Analyzing the "Sandwich" Structure of Stablecoins: Reshaping Global Capital Flow

Stablecoins, as the most representative practical tool in the field of digital currencies, showcase the potential of blockchain to provide a new and efficient infrastructure for traditional financial payment systems. In the past year, the total market value of stablecoins has grown by over 50%, now surpassing $250 billion, and is expected to expand further. This scale is already capable of supporting the efficient circulation of trillions of dollars globally.

Industry insiders are well aware of the value of stablecoins: they fully embody the core capability of blockchain to "transfer funds and value instantly," making it possible to build a complete business ecosystem on-chain. However, payments go far beyond simple "peer-to-peer transfers"; true enterprise-level scenarios are much more complex than mere fund transfers.

Currently, enterprise-focused stablecoin applications often adopt a "stablecoin sandwich" architecture, which replaces traditional payment channels with horizontal value/fund transfer via blockchain, while still relying on traditional financial payment systems at both ends. Although this design brings significant improvements, it also limits the full realization of blockchain advantages.

This article will explore how stablecoins are applied in cross-border payments from the perspective of global capital transfer:

1. Analyze the existing global cross-border payment system;
2. Analyze the specific improvements of the stablecoin sandwich architecture in fund management, B2B payments, and card network settlements;
3. Discuss how to break through the limitations at both ends of the stablecoin sandwich and fully leverage the value of blockchain.

1. Background of Stablecoin Payments

Among the various applications of stablecoins, B2B enterprise payments are the most noteworthy. Recent data shows that last year, the monthly B2B enterprise payment amount increased from $770 million to $3 billion. Stablecoins accounted for nearly half of the transaction volume on a certain payment platform, with 49% of customers actively using stablecoin payments.

Leading companies' internal data better reflects the scale of niche markets. According to reports, a large payment company processes about $15 billion annually, with approximately half coming from B2B enterprise payments. Another company's annual transaction volume is $10 billion, estimated to account for around 20% of the global B2B stablecoin cross-border payment market.

The use of global payments is becoming increasingly popular, mainly because the advantages of blockchain-based stablecoins are becoming more pronounced as traditional financial payment infrastructures show their age. Although traditional systems still facilitate over $100 trillion in global payments each year, businesses and banks face significant complexity and delays.

2. Various Models of Global Cross-Border Payments

2.1 SWIFT-based banking infrastructure

Traditional cross-border interbank transactions are divided into two parts: "message transmission clearing" and "funds settlement". A certain messaging system is responsible for transmitting transfer instructions, while the actual flow of funds only occurs between banks that have pre-established correspondent accounts.

Only when both banks are connected to the system and are partners can the final transfer be completed. If there is no direct partnership, it is necessary to connect with correspondent banks that have the appropriate interfaces and positions to complete the fund settlement.

As more intermediary banks are involved, settlement times may extend to several days, costs rise, and tracking becomes difficult. This means that even cross-border payments between neighboring countries may require routing through banks in developed countries, causing significant inconvenience.

2.2 Cross-border Fund Pool Model Based on PSP

The cross-border fund transfer provider (XBMT) has emerged to enable enterprises to complete global payments without directly using traditional channels. Its essence is the cross-border fund pool model, with the core service being to provide enterprises with multi-currency fund pools, allowing for flexible payments between different countries.

XBMT is responsible for managing compliance and banking relationships, allowing enterprises to obtain a single multi-coin banking product, forming a "closed loop". The internal ledger is like the meat in a sandwich, while the local receiving accounts are the bread.

Although it appears shiny on the surface, XBMT is still built on traditional systems, creating an "instant payment experience" through sophisticated liquidity management. However, the speed and scale of this design are always constrained by the available liquidity of XBMT in specific countries and the clearing efficiency of the underlying settlement tracks.

2.3 stablecoin model

Stablecoins leverage blockchain technology to reconstruct the operational model of internet commerce. Their settlement cycles are equivalent to the blockchain block time, achieving a leap in speed compared to traditional methods. More importantly, stablecoins are typically deployed on smart contract platforms, enabling innovative systems and workflows that traditional banking channels cannot realize.

From a macro perspective, faster and more interactive financial payments can directly promote global GDP growth: enterprises can receive payments more quickly, and funds can enter downstream processes faster, thereby reducing management costs and capital occupation caused by settlement delays. When the settlement cycle is compressed from "days" to "seconds", its chain reaction will sweep through the entire economy. At the same time, the existence of verifiable standards allows financial innovation to occur globally for the first time without permission.

3. The Application of Stablecoins in Global Payments

3.1 Corporate Fund Management

In a traditional model, businesses must prepare funds in advance and consider the time required for payment preparation. The longer the delay, the greater the exposure to foreign exchange risk, and the higher the capital requirements.

Stablecoins simplify this system: although both ends still need to touch the fiat currency system, stablecoins allow for smooth intermediate fund flows. The entire process is divided into local transfers within countries, and the blockchain completes global liquidity settlement between the two parties.

3.2 B2B enterprise payment

B2B payments are often more complex and may impact other operational aspects of a business. Stablecoins bring additional benefits in this area:

• Both parties can monitor the payment status in real time.
• Financing can be directly linked to delivery nodes with strong timeliness.
• After the risk is reduced, the cost of capital decreases and turnover accelerates.

The entire process has been compressed from 3 days to a few seconds, unaffected by market closures, significantly simplifying the working capital requirements.

3.3 Card Organization Network Settlement

A large payment network has begun trialing the use of stablecoins for settlement between acquiring banks and issuing banks, replacing traditional wire transfer processes. This system operates within the payment network, benefiting partners within the network.

The advantages of stablecoins are similar to fund management, but they belong to the banks within the network: they can reduce the capital requirements for timely international transfers and avoid foreign exchange risks. In addition, the openness, verifiability, and programmability of blockchain lay the foundation for financial infrastructure such as inter-bank lending within the network.

4. Outlook

Currently, most stablecoin applications remain at the "sandwich" structure itself. The ultimate goal of stablecoin payments is to completely remove the "bread" at both ends. When businesses and consumers fully adopt stablecoins, complete financial and commercial cycles can be accomplished on the blockchain, no longer limited by outdated traditional rails.

Once financial institutions and enterprises fully settle using stablecoins, it will unleash an unprecedented scale of business. As the global friction in building, operating, and servicing enterprises significantly decreases, the growth curve of global GDP will be more closely aligned with the true consumption speed of goods, services, and content on the internet.

Therefore, the essence of PayFi( in payment finance) is: stablecoin payment + on-chain finance. If we can completely break free from the sandwich structure and build more on-chain financial services at both ends, the speed of global capital/value circulation will reach unprecedented new heights.