Daniel Cunha

Stablecoins are the next logical evolution of closed-loop payment networks Historically, large merchants like Starbucks and Target built out their own internal payment networks in an attempt to circumvent fees paid to card networks and banks Users upload funds onto their app → the merchant monetizes this “float” by investing it into liquid low-risk assets on the back-end → the merchant simply updates their internal ledger when the funds are spent Given this model meaningfully improves their bottom-line, merchants have historically subsidized adoption with rewards However, the tradeoff with closed-loop networks has always been interoperability — my Starbucks dollars aren’t fungible with my Target dollars given they exist on two independent payment networks This has hamstrung the adoption of closed loop networks as users need to on and off-ramp into independent apps each time they want to spend Blockchains and stablecoins however fundamentally change this As open and programable networks, Amazon, Walmart and Target could each issue their own interoperable stablecoins In other words, my Amazon dollars, Starbucks dollars, and Target dollars would all exist in the same wallet on the same open network (perhaps an even better model would be a consortium) Said differently, stablecoins rails offer merchants all the benefits of having their own closed-loop payment network — float income, evading fees — with the same benefits of operating on an open network — interoperability Stripe, Shopify, OpenAI, X, Amazon and Walmart are realizing that blockchains are credibly neutral infrastructure that allow them to own more of the payments stack themselves While the incentives are there for merchants, the open question is whether consumers will overcome the path-dependent inertia of card payments