WSPN on 'Stable Coin 2.0': Can it start a new era in the stablecoin market?

The Stablecoin market is continuously evolving. While traditional Stablecoin solutions like USDC and USDT still dominate the market, they also face challenges such as low capital efficiency and centralization. At the same time, many new types of Stablecoin solutions have emerged, such as high-yield USDe, RWA Decentralization Stable Coin Usual Money, and WSPN, which is dedicated to building a payment ecosystem network. These emerging solutions are intensifying market competition and driving the emergence of more choices.

Against this background, ChainFeeds invited Raymond Yuan, founder of WSPN, to discuss the development of Stable Coins, including the concept of ‘Stable Coin 2.0’, the market structure of Stable Coins, and Compliance.

Key Points:

1）The “Stable Coin 2.0” proposed by WSPN aims to promote a wider range of global payment applications and achieve large-scale market expansion using digital technology.

2. Licenses are only a threshold for market entry, and their main function is to integrate into the local mainstream economic system. The key to the success or failure of a project lies in whether it can bring real value to users.

3. As the stablecoin market expands to trillions of dollars, market share will become more balanced, with even the largest stablecoin issuers possibly only holding 20% to 30% of the market. At the same time, there will be many smaller stablecoins, each occupying around 1% of the market share.

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

WSPN: Hope to promote Stable Coin applications by building Payment Network

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

Currently, WSPN has launched its first Stable Coin WUSD and plans to launch the Euro Stable Coin WEUR. Founder Raymond Yuan explains that the ‘W’ in WUSD stands for ‘stable’, symbolizing its stability. To ensure the stability of WUSD, WSPN has taken multiple measures. For example, in the issuance process, it insists on the path of Fiat Currency collateralized Stable Coin, ensuring that each WUSD has 100% of its funds reserved in a bank account. In the storage process, it adopts Private Key Sharding technology and collaborates with third-party custodial platforms to ensure security. Finally, in the redemption process, WSPN has built a 24-hour operation system and established operation centers in North America, Asia, and Europe to ensure quick response to customer needs.

In addition, WSPN has collaborated with Visa and Mastercard to launch Stable Coin payment cards and has conducted tests in Japan. Users can use the card for payments at convenience stores and supermarkets, among other places. Meanwhile, WSPN’s Stable Coin has been used by some commodity traders and cross-border trade payment companies for payments and Settlement, and actively expanding the financial market based on Stable Coin.

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

From ‘Stable Coin 1.0’ to ‘Stable Coin 2.0’: WSPN’s Payment Network Vision

WSPN has proposed a new concept of “Stable Coin 2.0”, aiming to build a Payment Network driven by digital technology and centered around users. Raymond Yuan said that although the scale of “Stable Coin 1.0” represented by USDT has exceeded more than 160 billion US dollars, its application scenarios are mainly limited to the cryptocurrency field, and the rise space is limited. For example, in the current payment system, users still need to associate real-name accounts and bind bank cards, and cannot pay freely worldwide. Stable Coin can play a more important role in future payment systems, enabling the transition from “electronic payment” to “digital payment”. In the future, with the development of artificial intelligence and the Internet of Things, the world needs a new digital payment tool, and Stable Coin may be the technology that is closest to this goal. Raymond Yuan predicts that the Stable Coin market is expected to reach a scale of 10 trillion US dollars in the next decade, thus achieving this vision.

Raymond Yuan also detailed the differences between ‘Stable Coin 1.0’ and ‘Stable Coin 2.0’ from four aspects:

• Productization Level: ‘Stable Coin 1.0’ has a lower level of productization, making it less accessible to users outside the industry. On the other hand, ‘Stable Coin 2.0’ envisioned by WSPN is a product matrix that should include a dozen or even dozens of products, ultimately driving the widespread adoption of Stable Coins.
• Governance: The governance structure of ‘Stable Coin 1.0’ is too centralized, which does not conform to the spirit of Decentralization in Web3. ‘Stable Coin 2.0’ emphasizes community governance to ensure a Decentralization management model.
• Application scenarios: The main application scenarios of ‘Stable Coin 1.0’ are concentrated in the field of Crypto Assets. The goal of ‘Stable Coin 2.0’ is global asset allocation, covering a wider range of scenarios including US stocks, daily consumption, and booking airplane tickets and hotels.
• User incentives: “Stable Coin 1.0” such as USDT and USDC cannot provide users with any form of incentives. WSPN plans to launch a governance token to capture most of the value of the ecosystem and return it to users.

The survival strategy of the stablecoin market competition: WSPN’s Compliance and profit strategy

Compliance has always been a core issue in the development of stablecoins. Raymond Yuan emphasized that since the establishment of WSPN, the company has set a clear principle: business operations must be conducted with the permission of local regulatory authorities. Between compliance and market expansion, WSPN prioritizes compliance, preferring to sacrifice certain efficiency and development speed to ensure the legality and security of its operations.

