Last night, the US payment giant PayPal announced that it will launch a compliant digital stablecoin, PYUSD, which will be issued by Paxos Trust (formerly the issuer of BUSD) and fully supported by US dollar deposits, short-term Treasury bonds and similar cash equivalents. It will be gradually opened to PayPal's customers in the United States in the coming weeks. At that time, eligible US customers will be able to buy and sell PYUSD directly through PayPal at a price of $1.
In addition to supporting the transfer of PYUSD between PayPal and compatible external wallets, and supporting exchange with any cryptocurrency, PayPal also provides users with available payment scenarios, including supporting users to choose to use PYUSD for purchases and person-to-person payments at checkout.
PYUSD will support the mobile payment service Venmo in the future. Considering that Venmo processes nearly $10 billion in transactions per month and PayPal currently has 430 million users, it is conceivable that when retailers all use PYUSD as a means of payment, there will be large-scale crypto adoption.
Related reading: "PayPal launches stablecoin, the crypto compliance portal for 430 million people is here"
Compliant deposit and withdrawal channels will hopefully bring more liquidity to the crypto ecosystem and the crypto industry. Payment scenarios based on real use cases will allow crypto stablecoins to have application scenarios that connect with traditional finance and the real economy for the first time. These are positive market signals for the crypto bear market that is in a trough.
While the traditional financial system is moving closer to digital currency, crypto-native projects are also working hard to enter the real world and actively looking for their own real users. They are "crypto debit cards that can buy coffee with cryptocurrencies", "self-hosted payment systems that support peer-to-peer", "crypto-native wallets", and "cross-border withdrawal services for corporate users".
Regardless of their specific implementation methods, they all have a common feature, which is "realizing the bridge between on-chain and off-chain", which allows us to see another possibility for the crypto industry to connect with reality besides RWA.
Low-fee, compliant, crypto-native, but non-custodial crypto wallets that are as smooth to use as WeChat Pay. The crypto industry is beginning to embrace more real users, perhaps starting with everyday behaviors like buying coffee with cryptocurrency.
Beam, a non-custodial P2P payment system
Beam is a self-hosted payment wallet that supports stablecoins and ECO tokens. It looks no different from Web2 P2P applications and is very smooth to use. It supports users to make peer-to-peer payments and hopes to become the on-chain version of Venmo.
The key advantage of Beam is that it not only provides a smooth enough crypto-native payment experience, but also reduces the payment fees to a negligible level.
Crypto-native means that the wallet is non-custodial, and centralized entities such as banks or exchanges cannot access users' funds. However, non-custodial wallets currently face the challenge of "complex user experience". Beam's goal is to make decentralized wallets intuitive enough that even people who are new to cryptocurrency can get started in minutes.
By adopting the ERC-4337 account abstraction standard, Beam removes a series of complex concepts such as wallet addresses, blockchains, keys, mnemonics, and ETH gas fees. Even novice users who have never been exposed to cryptocurrency can use cryptocurrency for remittances without worries. New users can create a wallet by visiting the official website, and then link the Twitter account to save the wallet login and access rights.
Related reading: "Understanding the newly launched "ERC-4337": No more mnemonics, is Web3 mass adoption coming?"
In addition, Beam supports users to pay fees by sending tokens. For example, if you transfer USDC, you can pay the transfer fee with USDC (no ETH is required). By adopting Optimism and Base network construction, Beam's transaction fees are also low enough.
In the early stages, Beam targeted peer-to-peer payment scenarios, hoping to create a global on-chain version of Venmo, especially in dollar regions outside the United States. The ultimate goal is to become a global version of Visa.
The app is “instantly available globally,” compared to traditional financial products that “need to be launched country by country because you have to touch the banking rails in each country.”
Beam was launched by Eco, a crypto payments startup backed by a16z that has raised a total of $95 million. Other investors include Coinbase Ventures, Founders Fund, Lightspeed Venture Partners, and Pantera Capital.
Gnosis Card: A Visa debit card tied to your wallet
Gnosis Card is a crypto debit card issued by Gnosis. It is a Visa debit card directly linked to the user's on-chain account. It supports users to use digital assets in their wallets to make purchases in any store that supports Visa cards. It meets the needs of Web3 users to use stablecoins to pay for goods in daily life, and aims to achieve the goal of using cryptocurrencies like using fiat currencies.
