Read the Original Article on LinkedIn:
- Stablecoin Payment Stack and Visa’s Solana Payment
- Written by our founder independently prior to founding Their Foundry.
Stablecoins (fiat on-chain) are pivotal in today's financial landscape, serving as an alternative settlement infrastructure for payments. They are the liquidity connective tissues on blockchains, which, from a technical perspective, are largely jurisdiction-independent compared to SWIFT's design. This enables 24/7 settlement, reduces operational complexity and costs, and bypasses various constraints, fundamentally reshaping our approach to financial transactions.
At a high level, the payment stack includes stablecoins at the top, merchant networks in the middle, crypto wallets, and blockchains at the foundation. The simple transfer of tokens between accounts, a fundamental blockchain function, positions stablecoin payments as a highly accessible gateway to widespread blockchain adoption.
Visa leads the charge in modernizing payment settlements by transitioning from traditional stacks to more agile systems. This shift allows them to circumvent complex processes, intermediaries, eliminating issues tied to wire cutoff times and bank holidays according to Visa. Additionally, Visa's innovation lets cardholders pay gas fees via account abstraction, simplifying user experiences.
Visa currently runs payment pilot programs on Ethereum and Solana, both offering distinct trade-offs in terms of performance due to their designs, including transaction ordering, decentralization, and DDoS attack resilience:
💚 Solana boasts an impressive throughput of around 4,600 transactions per second and a low transaction fee of $0.0017, making it ideal for specific use cases. Note that 33.8% of the total stake is concentrated among its top 30 validators.
🔷 In contrast, Ethereum achieves a transaction rate of 12.6 per second but incurs higher gas fees. However, it boasts a more decentralized network with 776,109 active validators, each capped at a maximum effective stake of 32 ETH. It also has a variety of scaling solutions (side-chain, L2 etc.) to alleviate the scaling bottleneck.
Visa’s choice of two chains highlights the range of blockchain options from a payment stack perspective, pointing to a future where transactions, including payments, will span different blockchains tailored to specific use cases, facilitated by bridges for cross-chain communication. We're ushering in a multi-chain era, providing a versatile, efficient, and interconnected system for financial operations.
SOL network data - https://lnkd.in/gtuugDBQ; validators - https://lnkd.in/gq_WDf2Z; fees - https://lnkd.in/gKctRY4v
ETH network data - https://etherscan.io/; validators - https://lnkd.in/gKynj-_q; fees - https://lnkd.in/gGWGJDcN; L2 fee -