As of now, WSPN has successfully obtained key licenses and permits in the United States and the Netherlands, including the MTL (Money Transmitter License) in the United States and the EMI (Electronic Money Institution) license in the Netherlands. In the Asian region, WSPN is actively applying for a sandbox license in Hong Kong and has submitted an application for the Stable Coin Payment License (DTP) to the Monetary Authority of Singapore (MAS). In addition, WSPN is also in communication with regulatory authorities in Thailand and other Southeast Asian countries, expecting further progress in the next three to six months. In the offshore market, WSPN is expected to obtain a license in the British Virgin Islands in the near future, and is applying for relevant licenses in Dubai and Abu Dhabi in the United Arab Emirates, with plans to complete these applications in the first quarter of 2025.

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

Of course, while ensuring compliance, it is important to ensure sustainable development in the face of an increasingly competitive stablecoin market. Raymond Yuan explained that WSPN’s revenue model is diverse, and the rise in revenue comes from the widespread adoption of its stablecoin, rather than passive income from users not redeeming stablecoins.

The yield of the underlying assets is the most common profit model for stablecoins, usually achieved through Interest income from collateral. However, Raymond Yuan pointed out that recent events (such as the stablecoin depeg caused by the Silicon Valley Bank incident) have exposed the potential risks of bank deposits. To avoid this risk, some companies have begun to transfer funds to government bonds to obtain relatively stable returns. It is important to note that the price of government bonds is still affected by Interest Rate Fluctuation. Therefore, WSPN has adopted a more cautious strategy, hoping to diversify and optimize returns by building a diversified and highly liquid asset portfolio, including government bonds from different countries and other high-yielding financial products, in order to diversify risks and optimize returns.

In addition to the returns from the underlying assets, WSPN is actively exploring other sources of income, such as collaborating with multiple public chains to deploy its Stable Coin. Currently, WSPN has successfully integrated 6 public chains and plans to expand to 20 public chains in the future. With the widespread application of Stable Coin on these public chains, a large amount of transfer activities will generate fee income. Raymond Yuan also mentioned that a portion of these fee income may be returned to users in some way in the future, further enhancing user participation and loyalty. In addition, platform revenue is also one of the important future sources of income for WSPN. The company plans to integrate Stable Coin into various user platforms, such as e-commerce and gaming, to obtain fee sharing from the transaction activities on these platforms.

Stable Coin Market Insight: The market size will expand to tens of trillions of dollars, and the distribution of market share will become more balanced

According to DefiLlama’s data, the total market capitalization of global Stable Coins has exceeded 168.3 billion US dollars, with USDT dominating the market with a 70.09% share. Raymond Yuan stated that there is indeed a risk of excessive centralization in the current market structure, but he is optimistic about the future development of the Stable Coin market. He believes that as the market size of Stable Coins expands to trillions of dollars, market shares will tend to be more balanced, even the largest Stable Coin issuers may only have a market share of 20% to 30%. At the same time, there will be many smaller-scale Stable Coins, each occupying about 1% of the market share. Raymond Yuan also gave an example, stating that the traditional banking industry in the United States has a principle that the concentration of deposits by a single bank in the industry should not exceed 16%. Similar rules or distribution patterns may also appear in the future Stable Coin market.

When discussing stablecoins in Decentralized Finance that can bring more application scenarios and profits to users, Raymond Yuan stated that the main competitors of WSPN are not these decentralized stablecoins, but the traditional payment field. The long-term goal of WSPN is to build a compliant, secure, and transparent Payment Network infrastructure, while decentralized stablecoins are more focused on providing high returns to users based on cryptocurrency. However, this income model is highly dependent on the rise of the market, and once the market enters a bear market, these returns may not be sustainable.

WSPN Future Blueprint: The core goal is to maximize user experience value

WSPN is actively responding to the increasingly fierce competition in the Stable Coin market, and Raymond Yuan has also delved into the company’s future plans in various fields. In terms of productization and user experience, WSPN has launched its own Wallet application StableWallet, and plans to further expand its product line, launching over 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 introduction of AI technology into its products.

Regarding community governance, Raymond Yuan emphasized that the governance of many 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 depeg events. The trust in USDC is more based on its compliance positioning. Raymond Yuan stated that in the Web3 era, trust should not be based on the morality of individuals or institutions, but on transparent rules and technology. To this end, WSPN plans to build an API-first platform that records asset allocation information in real-time through Oracle Machine technology and introduces on-chain voting mechanisms to ensure that community members can truly participate in the decision-making process, further enhancing the transparency and security of governance. In addition, in terms of user incentives, WSPN plans to capture and distribute the value of the ecosystem through governance tokens.

Finally, Raymond Yuan said that stablecoin is not just an issuanceToken, its success depends on the prosperity of the entire ecosystem, including continuous innovation and development in various fields such as payment services, KYC, and AML tools. Of course, all efforts ultimately aim at a core goal: maximizing user experience value, whether it’s the continuous construction of infrastructure, obtaining global licenses, or expanding the market and launching on exchange.

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