Perhaps offline adoption in the physical world is still a long way off, but through this real-time conversion of fiat currency into physical assets, ordinary users can also realize the freedom to consume crypto assets in the real world.
The underlying technology network Gnosis Pay
Gnosis Card is powered by Gnosis Pay, a decentralized payment network developed by Gnosis itself. It is based on Polygon's zkEVM. As a second-layer chain, it supports any EVM-compatible first-layer network, enabling faster and cheaper transactions than first-layer chains.
Whether it is the off-chain banking system, Visa, MasterCard, Alipay, etc., they can interact directly with this L2 payment network, and the user's Safe contract payment wallet runs on this L2.
It is worth noting that as one of the important partners of Gnosis Card, the Euro stablecoin EURe issued by Monerium will be used by Gnosis Pay for on-chain and off-chain payments to reduce bridging risks. At the same time, Monerium supports users to link crypto wallets with international bank accounts or IBANs. Correspondingly, each Gnosis card will be associated with a Safe wallet account.
When a user transfers money from a bank account to an IBAN associated with a wallet, EURes stablecoins are automatically minted on blockchains such as Ethereum and Gnosis and displayed in the wallet. Conversely, when a user spends money from the wallet, the stablecoin EURe is destroyed and the corresponding euros are sent to the user's bank account.
Although there is such a complex operational process behind it, connecting the "on-chain" and "off-chain", "fiat currency" and "physical" worlds, and involving first- and second-layer settlement and payment, for consumer users, the experience is as smooth and convenient as the traditional use of credit cards and WeChat payments. According to the team's on-site demonstration at the EthCC speech, the transfer transaction can be completed in about one or two seconds, and the gas fee cost is less than US$0.1.
How to solve DeFi compliance issues?
Non-custodial does not mean non-compliance or violation of any current regulations. On the contrary, this compliant approach to decentralized financial payments is becoming a trend, which means that DeFi is moving in the right direction and is good for the entire industry.
Fractal provides KYC process support for Gnosis Pay. Specifically, when a user applies for a Gnosis Card using a Monerium bank account, Fractal’s system allows the user to share the verified identity with Gnosis through an on-chain message signature.
Compliance focuses on meeting data privacy regulations. This requires developing a solution that can "distribute data among a private but permissionless federation of nodes (which means that no entity can control the blockchain)." Unlike the distributed file storage protocol IPFS, this requires Fractal to be able to "ensure data coverage to comply with the right to be forgotten."
The right to be forgotten, also known as the right to erasure, is a key provision of the General Data Protection Regulation (GDPR) that gives individuals the right to request that organizations delete their personal data and requires organizations to comply with those requests within a specified time frame.
In other words, Fractal offers a solution that allows users to control their own data while providing access to it for a specified timeframe as required by law to obliged entities, which are subject to scrutiny by financial regulators who may demand information about the parties behind the IBAN number.
Additionally, Gnosis Pay will work with partners to screen for fraudulent activity.
Each user has a Safe account on the Gnosis layer 1 chain, and a corresponding account on zkEVM (the layer 2 Ethereum scaling solution built by Polygon), similar to a savings and spending account.
Funds entering L2 accounts are screened for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) by Gnosis Pay’s compliance partners. This means that all funds entering L2 are screened and can be spent instantly through the Visa network. Users have full control over both Safe accounts and can transfer from L2 back to L1 at any time. In other words, the role of L2 is to both ensure compliance and allow the network to process large volumes of payments, which is the fundamental purpose of the L2 solution.
Integrate with existing financial systems
Gnosis Pay provides users with a smooth crypto-native payment experience. However, there is a very complex process behind it. In fact, Gnosis Pay needs to be integrated with the existing financial system to truly realize transactions, such as becoming a Visa member and a Mastercard member.
It is worth noting that as one of the important partners of Gnosis Card, the Euro stablecoin EURe issued by Monerium will be used by Gnosis Pay for on-chain and off-chain payments to reduce bridging risks. At the same time, Monerium supports users to link crypto wallets with international bank accounts or IBANs. After users link their wallet addresses, they can obtain an IBAN account that can be used to "send and receive Euros in the SEPA system (including CEX)".
As the world's first Web3 IBAN, Monerium is an authorized and regulated electronic money institution (EMI). Its authorized and regulated Web3 euro token "EURe" supports use on Ethereum, Polygon and Gnosis, and supports sending and receiving euros between any bank account and Web3 wallet (Metamask, Safe and Argent).
