WSPN: Stablecoin 2.0 Era and Global Payment Change

Author: Raymond Yuan

Since the birth of the first product in 2014, stablecoins have been developing in the field of cryptocurrencies for more than 10 years. In 2017, as many governments restricted or even shut down Bitcoin sovereign currency trading channels, stablecoins officially emerged and have been playing the role of an intermediary for cryptocurrency transactions. Today, in the daily trading volume of nearly US$100 billion, stablecoin trading pairs account for more than 80%, far exceeding the trading volume of sovereign currency and cryptocurrency trading pairs.

As the performance advantages of stablecoins - such as anonymous transfers, low transfer fees, high transfer speeds, irreversibility, 24/7 global peer-to-peer transactions, etc. - are widely recognized, these digital assets are increasingly integrated into daily payment scenarios, and their scope of use has been greatly expanded. However, from the perspective of the product itself, the stablecoins on the market currently still have many obvious shortcomings and defects, which restrict the increase in the total circulation of stablecoins and also inhibit their rapid development.

Several Development Bottlenecks of Stablecoins

1. Lack of user incentives: Currently, the leading stablecoin products on the market generally lack incentives for users. Stablecoin issuers and operators obtain all profits, which leads to the loss of basic risk-free returns when user funds are deposited in stablecoins. When the base interest rate is high and the speculative market is sluggish, customers will lack the motivation to continue holding stablecoins, and a large amount of funds will flow out. Although users can obtain returns by lending stablecoins or using stablecoins to engage in high-risk investments, this essentially means that users need to bear additional risks. If stablecoins want to maintain continuous circulation growth and compete with traditional payment wallet retention/demand deposits, they need to provide additional incentives to promote user retention and maintain user loyalty.

2. Lack of community governance and transparency: As a Web3 product built on a blockchain network, stablecoins should gradually return to the basic consensus in this field, that is, introduce a community governance mechanism and use on-chain asset proof methods to improve transparency. At present, the success of stablecoins mainly depends on the integrity, self-discipline and wise decision-making of the management team. In the absence of community governance, the operation of the entire product is very centralized, and it is difficult to ensure that the management team will not take excessive risks in pursuit of higher returns. Although traditional auditing agencies regularly disclose audit reports, those who are familiar with the rules of the Web3 world will know that audit reports cannot completely ensure the safety of assets. Behind many serious bankruptcy accidents, there is a phenomenon of failure of traditional audit methods. In the future digital world, trust can only rely on the reliability of technology and rules, rather than personal moral standards.

3. Lack of user interface, inconvenient deposit and withdrawal: If we do a simple survey, randomly select 100 adult users on the street, and explore the proportion of their use of cash, bank cards, mobile payments, and stablecoins, we can definitely get a conclusion that the development of stablecoin payments is still in a very early stage. At present, the number of users that stablecoins can obtain is still limited. Compared with traditional Internet payments, the penetration rate of stablecoin payments is still very low. This is because the current stablecoin exchange relies heavily on over-the-counter transactions, and a large number of users are still trapped in the inconvenient access to the entrance, and do not know how to buy and redeem stablecoins at a low cost. This not only breeds a large number of transaction frauds, but also suppresses people's normal demand for stablecoins. How to expand the user base has become the key to determining the success or failure of stablecoin payments. Fundamentally speaking, stablecoins need to build a more convenient distribution and exchange channel, improve infrastructure, and strengthen user education.

4. Lack of diverse product lines, lack of usage scenarios and value ecology: Most of today's stablecoins have a single product line, and many stablecoin products do not even have their own wallets, which cannot solve the obstacles of novice users using mnemonics, paying gas fees, and using stablecoins on different chains. For institutional customers, there is a lack of support in the process of stablecoin custody and internal transfer approval, which requires a large number of users to explore on their own and build infrastructure from scratch. In addition, even if people have purchased stablecoins, due to the lack of usage scenarios, a large number of users can only use stablecoins as a value transfer medium instead of holding stablecoins for a long time. Stablecoin products currently generally lack a value ecology, and the entire value chain is very short. Users need to frequently deposit and withdraw funds and switch repeatedly between stablecoins and sovereign currencies to meet their own value needs.

