Author:PANews

Uniswap officially announced a cooperation with the crypto payment company MoonPay on December 21. The cooperation method is that users can use credit cards, debit cards, and bank transfers to purchase cryptocurrency on the Uniswap web page, and the underlying layer is supported by MoonPay. The first batch of tokens supported for purchase include DAI, ETH, MATIC, USDC, USDT, WBTC and WETH. Currently supports ETH, Polygon, Optimism and Arbitrum chains.

Prior to this, MoonPay has cooperated with a number of well-known protocols and platforms by expanding the scope of product services. At the end of November 2021, MoonPay began testing its NFT fast-track business for high-net-worth individuals, aiming to provide a seamless transaction experience for high-net-worth individuals who want to purchase NFTs. This service makes it easier for customers to purchase NFTs. American pop singer Madonna used MoonPay’s service to purchase BAYC.

Subsequently, in April 2022, the NFT market OpenSea cooperated with MoonPay to launch credit card payment on its platform, simplifying the process of purchasing NFT for users who do not hold cryptocurrency. Also in the same month, MetaMask announced a partnership with MoonPay. MetaMask users can use mainstream credit cards, debit cards, Google Pay and Apple Pay to purchase ETH and other assets, and support bank transfers in more than 160 countries/regions.

In addition, MoonPay also cooperates with Aptos Labs and Ethereum’s second-layer expansion solution Immutable X. According to MoonPay’s official website, it has currently reached 2 billion U.S. dollars in transactions, more than 250 partners, more than 5 million customers, and supports more than 80 cryptoassets.

MoonPay can serve with so many well-known encryption companies and protocols, which is enough to show the resources and operational capabilities behind it. In November 2021, MoonPay announced the completion of a US$555 million Series A equity financing, led by Coatue and Tiger Global, with a post-investment valuation of US$3.4 billion.

On April 13, 2022, according to Reuters, MoonPay disclosed that it had raised $87 million from more than 60 well-known investors, including singer Justin Bieber, rapper Snoop Dogg and actor Bruce Willi Bruce Willis and others (Note: It is reported that this financing is part of MoonPay’s Series A financing).

So, how safe is it to use MoonPay to buy crypto assets? Does MoonPay lower the barrier for users to enter the crypto field? PANews conducted a trial experience.

Is it safe to use MoonPay to purchase crypto assets?

To use legal currency to purchase cryptocurrency, you need to comply with KYC/AML policies. There is no doubt that users need to deposit personal credit card, debit card and other private data when using MoonPay. According to MoonPay’s official documentation, all data sent by users to or from MoonPay is encrypted during transmission using Transport Layer Security (TLS) 1.2 or higher, and uses the HTTP Strict Transport Security (HSTS) policy to prevent Downgrade attack.

All MoonPay data is encrypted at rest using AES-256 block-level storage encryption and stored in ISO 27001 and PCI DSS compliant data centers. At the same time, MoonPay complies with the General Data Protection Regulation (GDPR), ensuring that all customer and employee personal information is processed with the highest level of security and lawfulness. All of its payment information is also processed and stored in compliance with the Payment Card Industry Data Security Standard (PCI DSS).

However, the possibility of leakage from third-party partner companies during this process cannot be verified. According to documentation of its cooperation with Uniswap, MoonPay does not share customer data with Uniswap Labs, nor does Uniswap Labs collect and store financial data such as credit card, debit card and bank information, or personal data such as first name, last name, email address and IP address .

Moreover, according to Cryptoslate, in mid-March 2022, MoonPay suspended its operations in Ukraine, Russia, and Belarus and will no longer work with customers who have physical addresses in these areas. Not only MoonPay, many encryption companies have chosen to take sides during the Russia-Ukraine conflict, which is understandable. But what users can’t help but worry about is whether a company that has collected a huge amount of users’ core private information will take the initiative or be forced to give up its own data the next time it takes sides.

Regarding the laws and regulations for users to purchase crypto assets using legal currency, MoonPay has European acquiring channels and global compliance licenses. At the same time, the anti-fraud process is completed by cooperating with the encryption compliance platform Sardine. According to official information, it also covers risks such as fraud and chargebacks encountered by users during use.

