April 11, 2025 ☼ Crypto ☼ Payments
I’ve been thinking about persistent pain points in stablecoin payment orchestration, particularly in non-US corridors where onramp/offramp complexities arise due to immature crypto-fiat liquidity. Stablecoin payments, after all, seem like the perfect catalyst for driving institutional crypto adoption.
My idea? Inject market dynamics by holding mini auctions at every critical node of a transaction. The mechanism is simple: let liquidity providers bid in real time - addressing cost, speed, and trust issues - while a robust zero liability framework ensures that any fraud or failure is covered by the payments aggregator, not the user or liquidity provider.
Stablecoin payments can be executed through eight potential transaction pathways consisting of four key nodes:
For each node, the aggregator maintains a corresponding account. For example, in a USD/EUR corridor, the aggregator would operate:
For optimal experience, KYC and verification are handled by the aggregator.
Overall Flow:
Request for Bids:
Suppose a user wishes to transfer funds from their USD account to a seller’s EUR account. The user specifies the amount to be transferred, and the aggregator issues a Request for Bids.
Bidding:
Liquidity providers submit bids with their best price and time commitments. The aggregator ranks these bids and presents the top options (e.g., 1.5% immediate, 0.8% in 24 hours) to the user - without revealing the providers’ names. The user then selects the option that best meets their needs.
Settlement:
Funds are transferred from the buyer’s USD account to the aggregator’s USD account. Next, the funds are converted to the aggregator’s USDC wallet (which can be done in batches for efficiency). The funds are then swapped with the liquidity provider, who sends them to the aggregator EURC wallet. Finally, the funds are transferred either to the seller’s EUR fiat account or remain in the EURC wallet, based on the buyer’s request.
Buyers will quickly realize that fiat-to-fiat transfers incur higher fees than crypto-to-crypto transactions, encouraging them to hold more funds in stablecoins. This shift can spark a virtuous cycle of improved rates, enhanced liquidity management, and the proliferation of additional crypto services. A shift from USDC to inflation-resistant stables such as the now-acquired USDM may also be a good thing.
Over time, as bids are processed and success rates recorded, providers can be scored and dynamic pricing implemented, thus incentivizing strong performance. Since the overall liability for delivering payment to the supplier’s wallet rests with the aggregator, aligning risk with liquidity providers’ incentives is crucial. The aggregator’s primary responsibility will be acquiring buyers and sellers and ensuring a seamless user experience while allowing providers to compete on the backend. Risk is continuously monitored using a variety of metrics.
After each transaction, performance data is fed back into the system to refine risk scores and future auction parameters. This constant feedback loop enables the network to learn and adapt, ensuring continuous improvement.
This approach harnesses real-time market dynamics to make stablecoin payments more efficient and resilient. By combining dynamic micro auctions with zero liability protection, we can optimize for cost, speed, and trust while ensuring that any failures are absorbed by the aggregator - not the end user. Inspired by models in insurance, supply chain routing, payment card liability protections, and travel aggregators (and a dynamic interchange pricing patent I co-invented), this is a shift from traditional models and could be a step toward a more robust global payments network.