Area | Hypothesis entering sprint | Takeaways leaving sprint |
Customer
problem(s) | Crypto-focused businesses want lower fees when accepting stablecoin payment. → Generally at 1% since using different crypto, but worth asking!
Crypto-focused small businesses want a payments aggregator for different app networks. → Accept users using Binance Pay, Coinbase Commerce, etc.
Crypto-focused small businesses, freelancers, and event organizers want standalone payment analytics instead of depending on e-Commerce platforms. → Note, this is likely a small market | Problems were invalidated.
- Fees are not top of mind for merchants, and 1% is considered good relative to credit card fees (3% + $0.30).
- Merchants cared more about how much more can you help them make (increase conversion) and how little work there is (ease of integration).
- Plenty of products offer analytics, and most users want crypto-based analytics as part of their broader e-Commerce stack.
Research shows plenty of competitors that offer a full end-to-end platform with analytics, output in desired currency, etc. One prominent competitor aggregates paying with CEX balances already. |
Market size | Binance pay did $1.8B volume in past 365 days
Crypto-only small businesses - likely small, many can implement wallet requests themselves, etc. | Market size was smaller than expected.
- Binance Pay is likely to include significant P2P transfers, which isn’t applicable since we’re focusing on merchant volume.
- Few people specifically care about crypto-only payments.
- On the other hand, payments space is very large. One company hadn’t heard of some competitors, and believes there will be multiple winners for even a specific vertical |
Growth rate | AA wallet providers are growing a lot (Privy)
Custodial exchanges continue investing in their ecosystem (Coinbase continuing to do more on Base, etc) | Didn’t get more info on AA.
However, CEX continue to invest in their offchain balances and ecosystem. Coinbase Commerce just launched a new onchain payments protocol which standardizes how users and merchants interact. |
Potential early customers | 8 calls, 2 chats - merchants, builders, folks at Circle, those in developing countries |
However, two opportunities that came up:
- Float - anyone who offers instant settlement has to handle double accounting.
- Remittance providers - user in country A sends money to recipient in country B, and recipient can instantly withdraw. However, money takes 2-3 days to transfer over Swift, so banks do internal “borrowing” at low rates to deal with this.
- Credit card checkout companies - card networks have next-day settlement, but that still means 12-24 hours, money is coming from treasury and stables.
- Especially for cases where money is settled immediately into stables (onchain) or into bank account
- Friendly fraud / first party fraud - when a legitimate transaction happens, but consumer contests it
- Chargebacks are $15 minimum fee, for a consumer who doesn’t want to pay for a $3 coffee. Massive problem for anyone who takes payments.
- There is a credit score for consumers who want to take loans. What does a credit score for consumers look like? (may not be blockchain)
I think the first may have a solution based on crypto rails (is there a way to get fiat USD to a bank if they don’t accept crypto? is this a routing problem?). I want to explore this further, but will prioritize it next week against other problems.
The second is interesting, but will hold until I explore more crypto areas that I’m interested in.
I’m fascinated by a few products that make decentralized commerce easier and easier.