The purchase of encrypted assets with legal currency has always been the most intuitive and highest demand in the market. However, due to the anonymity and other capabilities of encrypted assets, criminals have used encrypted assets to complete illegal activities such as money laundering. This process has caused many crypto users who were not involved in illegal activities to suffer losses because they unknowingly received funds from unknown sources. This is also the biggest pain point for users to deposit and withdraw money through centralized exchanges.

At present, MoonPay cooperates with a number of statutory banks on the deposit side, focusing on serving admission users and ensuring a clean source of admission funds. But for users entering the market, the legal currency market makers that MoonPay cooperates with include many companies, including many centralized exchanges. Because the source of assets and users of the exchange are complicated, if there are no extremely strict anti-money laundering measures, , if an entry user receives illegally obtained crypto assets, there is still a risk of being frozen by the judiciary.

Does MoonPay lower the threshold for users to enter the crypto field?

In this cooperation with Uniswap, it is mentioned in the cooperation documents of both parties that its fees are one of the lowest in the entire market. Uniswap negotiates low slippage and low fees with merchants on all supported token purchases. First, there is no minimum fee. No matter how much the user purchases, merchants usually charge a minimum fee, but the minimum fee when entering MoonPay to purchase through the Uniswap interface is zero. Second, USDC has no price difference. Generally merchants quote token prices slightly higher than the market price as profit, and MoonPay provides zero slippage for USDC purchases.

However, through PANews’ product experience, it was found that purchasing 1 ETH on MoonPay costs 8,918 yuan, while at the same time, the price of ETH on the Binance legal currency channel is 8,419 yuan. In other words, MoonPay is 500 yuan higher than Binance’s ETH legal currency price, and the price difference is as high as 5.6%.

(The left side is the Uniswap side MoonPay fiat currency purchase, the right side is the Binance fiat currency purchase)

This is seriously inconsistent with the information disclosed in the Uniswap official cooperation document. According to MoonPay official information, when users purchase crypto assets, the service fee charged is 4.5% of each purchase or a minimum fee of $4.99. Users are required to pay a 1% fee when selling cryptocurrencies. The current charging data of Uniswap port MoonPay is roughly consistent with its original value.

During the bull market, users could accept such high fees due to FOMO sentiment. As mentioned earlier, MoonPay seized the summer of NFT and established a convenient channel for many users to purchase NFT. Especially by binding celebrities and blue-chip NFTs to further build your own brand effect. At the same time, we continue to expand payment scenarios to accommodate larger groups. However, when the market environment is sluggish, the willingness of new users to enter the encryption field through it has been reduced to a certain extent.

Taken together, the MoonPay platform approach lowers the threshold for users outside the circle to enter the crypto circle and expands the incremental market. However, its high handling fees limit its ability to bring a wider audience to the encryption field.

Summarize

MoonPay's handling fees are high, especially when users purchase NFT assets. The inherent friction in royalties and platform handling fees in the NFT market has reached about 15%. The optimism of the bull market cycle allows users to ignore such high spreads and friction and generate massive demand. Users will start to think about it during bear market cycles.

However, users in the crypto field rely on bull market cycles to achieve orders of magnitude growth, while user growth during bear market cycles is lackluster. Therefore, MoonPay overall expands the channels for more users to enter the crypto field and lowers the threshold. And from MoonPay's perspective, in addition to profit, handling fees also require payment for cooperation with banks, review of various compliance processes, etc.

There is still no way to avoid the issue of whether the source of assets is legal or not, and we can only rely on the platform's own strict review capabilities. The legal currency channels of centralized exchanges frequently have problems with frozen cards and currency. One of the reasons is that the review is lax. You can become a market maker by basically paying a deposit. The MoonPay platform has access to the liquidity of centralized exchanges, which has become one of the hidden dangers of asset compliance.

However, this is a common problem that exists in the current industry and even the Internet itself, and the MoonPay platform cannot be expected to solve it. From the perspective of the crypto field, the existence of the MoonPay platform provides more scenarios. Not only can users directly purchase crypto assets without going through many unnecessary procedures, but they can also purchase them through credit card loans, allowing a larger group to conveniently enter the crypto field. It provides greater room for imagination for the total valuation of crypto assets.