fees from these platforms.

Insights into the Stablecoin Market Landscape: Market Size Will Expand to Several Trillions of Dollars, and Share Distribution Will Become More Balanced

According to DefiLlama data, the current total market capitalization of global stablecoins has exceeded $168.3 billion, with USDT dominating with a 70.09% market share. Raymond Yuan stated that the current market structure does indeed pose the risk of excessive centralization, but he is optimistic about the future development of the stablecoin market. He believes that as the stablecoin market expands to several trillions of dollars, market share will become more balanced. Even the largest stablecoin issuers may only hold 20% to 30% of the market, while many smaller stablecoins will each occupy about 1% of the market share. Raymond Yuan also gave an example, stating that there is a principle in the US traditional banking industry that the deposit concentration of a single bank in the industry must not exceed 16%. Similar rules or distribution patterns may also appear in the future stablecoin market.

When discussing DeFi stablecoins, which can also provide users with more application scenarios and returns, Raymond Yuan said that WSPN's main competitors are not these decentralized stablecoins, but rather the traditional payment sector. 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 returns based on cryptocurrencies. However, this return model is highly dependent on market growth, and once the market enters a bear phase, these returns may not be sustainable.

WSPN's Future Blueprint: The Core Goal Is to Maximize User Experience Value

WSPN is actively responding to the increasingly fierce competition in the stablecoin market, and Raymond Yuan has also explored the company's future plans in various fields. In terms of productization and user experience, WSPN has already launched its own wallet application, StableWallet, and plans to further expand its product line by launching more than 10 applications. These applications will form a product matrix, making the user experience more friendly. At the same time, Raymond Yuan also stated that WSPN is actively exploring the integration of AI technology into its products.

In terms of community governance, Raymond Yuan emphasized that the governance of many current stablecoins still relies on the industry's long-term trust in specific projects. For example, USDT has gained trust due to its long-term presence in the market, despite experiencing several depegging events, while USDC's trust comes more from its compliance positioning. Raymond Yuan said that in the Web3 era, trust should not be built on the morality of individuals or institutions, but on transparent rules and technology. To this end, WSPN plans to build an API-first platform, use oracle technology to record asset allocation information in real time, and introduce on-chain voting mechanisms to ensure that community members can truly participate in the decision-making process, further achieving transparency and security in governance. In addition, in terms of user incentives, WSPN plans to capture and distribute ecosystem value through governance tokens.

Finally, Raymond Yuan stated that stablecoins are not just about issuing tokens; their success depends on the prosperity of the entire ecosystem, which includes continuous innovation and development in areas such as payment services, KYC, and AML tools. Of course, all efforts ultimately point to a core goal: maximizing user experience value, whether it is the continuous construction of infrastructure, obtaining global licenses, or expanding the market and listing on exchanges.