IBAN is a standardized system for cross-border identification of bank accounts widely used in Europe. When a user transfers money from a bank account to an IBAN associated with a wallet, EURes stablecoins are automatically minted on blockchains such as Ethereum and Gnosis and displayed in the wallet. Conversely, when a user spends money from the wallet, the stablecoin EURe will be destroyed and the corresponding euros will be sent to the user's bank account.
Holyheld: Web3 Debit Card
Holyheld is a Web3 debit card powered by Polygon zkEVM. Register on the official website (http://holyheld.com) to get a crypto payment card with an international bank account number (IBAN). It provides crypto-currency and fiat currency exchange services and crypto wallet services, supporting stablecoin USDC and most mainstream crypto wallets. Android and iOS apps will be launched in the future, but physical cards have not yet been launched.
Holyheld can connect to multiple non-custodial wallets including Argent, Coinbase Wallet, MetaMask and Rainbow, and supports multiple networks such as Arbitrum, Gnosis Chain, Optimism and Polygon without the need for bridging and centralized compromise.
Holyheld allows users to visit http://holyheld.com or the app to order a card, and the accompanying virtual card is immediately available. Users can also add it to Google Pay (Apple Pay is coming soon) and start using Holyheld without a physical card.
Virtual Credit Card OneKey Card
OneKey Card is a virtual VISA card service launched by OneKey, a world-renowned digital hardware wallet, that supports users to use cryptocurrencies to pay for daily expenses. Users can top up in USDT/USDC, and after a successful top-up, use it online and offline on major domestic and overseas e-commerce platforms. OneKey Card is a prepaid card that supports mainland ID card KYC, can be bound to electronic payment platforms such as Alipay, WeChat Pay and PayPay for consumption, and supports most domestic consumption scenarios.
The consumption scenarios supported by OneKey Card include: overseas shopping (supporting consumption on Amazon, Walmart, eBay, Shopee, Lazada, and other platforms), currency conversion (converting cryptocurrencies into USD, HKD, and other currencies), software subscription (used for deduction of software subscription services such as OpenAI/ChatGPT Plus API), and daily consumption (can be bound to Meituan to pay for takeout, catering, travel, and other consumer services).
However, OneKey Card will stop accepting new user applications from mainland China, Russia and other places from September 30. On August 8, the hardware wallet OneKey tweeted that OneKey Card will stop accepting new user applications from the following countries or regions from September 30, 2023: Iran, North Korea, Syria, Russia, North Macedonia, mainland China, Sudan, Venezuela and Zimbabwe. Users who have activated the card will not be affected and can still use it normally. This move is to strictly comply with local laws and regulatory requirements, and support more scenarios such as Apple Pay in the future. Physical cards are also in the plan.
Utopia Labs: USDC withdrawal service for corporate users
Utopia Labs, which previously focused on becoming a DAO salary payment system, recently transformed into providing USDC stablecoin bank transfer services for corporate users, aiming to accelerate the adoption of crypto payments.
The product enables corporate entities worldwide to send USDC to U.S. bank accounts, bridging the gap between fiat and cryptocurrencies and increasing the speed and convenience of transactions by avoiding centralized exchanges.
This is especially applicable to companies that use cryptocurrency as salary income and fundraising, for example, using USDC to pay service providers with US bank accounts, such as office rent. Other potential use cases include: venture funds paying investments to invested projects or crypto projects withdrawing on-chain revenue.
how to apply?
Corporate users can submit KYB and KYC verification applications to Utopia Labs and wait for 2 working days for the application to be approved. Once approved, corporate users can exchange USDC for US dollars at a 1:1 exchange rate, and Utopia Labs will charge a 0.3% fee. USDC transfers are unique to the Ethereum blockchain, have no restrictions, and are compliant with ACH (Automated Clearing House) transfers, and transfers are generally received within three working days.
The Utopia roadmap includes withdrawals for any token (not just USDC), support for other blockchain networks in the future, and fiat deposits. The service supports most countries in the world except Cuba, North Korea, Iran, Syria, Belarus, and Russia. In addition to crypto payments, Utopia Labs also provides vault management for Safe (formerly Gnosis Safe) users, and provides token swap services for users through integration with the 0x protocol, with liquidity across more than 100 decentralized exchanges.