WSPN's solution: Opening a new era of stablecoin 2.0

As the proposer and advocate of stablecoin 2.0, WSPN (Worldwide Stablecoin Payment Network) is committed to building an ecosystem that is more in line with the spirit of Web3, improving the robustness and transparency of the stablecoin infrastructure, making it more user-oriented and community-oriented, and enriching product forms and usage scenarios, introducing stablecoins into more real application cases, and serving more users. We look forward to developing the user scale of stablecoins to the order of 1 billion, and gradually replacing the current mobile payment system to become the most dominant payment method in the future digital world.

1. From the people, for the people: WSPN will issue its own governance token to realize user incentives, feed back the value of the ecosystem to users, and make users the biggest beneficiaries of this infrastructure. The essence of infrastructure is "from the people, for the people", and should not only satisfy the desire for profit of some people. Any value system, if it cannot put user value and user incentives at the core, will only end up being abandoned by users. Unlike many stablecoin products that directly distribute the interest rate income of the underlying assets, governance tokens can share the long-term value of the entire ecosystem with users, and are no longer subject to the restrictions of interest rate levels. In the long run, this will encourage users' sense of ownership, making the entire infrastructure owned by the community and users in the long run.

2. Community-driven, serving the community: WSPN will introduce community governance, allowing holders of governance tokens to vote on the chain, and ultimately achieve the transition from corporate governance to community governance. As an infrastructure built on a blockchain network, stablecoins must be more in line with the spirit of Web3. For example, the configuration of underlying assets will no longer be decided by individual key people, but by the community to vote on proposals with different risks/returns, and finally be announced on the chain, so that the entire network can achieve real-time on-chain asset proof, no longer relying on the due diligence of a certain auditing agency. The purpose of community governance is to establish a trust based on technology and rules, so as to get rid of the dependence on the credit of individuals and institutions.

3. Enhance user accessibility and redefine the payment system: WSPN will greatly enrich the user interface, lower the user threshold, and make it as convenient as possible for users to freely deposit and withdraw funds. The future stablecoin should have the best user accessibility, so that traditional individual users and institutions can complete the migration of usage habits at a lower cost. It should be emphasized that the future stablecoin will not be limited to the segmented scenario of encrypted asset trading. Its main mission should be to upgrade the current electronic payment system, and even the settlement and clearing system, and migrate the current online bank transfer based on electronic ledgers to on-chain transfers based on blockchain distributed ledgers. Although the stablecoin payment network will still coexist with traditional payment and settlement/clearing networks for a very long time, stablecoin payment will eventually gradually erode the market of electronic payment, better serve the digital economy and smart economy in the AI ​​era, and become the core of the next generation of global digital payment network.

4. Build a value ecosystem and expand use cases: WSPN is committed to establishing a rich product line, building a more prosperous value ecosystem and diversified use scenarios. In the future, stablecoins should help users freely complete various asset allocations, including stocks, gold, crude oil, commodity trading, etc., and can purchase any freely circulated asset on this planet. Stablecoins should also be able to be used for daily payments, such as taking public transportation, going to convenience stores, shopping malls, etc. Of course, stablecoins should also have a rich source of income. Whether holding stablecoins or using stablecoins for lending and financial management, stablecoin users need to be able to maximize their value in this world, rather than frequently switching between sovereign currencies and stablecoins. As a major tool for open finance, stablecoins must be committed to building a more prosperous value ecosystem and attracting more participants to play different roles in this value system.

Throughout history, technological innovation has always been a powerful driving force for expanding human vision and promoting free communication and trade. At present, we are standing at the top of a new wave of globalization led by digital technology, and the widespread adoption of stablecoins will undoubtedly become a key catalyst for promoting this new wave. The future we look forward to will be a new era full of infinite possibilities and opportunities.  

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About WSPN

WSPN is a global digital payments company that leverages the latest technological advances in distributed ledger technology (“DLT”) to provide transparent, fast and efficient digital payment solutions. We are committed to shaping seamless digital payment solutions for our global partners and standing at the forefront of future digital payments and financial inclusion.

WSPN’s flagship USD stablecoin, Worldwide USD (“WUSD”), is a fiat-collateralized stablecoin pegged 1:1 to the U.S. dollar. WSPN is committed to optimizing payment solutions for corporate users in the web3 industry, empowering the real economy through secure and compliant digital payment methods, covering stablecoins, exchanges and cards, all of which are expanding globally.

For more information, visit: www.wspn.io  | Twitter | LinkedIn