From start to giving up, why I stopped doing Web3 payments.

Author: Yokiiiya

In the past six months, I transitioned from being a bystander in Web3 to getting involved in the payment industry. And now, I have chosen to stop and no longer continue with Web3 payments.

This is not a retreat after a failure, but a judgment adjustment made after truly stepping into the field. In the past six months, I have been to Yiwu, Shuibei, Putian, and even Mexico, to see how payments are actually made in the busiest places mentioned in those reports. I have also stepped into the field, built a Web3 payment MVP, taken over accounts, developed Web3 collection tools, and tried to run the imagined path from the first step to the last step.

But as I continued deeper, I became increasingly aware of one thing: this is not an industry where “doing a good job on the product guarantees success.” In payments, it’s not about functionality, but rather about banking relationships, licenses, capital efficiency, and the long-term ability to manage risk.

Many payment businesses that seem to be “profitable” are not actually making money from capability premiums, but rather from risk premiums—it's just that nothing has gone wrong yet. What truly determines how far a payment company can go has never been how much money it has made, but rather whether it can still endure and survive before the risks become apparent.

This article is not intended to deny the industry, but rather to remove the filters and lay bare the real structure, leaving some clearer judgments for future entrants. (A few weeks ago, I also recorded a podcast with former Kun Global VP Robert, Nayuta Capital CEO, and former Didi Finance CEO Alex, discussing the same issues.)

1. Why did I get into Web3 payments?

As a serial entrepreneur, I wrapped up a long-running venture last year. During the process of closing the company, I also allowed myself a break to return to a more “cleared” position, seriously considering what direction I should focus my energy on next.

Six months ago, a friend invited me to Hong Kong to explore entrepreneurship related to Web3 payments. At that time, I was not familiar with Web3 itself and did not have much understanding of the payment industry. However, from a macro perspective, it was clear that it is a sufficiently large industry that is still in an upward cycle, and there is potential for a combination between Web3 and AI.

In the previous entrepreneurial process, we have engaged in cross-border business and developed platforms and software related to remote employment. In these practices, I constantly encountered the same fact: business can quickly go global, but the flow of funds is always lagging. Slow settlement, fragmented paths, opaque costs, and uncontrollable payment terms—these issues may be bypassed by experience and patience when the scale is still small; but once the business expands, they will not be solved by “management capability,” but will only continue to be magnified. Money cannot be transmitted as freely as information, and this is itself an invisible limit for many globalization businesses.

It is also against this backdrop that when I began to systematically understand the practical use of Web3 payments in the settlement layer, it presented itself not as an abstract technological narrative, but as a solution that could logically and directly address these pain points: faster settlement speeds, higher transparency, and near 24/7 clearing capabilities.

At the time, this seemed to be a direction that could solve real problems and align with Day 1 Global - I didn't enter the space because of Web3 itself, but because in the specific context of payments, it appeared to offer a better structure - at least logically, it seemed sufficient to leverage those long-standing frictions that had been overlooked.

But looking back now, I gradually realize that, like many others at the time, I assumed a premise that was continuously challenged by reality: as long as the clearing and settlement efficiency is high enough, payment would naturally migrate to the blockchain. It was even further simplified into an intuition — payment is just facilitating transactions; as long as the process is streamlined, cash flow can be “manually generated”.

Based on my lack of understanding of the web3 and payment industry, I decided to spend three months truly immersing myself in this field, figuring out the structure, and then deciding what exactly to do and what position I should take.

2. What truly determines payment is never the product.

When I arrived in Hong Kong, the initial idea was not complicated. The original thought was quite simple: relying on some resources and relationships that friends already had, I would start by tapping into OTC or relatively simple payment scenarios to get the cash flow running first, and then determine what to do next based on real demand.

I'm not here to do research, nor am I here for the long-term observation; I just want to see if it's possible to first create something that works and then calibrate the direction in real business.