Previously, Utopia Labs focused on the DAO salary payment system. In 2022, it received a US$23 million Series A financing led by Paradigm and participated by Circle Ventures and Coinbase Ventures, with a valuation of US$115 million.
Summary of trends and characteristics
While each of these products is implemented differently, we can see some consistency in the current state of non-custodial payment consumer products, which can be summarized as follows:
1) Account abstraction brings a smooth user experience, providing users with a seamless experience of using cryptocurrency like using traditional credit cards.
Without exception, these products have put a lot of effort into user experience. Although they are crypto-native and non-custodial wallets, the experience is as smooth as traditional payment tools. This is mainly due to the application of the ERC-4337 account abstraction standard. By abstracting the complexity of the underlying implementation technology and removing a series of complex concepts such as wallet addresses, blockchains, keys, mnemonics, and ETH gas fees, novice users can also use cryptocurrency payments and transfers without worries.
2) In addition, as David Hoffman of Bankless felt when attending ETHCC, "the underlying performance optimization is ready, waiting for the bull market and the arrival of users." The optimization and continuous improvement of these underlying solutions will promote a significant reduction in payment fees.
3) Non-custodial wallets mean that centralized entities such as banks or exchanges cannot access users' funds. This is an increasingly attractive practical demand for consumers, especially after the FTX incident. Non-custodial does not mean non-compliance. On the contrary, to gain adoption, compliance is required and moving in the right direction. This is also a trend we see. Fractal provides KYC identity verification services to ensure compliance with "data privacy" laws. In addition, Gnosis Pay's partners will conduct anti-money laundering (AML) and counter-terrorism financing (CFT) screening on funds entering L2 accounts. For Gnosis Pay, the L2 solution built on Polygon zkEVM can not only process large amounts of payments at low cost, but also ensure ultimate compliance.
4) The freely combinable underlying technology stack is equivalent to developing products by standing on the shoulders of giants.
One of the benefits of blockchain technology is "openness and composability without permission", which means that most of the time, building an application does not require development from scratch, but rather you can make full use of existing basic building blocks.
This is a typical feature of most Web3 products. Lens Protocol, a Web3 social graph protocol, is a very representative case. It has formed a flourishing ecosystem based on multiple technology stacks. They are mutually compatible, can be freely combined, use other people's existing components, and are also willing to be used by others. This approach can greatly improve production efficiency.
As a type of consumer product, non-custodial wallets are no exception. In order to reduce transaction fees, they generally use a second-layer expansion solution. In order to optimize the user experience, they need to use account abstraction standards and the very important standardized compliance services provided for decentralized finance.
Taking Gnosis Pay as an example, the founder shared the underlying technology stack of Gnosis Pay, which includes: Safe for account abstraction, Gelato for gas-free transactions, a second-layer chain developed using Polygon zkEVM, and Monerium for providing solutions for deposits and withdrawals.
ethcc makes us feel that "the underlying performance optimization is ready, waiting for users to arrive". As the underlying infrastructure of blockchain gradually matures and improves, and various protocol layers and middleware emerge, this way of developing products, which is equivalent to standing on the shoulders of giants, may change the current situation of scarcity of consumer products.
5) Integration with existing financial systems.
Behind the smooth crypto-native payment experience is a very complex series of processes, including integration with traditional financial systems such as Visa Member and Mastercard.
In addition, regulated electronic money institutions (EMIs) such as Monerium also act as a bridge. As the world's first Web3 IBAN, Monerium users can obtain an IBAN account that can be used to "send and receive euros in the SEPA system (including CEX)" after linking their wallet addresses. It supports users to use the authorized and regulated Web3 euro token "EURe" issued by them on Ethereum, Polygon and Gnosis, as well as send and receive euros between any bank account and Web3 wallet (Metamask, Safe and Argent).
References:
https://techcrunch.com/2023/07/27/a16z-eco-beam-p2p-crypto-transfer-service-global-venmo/?tpcc=tcplustwitter
https://www.theblockbeats.info/flash/159950?search=1
https://twitter.com/andy_bromberg/status/1684605161308925952
https://beam.eco/about
https://echo.mirror.xyz/FbaqedtGg7SZuwOXesLnO8-Gk-Nzpna5ZvLZiw2TIFs
https://www.theblock.co/post/240880/paradigm-utopia-labs-usdc-bank-transfers