PayFi's innovation addresses the long-standing inefficiencies in traditional finance and opens up vast market opportunities.
Written by: Alice @Foresight Ventures
In the previous article, we analyzed the overall ecological landscape of the PayFi sector. This time, we will delve into several highly promising new application scenarios: AI payments, consumer micro-payments, and innovative deposit and withdrawal solutions.
### (1) AI Payments
We firmly believe that AI and cryptocurrency payments hold enormous market potential. AI payments are expected to disrupt multiple industries beyond traditional finance, such as data labeling, model training, and content creation. As AI agents gradually integrate into daily life, the application scope of cryptocurrency payments will expand into mainstream industries. In the future, AI assistants may even help you proactively order takeout, coordinate clothing and grocery purchases, and arrange rides to meetings, among other tasks.
Market Opportunities
Revenue sources for AI payment platforms: Transaction fees, subscription fees, or various micro-payment systems for AI services are all revenue channels for AI payment platforms.
Advantages of stablecoin settlement: Stablecoin transactions enable real-time cross-border remittances around the clock. Compared to traditional banking systems, they not only offer faster speeds but also lower fees, making them highly suitable for AI-driven micro-transaction needs.
Case Study: Skyfire
Skyfire technology aims to create a powerful and scalable payment infrastructure for AI agents and users, primarily consisting of the following key components:
Payment and Wallet Infrastructure:
Skyfire Wallet Service: Provides channels for funds to flow in and out for global transactions.
Payment-as-Auth: Achieves real-time settlement of USDC.
Micro-payment support: Assists AI agents in conducting permissionless, high-frequency, low-value transactions.
Open Protocol (AI Market): Integrates all AI-related products and services, allowing AI agents to connect to the resources they need through the Skyfire open protocol (market) and pay for these services using the Skyfire API. This includes decentralized computing markets, decentralized data labeling markets, automated datasets, AI model APIs, and more.
Identity and Verification Layer: Grants identity (KYA) to each AI agent, providing identity verification for all agents, users, and enterprises using Skyfire products. Through KYA, transaction history can be tracked, ensuring compliance and accountability, with each transaction verifying the agent's identity to ensure security.
Integration Tools: Supports over 160 large language models (LLMs), providing API access to datasets, high-quality content, and web services, while also offering developers tools to facilitate the integration of Skyfire into their systems.
Key Success Factors
Network Effects of AI Payment Layer: Skyfire is a platform that integrates both the AI market and payment layer. On one hand, by integrating various AI markets and service providers, it attracts more users and AI agents to use its products; on the other hand, it creates revenue for more Web2 and Web3 AI service providers (significantly improving transfer efficiency and frequency through stablecoin transactions), thus forming a bilateral flywheel effect.
Compliance and Security: Verifiable identity (KYA) and transaction history ensure the security of transactions, effectively preventing fraud, while the payment-as-auth system further enhances transaction trust.
Strong Community: Collaborations with LLM providers, data markets, and enterprise-level AI companies strengthen its ecosystem. Currently, over 1,500 developers are using Skyfire's tools and services.
### (2) Consumer Micro-Payments
Cryptocurrency-based consumer micro-payments, combined with innovative models like Moonshot (buying and selling meme coins with cryptocurrency) and Sidekick (providing Web3 payment gateways for streamers), showcase the immense potential of global instant settlement and decentralized protocols. By cutting out intermediaries and costs, this model has the potential to disrupt industries such as cryptocurrency trading, content creation, gaming, and live streaming, especially in emerging markets. Low commission rates, the convenience of cross-border payments, and high mobile penetration make cryptocurrency an ideal solution.
Market Opportunities
Target Market: Covers daily transaction scenarios for consumers, including ride-hailing, gaming, digital media, live streaming, content creators, and online communities.
Revenue Sources: Transaction fees, revenue from partnerships with content platforms, and integration income from decentralized finance (DeFi).
Case Study: Moonshot
Moonshot is a trading platform that allows users to buy and sell meme tokens using methods like Apple Pay. Its main features include:
Self-custody Wallet: Users can create accounts using email and password (along with Touch ID, Face ID, or password). Moonshot generates embedded wallets for supported blockchains through its multi-party computation (MPC) partner Turnkey.com.
Fee Structure: Moonshot charges fees on transactions to cover management costs and ensure a smooth experience. Fees are tiered based on transaction amounts, with network fees paid by the platform to prioritize order processing. For example, transactions from $1 to $250 incur a 2.5% fee, with a minimum of about $0.40; transactions over $250 incur a 1% fee.
Referral Program: Users can earn rewards by referring friends to the platform. Once both the referrer and the referred complete identity verification, both parties receive rewards. Currently, this program is only implemented among iOS users in select regions.
Key Success Factors
User-Friendly Interaction Design: Moonshot's interface is simple and intuitive, streamlining the buying and selling process of meme cryptocurrencies. By supporting fiat payment methods like Apple Pay, credit cards, and PayPal, it lowers the entry barrier for new users.
Speed of Token Listings: The platform's ability to quickly list popular meme tokens is crucial. For instance, the launch of MOODENG significantly boosted user engagement and trading volume, demonstrating Moonshot's ability to seize market trends.
Efficient Referral Mechanism: Moonshot's referral system promotes user growth by rewarding both referrers and new users, enhancing community interaction and accelerating platform adoption.
Compliance and Security Assurance: The platform strictly adheres to local regulations and implements robust security measures, such as collaborating with MoonPay for identity verification and transaction processing. This compliance and security framework enhances user trust and lays the foundation for sustainable development.