But soon, the external environment experienced a noticeable acceleration. In May, the U.S. passed the GENIUS Act, igniting the entire industry almost overnight. Capital, projects, and entrepreneurs rushed in, and Web3 payments transformed from a relatively niche infrastructure topic into a frequently discussed “new opportunity.” From an external perspective, this is good news; however, for a newly established startup team, this sudden excitement is not necessarily a good thing.

The more chaotic, noisy, and rapidly consensus-forming the moment is, the easier it is to obscure the real issues. Internet giants, financial institutions, banks, traditional Web2 payment companies, and Web3 native teams are all entering the scene, with everyone talking about opportunities, yet very few discussing the structure. At that time, I felt it was even more important to dive into the front line and truly understand this industry.

1. The “bustle” in the report is not the same as what is seen on the front line.

Once I really started running on the front line, the first thing I did was not to continue optimizing the product plan, but to see: who is actually using web3 payments? Why are they using it? Where are they using it? I first went to Yiwu, which was mentioned most frequently in reports.

In many studies and discussions, Yiwu is often treated as a representative sample of “web3 payments already scaled applications.” However, what I actually observed was a different picture. Stablecoins do exist, but more often they are used in a fragmented, relationship-driven manner, hidden behind the scenes.

It has not become a settlement method that can be standardized and productized as described in the report. Many transactions are not due to “optimal efficiency.” I then went to Shuibei, Putian, and Mexico, and also learned about the penetration rates in different places like Africa and Argentina, and the situation is fundamentally no different.

Web3 payments do not not exist; rather, they have not yet formed a stable and scalable backbone pathway. More often, they are just a “patch” embedded in the existing system. The actual penetration rate does not match the enthusiasm we perceive in reports, communities, and discussions.

But it was precisely during these exchanges that I gradually shifted my perspective from “whether a product can be made” to the industry structure itself. I began to realize that the incremental market for stablecoins is likely not within the “crypto circle,” but in those business scenarios in the Web2 world that already exist but have long been slowed down by traditional clearing and settlement systems.

This is not a narrative migration, but more like a slowly occurring fintech upgrade. Meanwhile, questions begin to arise: if real usage is so fragmented, can the path to productization hold up?

2. When we really start to develop applications, all the issues point to the same place: the channel.

From July to September, I continued field research while also starting to systematically engage with potential clients. Human resource companies, insurance, tourism, MCN institutions, service trade, cross-border businesses, gaming companies… the demands varied, but the core issue they pointed to was highly consistent: money should flow faster, cheaper, and more stably.

Payroll, task settlement, B2B payments, these scenarios are logically very suitable for stablecoins. At first, we also thought that the application layer could be a direction to explore. However, soon an unavoidable premise emerged: you must have a stable, compliant, and sustainable fiat ⇄ crypto channel.

We started to connect with several service providers that looked good in the market, but after the real experience, it's hard to say which channel is “long-term reliable.” To meet business needs, we even tried to build our own channel, but only after we actually started did we realize: this is not a product issue at all, but an infrastructure issue.

Banking relationships, licensing structures, KYB/KYC compliance, risk control capabilities, quota management, regulatory communication… The entire channel layer heavily relies on long-term accumulated credit, experience, and capital, which are not capabilities that a small team with an internet background can quickly build up.

It was here that I first truly realized: payment is not an industry where “just making a good product wins.”

3. You think you are making money, but in fact, you are taking on risk premium.

In this process, there is a saying that deeply touched me: payment is not about how much money you earn, but how much money you can spend. Many Web3 payment paths that seem to be “running smoothly” are essentially not capacity premiums, but risk premiums.

The more dangerous aspect is that many people do not know what risks they are taking on, nor do they know where those risks specifically lie.

• Is it a compliance issue with the counterparty?
• Is there a mismatch in the capital pool structure?
• Is it a lag in risk control rules?
• Is it still a gray area for regulatory interpretation?

If the feasibility of a business is based on “nothing bad has happened temporarily,” then it is not a structure that can be safely scaled.

The essence of payment is a business of “water flow.”

