For many years, the most ambitious developers in the cryptocurrency space have focused their efforts on building the industry's underlying infrastructure—whether pursuing faster blockchain processing speeds, simpler and more efficient smart contracts, or more robust protocol economic systems. However, the industry landscape has shifted significantly. More and more projects are moving beyond the limitations of underlying infrastructure, turning their attention to areas closer to the practical needs of ordinary users, specifically payment services, bank card services, and similar new banking services.
This transformation reflects a broader industry understanding in the cryptocurrency space: while the importance of underlying protocols is undeniable, the practical application of a technology often depends on its usability. Now, some projects are beginning to convey a new concept: users can easily use cryptocurrencies for everyday financial operations such as spending, saving, and lending without needing to understand the underlying technical principles.
As stablecoins are increasingly positioned as tools with everyday financial applications, the way information about them is conveyed is also evolving. Relevant research by Messari indicates that the next generation of crypto-native banks will not simply replicate traditional fintech application models in the blockchain space, but will attempt to rebuild core banking functions, such as completing spending and lending operations directly on the chain, without relying on traditional payment channels as intermediaries.
Ethereum staking platform ether.fi is one of the few crypto-native projects that has already completed this transformation, breaking through the limitations of protocol development and shifting to providing decentralized finance (DeFi)-based payment and banking services. This trend is gaining momentum in the industry, driven by projects like ether.fi. Polygon, long known primarily as an Ethereum scaling network, recently announced a new acquisition plan focusing on crypto rails and payment infrastructure construction for stablecoin applications.
Polygon CEO Marc Boiron stated in a media interview, "Calling it a shift is accurate. This is a shift that we started 12 months ago and have been working on, not just talking about."
The core objective of this industry transformation is to simplify the fragmented user experience that has long plagued cryptocurrencies. Currently, businesses looking to accept cryptocurrency payments or integrate blockchain-related tools often need to integrate multiple different service providers, covering various aspects such as wallet services, access points, custody services, and protocol integration. Each service provider faces different technical challenges and regulatory hurdles, undoubtedly increasing costs and operational difficulties for businesses.
“When we talk to banks, fintech companies, and merchants, one of their biggest frustrations is having to deal with blockchain companies, wallet companies, and access point companies—it’s very confusing,” said Boylan. “All they want is one API to connect to. That’s our biggest advantage.”
Mike Silagadze, founder and CEO of Ether.fi, believes this convergence of technology and applications is a natural trend in the industry. “It seems to be a rapidly growing trend, and many companies are entering this space and seeing growth, which is great,” Silagadze told the media.
He further stated that the widespread adoption of decentralized finance (DeFi) will not come from users directly interacting with underlying protocols, but rather from crypto-native financial products that operate similarly to banks while not abandoning the core principles of DeFi—the very principles that initially attracted users to DeFi.
“I truly believe that the widespread adoption of cryptocurrencies will primarily come from these new types of crypto-native banking participants,” Silagadze said.
In his view, the appeal of these crypto-native financial products lies in their diverse combination of functions that traditional fintech struggles to replicate: users can both self-custody their assets and conveniently conduct spending or lending operations. “DeFi is composable, so you can actually use DeFi assets for lending or spending,” Silagadze said. “At the same time, you can self-custody your assets and truly control your own assets.”
Currently, Silagadze believes that the emergence of DeFi composability is poised to trigger a new wave of user activity. “I think this will bring a lot of user activity and ultimately lead to the widespread adoption of DeFi.”
However, the boom in the cryptocurrency payment sector has also raised a significant question: will this emerging market become saturated before it truly proves its value?
A relevant report from Messari indicates that the current payment sector is already showing signs of saturation. Currently, many new cryptocurrency banking products rely on prepaid debit cards that automatically convert users' crypto assets into fiat currency and then settle transactions through traditional card networks. Messari believes this model is already oversaturated, offering only minor differences compared to existing traditional fintech products and lacking core competitiveness.
“The crypto card market is both saturated and in its infancy. Most crypto cards today are virtually identical: using cards like Bridge or Rain, you can easily open a US virtual account in over 150 countries. This is incredible, but at the same time, because the barrier to entry is so low, we're seeing dozens of identical products,” said Sam Ruskin, an analyst at Messari.
Nevertheless, Ruskin also offered a positive perspective, suggesting that on-chain payments could significantly reduce costs by eliminating intermediaries. “One of the biggest costs in finance is settlement risk, the time lag between when you think you've received the money and when you actually have access to it. But on-chain stablecoins can use atomic settlement, so transactions and settlements can happen simultaneously in real time,” he added.
For now, it's too early to tell whether this current wave of new cryptocurrency banks will be able to build sustainable business models or will be gradually eliminated in the fierce market competition.
Polygon's Boiron also acknowledged that competition in the industry will intensify in the future, but he believes this is not a threat, but rather a sign of the industry's success.
“When a product truly fits the market, the entire market explodes,” he said. “Many companies will enter the market, and only those with the strongest execution will survive.”
For an industry that has long focused on building underlying infrastructure, the shift towards payments marks a new stage of development for the cryptocurrency industry: in this stage, the success of cryptocurrencies no longer depends solely on how many developers it can attract to build the underlying infrastructure, but more on how easily people can use it to make card payments, transfer money, or conduct business – all without users having to worry about the underlying blockchain technology details.
Of course, there are still some pressing issues that need to be addressed to achieve this seamless user experience. “The fiat currency deposit/withdrawal channels are expensive and not yet mature,” Raskin said when discussing the current unresolved issues. “Simplifying the exchange process between fiat and cryptocurrencies will bring new users and new application scenarios to the blockchain.”