Case Study: Sidekick
Sidekick is a Web3 gaming companion platform and payment gateway, allowing streamers to receive micro-payments and tips in cryptocurrency.
Key Success Factors
Solving Payment Issues for Creators: Traditional streaming platforms (like YouTube, Twitch, and TikTok) have commission rates as high as 30%, with long payment cycles (often taking weeks) and regional restrictions. Sidekick offers instant, low-cost blockchain payments, effectively addressing these issues. For global content creators, especially those in regions with inadequate coverage of traditional payment systems, this resolves a significant pain point.
Low-Cost Transactions Promote Income Fairness: Sidekick enables mid-tier influencers to earn higher income from transactions. By eliminating Web2 platform commissions, Sidekick ensures a more equitable income distribution. This is highly attractive for gig economy workers seeking better revenue sharing and faster payments.
Scalability through Web3 Infrastructure: Sidekick utilizes Web3 protocols to ensure its payment gateway is decentralized, scalable, and secure. The transparency and security of blockchain provide a trust foundation for creators and users, while also allowing Sidekick to meet demands ranging from a few transactions to millions daily.
Future Direction of the Creator Economy: As the creator economy evolves, platforms like Sidekick are positioned to lead in decentralized, cryptocurrency-native monetization. With the increasing prevalence of NFTs, digital assets, and Web3 applications, Sidekick can serve as a comprehensive payment solution. Streamers and creators can not only earn income through regular live streams but also monetize their influence through tokenized content and fan tokens.
### (3) Innovative Deposit and Withdrawal Solutions
Efficient deposit and withdrawal solutions play a crucial role in the widespread adoption of cryptocurrency. These solutions build bridges for users and institutions reliant on fiat currency to access crypto assets or participate in decentralized finance (DeFi).
Market Opportunities
Rising Demand for Stablecoins: The usage of stablecoins (like USDC, USDT, DAI) in remittances, DeFi, and cross-border trade is continuously increasing, creating a demand for fiat to stablecoin conversions. Following the U.S. elections, regulations related to stablecoins are expected to improve, leading to greater development opportunities post-compliance.
Layer-2 and Multi-Chain Expansion: Deposit and withdrawal platforms can integrate with Layer-2 networks (like Optimism, Arbitrum) and cross-chain support (like Solana, Avalanche) to reduce costs and enhance transaction speeds, allowing users to access a diverse crypto ecosystem.
Enhanced Accessibility: Embedded payment solutions and wallet-free access methods (via email or mobile) simplify the entry process into cryptocurrency, attracting novice users and promoting broader adoption.
Emerging Market Potential: Deposit and withdrawal platforms typically penetrate emerging markets with weak financial infrastructure through mobile products, while also providing enterprise-level tools and collaborating with partners like Visa and Stripe to access institutional and traditional payment networks.
Case Study: Fiat24
Fiat24 is a new Web3 bank that provides users with a seamless, zero-cost conversion experience between fiat and cryptocurrency. Its main product features include:
Tokenized Deposits: Fiat24 presents fiat currencies (such as CHF, EUR, USD, GBP) in the form of ERC-20 tokens on the Ethereum blockchain. Each token corresponds 1:1 with the held fiat currency, ensuring stability and credibility. The system supports instant, transparent transactions and can seamlessly connect with DeFi services.
NFT-Based Account Access: Users receive a unique non-fungible token (NFT) as their digital identity to access their Fiat24 account. This method replaces traditional usernames and passwords, enhancing security and user control. The NFT is stored in the user's Arbitrum (Ethereum) wallet and is used to access Fiat24 services.
Visa Debit Card Integration: Fiat24 offers a Visa debit card linked to user accounts, supporting global spending at over 40 million merchants. Users can recharge the card through Fiat24's decentralized application (dApp) and view their balance in the specified currency.
Compliance Assurance: Fiat24 is operated by SR Saphirstein AG and is regulated by the Swiss Financial Market Supervisory Authority (FINMA). The platform complies with anti-money laundering (AML) requirements and undergoes regular financial and regulatory audits by Swiss Grant Thornton, ensuring user compliance and fund security.
Key Success Factors of Fiat24
Strong Network Effects: The key to Fiat24's success lies in establishing its tokenized deposits as a universal standard. This foundational role promotes interoperability and builds a self-reinforcing ecosystem connecting traditional finance (TradFi) and decentralized finance (DeFi).
Regulatory Advantages and Cost Leadership: With a Swiss banking license, Fiat24 gains endorsement from the traditional financial system and access to the SWIFT/SEPA network. This regulatory status allows it to offer highly competitive pricing to partners and users, making it a trusted and efficient web3 banking solution.
Integration of Fiat and Cryptocurrency: Through tokenized bank deposits (like USD24), instant fiat-cryptocurrency conversions, and synchronized on-chain/off-chain ledgers, Fiat24 seamlessly connects traditional finance and decentralized finance, creating a smooth and user-friendly ecosystem.
Scalable Partnerships: Fiat24 provides integrated Web3 banking solutions that are easy to integrate with major wallets and exchanges, expanding application scope through revenue-sharing models, driving network growth, and enhancing platform utility.
Conclusion
We believe that blockchain has immense potential in redefining global payment systems. From AI-driven micro-transactions to consumer micro-payments and fiat-to-cryptocurrency conversion solutions, PayFi innovations address the long-standing inefficiencies in traditional finance and open up vast market opportunities. The integration of cryptocurrencies, stablecoins, and decentralized finance paves the way for scalable, secure, and cost-effective solutions.
PayFi acts as a bridge, leading us toward a more inclusive, transparent, and efficient financial future. While challenges in regulation and infrastructure remain, the prospects are clear, and the future is promising.
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