Slowly, I began to understand payments from a simpler perspective. The essence of payments is actually a business of “water flow.” Whoever controls the waterways can make money; the larger the flow from the faucet, the greater the profit potential. If the water flows past your doorstep, you can take a cut—this sounds like a nearly “easy money” business.

But it is precisely for this reason that payment has never been a simple business. Not all companies that “stand by the water” can make money. The payment companies that truly make money in the long term are often those that have a strong control over water volume, pressure, backflow, pollution, and leakage.

How much water you can carry depends on how much risk you can bear; how long you can let the water flow depends on your tolerance in a compliant, risk-controlled, and regulatory environment. Many paths that seem to have “a lot of water flowing” are essentially just situations where no one has come to close the gate temporarily. It is also in this process that I have developed a more complex, yet more genuine, awe for the payment industry.

Its charm lies not in who has created a new product, but in the fact that it honestly tells you which industries are truly making money in the real world and which ones are just making a lot of noise. Standing on the waterway, you can see where the real funds are flowing, rather than who is constantly doing PR outside.

5. Payment is a good business, but it is not a business we can do well.

As I reach this point, I also have to face a judgment that is not easy for entrepreneurs but is very important. Payments are a good business, but they are not the type of business that we can do best. This is not a denial of direction, but a respect for resource endowments.

What the payment industry truly needs is not the ability to quickly iterate and trial-and-error products, but rather long-term stable banking relationships, sustainable compliance systems, mature risk control capabilities, and the credit accumulated after repeated negotiations in a regulatory environment. These capabilities cannot be attained simply by “giving it a try,” nor can they be quickly compensated for through intelligence or effort in the short term. They are more like industry-level assets that tend to form gradually only within specific types of teams and during certain time windows.

When I truly see payment as a “flow business,” I become more clearly aware that what determines whether a team can stay on the waterway in the long term is not whether you want to or not, but whether you have the structural framework to withstand pressure.

Under this premise, continuing to push forward is no longer a rational investment for us, but more like using time and luck to confront an industry structure that does not stand on our side. This question ultimately led me to the next choice.

3. I still have confidence in payment, but I have a clearer understanding of its true battlefield.

It should be noted that my decision to stop engaging in Web3 payments is not because I am bearish on this industry. On the contrary, over the past six months, I have become increasingly convinced that there are still very significant structural opportunities in the payment industry.

It was only when I took a closer look at these opportunities that I gradually realized a more brutal yet equally important truth—payments is a business with a longer time cycle, heavier structure, and higher resource demands. The opportunities are real, but they are not evenly distributed beneath every entrepreneurial team.

1. The incremental payment is not a short-term bonus, but a long-term restructuring.

If we broaden our perspective, cross-border payments are not a question of “whether they will explode” but rather an ongoing process of infrastructure reconstruction. The continuous overflow of global supply chains, the growth of cross-border service trade, and the acceleration of distributed team collaboration are trends that, when combined, are continually amplifying the friction in the traditional clearing and settlement system.

In this process, the value of web3 payments is not reflected in being “cheaper”, but in three aspects:

• Significant improvement in turnover efficiency
• Transparency of the liquidation path
• Unified settlement capability across currency zones and regulatory zones

This is a structural improvement rather than a tactical optimization. For this reason, it inherently belongs to a project that spans a decade, rather than a market that can be leveraged through product sprints.

2. The real challenge is not “collecting money”, but the funding system in the Marketplace.

After having enough real-world exposure on the front line, I increasingly realized that the difficulty of payment is no longer in the act of “collecting money” itself. Especially in the Marketplace scenario, payment has never been an independent component, but rather a complete ecological financial system.

Buyers, sellers, platforms, logistics, anchors, couriers, tax authorities, frozen accounts, subsidy accounts - all roles are mutually constrained within the same financial chain. In such a system, the true determinant of the threshold is not the payment interface, but rather:

• Custody and Freezing Mechanism
• Revenue Sharing and Settlement Period Design
• Risk control and anti-fraud capabilities
• Cross-regional compliance and regulatory obligations

Once such systems stabilize, they inherently possess the potential to extend into financial capabilities; however, they also impose high demands on the team's financial strength, risk control systems, and long-term patience.

3. Web3 payment is not a front-end revolution, but a back-end upgrade.

One point that has become increasingly certain to me over the past six months is that the true scaling of Web3 payments will not happen on the user end.

It will not explode because users actively start using the wallet, but rather because enterprises begin to upgrade their Treasury, reconciliation systems, cross-border settlement paths, and fund pool management methods.

In other words, the mainstream path is likely to be: the front end remains Web2, while the back end is restructured into Web3. This is a “hidden” upgrade. And this upgrade precisely means that it relies more on system stability, regulatory certainty, and long-term operational capability, rather than market education.

The real breakout point is not in the most mature markets. If we look at it geographically, the growth in payments is also uneven.

The Asia-Pacific region is already a relatively mature market, and real structural growth is more likely to occur in regions such as Latin America, Africa, the Middle East, and South Asia.

• The payment system is severely fragmented.
• High costs, complex paths
• Users have a stronger willingness to migrate with merchants.

But the other side of these markets is: highly localized, strong regulatory differences, and strong operational requirements. What they need is not “smartness”, but long-term deep cultivation.

When I put these opportunities together and take a real look at them, I have to face a clear conclusion: payment is indeed a good business, but the resources it requires —

• Long-term stable banking relationship
• Mature and sustainable compliance system
• Risk control capabilities that withstand stress testing
• Credit accumulated after repeated games in a regulatory environment

is not within the current capabilities of our team. This is not a denial of direction, but a respect for reality. The battlefield of payment still exists, but it is no longer under our feet. It is precisely under this judgment that I ultimately chose to stop and rethink: if I do not stand on the waterways, where else can I stand to continue participating in this ongoing structural change.

Four, when I decide to stop making payments

When I truly made the decision to stop continuing with Web3 payments, there wasn't a strong sense of “finality.” It felt more like a journey of exploration had finally reached a point where it should pause. I haven't left the industry. I've simply shifted from trying to stand in the waterway to collect water, to observing from the side how the water flows and ultimately where it leads.

In the process of repeatedly dissecting the payment structure, one judgment becomes increasingly clear: payment addresses the issue of liquidity, whether money can move and how quickly it can move; however, what truly determines long-term value is never the liquidity itself, but rather—where the money stops after it moves and how it is managed.

Looking back at the development path of China's financial technology over the past twenty years, the logic is actually very clear. Payment is just the entry point, the balance is a transfer station, and what truly forms scale and barriers is the subsequent capital management and asset allocation system. Yu'ebao, Tiantian Fund, and Tianhong did not succeed because they “did payment better,” but because they stood after payment, taking in and reorganizing the already scaled capital flow.

Payments are at the entrance, but not the destination. Looking at this structure in the Web3 world, I see similar issues gradually emerging. There has already been a significant amount of assets on-chain that are not aggressive, but sufficiently robust—such as lending, short-duration RWA, neutral strategies, and composite products… They resemble on-chain money market funds, short-term bond funds, and stable allocation tools. The real issue is not whether “there are assets”, but rather that most people do not understand what kind of risks they are facing, and lack an entry point to comprehend, compare, and judge these assets.

As more and more funds start to flow on the chain, this issue will only become more prominent. It was at this point that I began to realize: if I do not continue with payments, I can still remain in this change in another way. Rather than competing for waterways, I can clarify the structure of the flow of water, lay out the boundaries and risks, and let people know which places are worth staying in and which places require extra caution. This is also the direction that my team and I will continue to explore.

This article is not meant to draw conclusions about Web3 payments, nor is it an attempt to persuade anyone to enter or exit; it simply aims to clarify why I chose to stop engaging in payments. I hope it can provide some reference for those who come after me, perhaps helping them avoid some detours.