1. What does Stripe’s largest acquisition, Bridge, mean for the crypto industry?

Stripe is one of the world's largest online payment service providers and processors, and the platform helps businesses accept online and in-person payments through its developer-friendly API . In 2023 alone, Stripe processed more than $1 trillion in transaction volume and ranks second only to ApplePay in adoption.

Last month, Stripe made a big acquisition, buying stablecoin platform Bridge for $1.1 billion, the largest acquisition in cryptocurrency history.

Recent cryptocurrency M&A activity, such as Robinhood’s $200 million acquisition of Bitstamp, is beginning to reflect the tech/financial giants’ prioritization of compliance and maturity in engaging There is a growing demand for 2B and 2C cryptocurrency businesses among the user base. Bridge is no exception.

You may have noticed that the adoption of stablecoins is surging around the world. According to a16z report, stablecoin transaction volume has reached $8.5 trillion in the second quarter of 2024, more than double Visa’s $3.9 trillion during the same period.

Stripe believes that stablecoins have potential and are the perfect medium to achieve a smooth and efficient process of asset conversion. Even though Bridge only generates $10 million to $15 million in annual revenue, Stripe paid a nearly 100x premium to acquire the company. This highlights that Stripe's motivations are not just about Bridge's current revenue, but also the compliance, partnerships and technology that Bridge can bring to the Stripe ecosystem.

Bridge is a stable currency platform that allows businesses or users to Transfer tokenized dollars using blockchain. Users can purchase cryptocurrency with fiat via wire/ACH transfer to a whitelisted bank, or sell cryptocurrency for fiat by sending the assets to a designated wallet. It also offers custodial wallets that help businesses accept, store or transfer funds through a simple set of APIs.Move stablecoin.

Under the hood, Bridge handles KYC, regulatory compliance, and more, allowing businesses to easily integrate and started accepting cryptocurrencies as a payment method. Currently, Bridge supports USD/EUR as fiat currency payments and accepts 5 stablecoins on 9 different chains.

About the team, Bridge founders Zach Abrams and Sean Yu previously worked at Coinbase as head of consumer products and senior developer respectively. Prior to the acquisition, Bridge had raised a total of $58 million from various venture capital firms, including approximately $40 million from Sequoia Capital. This already shows that investors were confident in the product before the acquisition.

2.1 Advantages and moats of Bridge:

Bridge is not the first to solve cross-border Products with transaction service issues. In fact, Ripple (XRP) has been providing cross-border transfer and payment services for the past 3 years, but it relies on its own currency as a medium and users must bear the downside risk of the currency. However, in an era where regulated stablecoins like USDC offer greater protection and resiliency, such solutions are outdated. Bridge solves this problem in a more efficient and compliant way.

2.2 Compliance and Cooperation

Bridge’s advantage lies in the compliance and cooperation it has obtained cooperate. First, according to Sequoia’s report, Bridge complies with all U.S. and European financial regulations and anti-money laundering laws, holds money transfer licenses in 22 states, and works with the U.S. House of Representatives and the Treasury Department on asset transfers. Before integrating with Bridge, businesses need to provide ownership and formation documents to prove their trustworthiness. See the following document for details: Bridge As Story Protocol founder SY Lee points out, content businesses often lack network effects, forcing them to rely on large content production and marketing budgets to stay afloat. This overwhelming negotiating power makes it difficult for smaller IPs to turn a profit, often causing them to fail before they even launch. Even large IP studios are hesitant to develop new IPs, choosing instead to focus on expanding existing IPs.

The credibility and reputation Bridge gains from compliance will significantly improve and expand their business pipeline, which stems from their recent relationship with As seen in the SpaceX collaboration, Bridge will be used for stablecoin management in its global financial operations (Source: Ledger)

In addition to compliance, Bridge also allows enterprises to use Bridge's orchestration API Stablecoins are customized and issued, and underlying USD is invested in U.S. Treasuries to earn a 5% yield or remain idle. This opens up the possibility for businesses and even CBDCs to create and customize their tokenized dollars for a variety of use cases while adhering to compliance, with all reserves held within Bridge in the form of cash and treasury bills.

2.3 Bridge use cases:

2.4 in today's payment solutions:

Global demand for electronic payment solutions is rising, and the electronic payment industry is expected to grow at 9.9 per year % growth rate, the market size will reach 90 billion US dollars.

Today's digital payment solutions, especially in the United States, charge fees as high as 1.5-3.5% per transaction (Visa charges 1.5-3.5%, Stripe Charges 3.4%, capped at ~0.3% in Europe, ~2% for global payments (e.g. Paypal)).

Bridge fees are expected to be much lower as it is primarily made up of blockchain transaction fees and developer or publisher fees.

In October, Stripe launched a feature called "Pay with Stablecoins" in its customer checkout product, which charges a 1.5% transaction fee. While there's no confirmation that the feature was created with Bridge or that the fee was designed by Stripe, it shows that Bridge, as an alternative payment solution, has the potential to provide a more cost-effective option for digital payments.

In addition, data breaches have always been a problem in the traditional electronic payment industry.Long term problem. The tamper-proof properties and security of smart contracts can effectively solve these problems. In addition to cost savings, Bridge unlocks access to $180 billion in stablecoin liquidity in the blockchain ecosystem, allowing Stripe to extend its reach into the cryptocurrency market.

In unbanked areas:

Bridge can provide solutions for businesses in underserved areas solution, allowing them to store USD or EUR in a custodial wallet, thereby building a better system for transferring, paying or investing in tokenized USD, depending on their needs.

In addition, financial institutions can start to offer more complex structured products and accept stablecoins as deposits, creating more business opportunities for them to utilize on-chain funds.

Since these transactions are conducted on the blockchain, the selected chain can also benefit from the associated transaction fees. Therefore, Bridge can enhance on-chain transaction activity and potentially increase the returns of validators and stakers.

In DeFi:

Businesses can also participate in DeFi to gain additional benefits. For example, they can borrow or lend tokenized dollars on platforms like Aave to earn interest, or leverage cryptocurrency investments for potential gains.

Alternatively, users can provide liquidity for stablecoin pairs on Uniswap V2/V3 to earn trading fees. While DeFi investments come with significant risk, they offer opportunities to maximize the capital efficiency of idle assets.

Given the dominance of USDC and USDT in the market, I believe the integration of Bridge can further solidify their role in the growing cryptocurrency space.

3. Market Outlook

Until recently, cryptocurrency use cases have been largely hampered by its adoption as a payment solution. However, Stripe's response to Bridge’s acquisition has the potential to change the trend and make cryptocurrency payments as seamless and indistinguishable as traditional fiat currency transactions, and could become the backbone of PayFi in the future.

The largest merger in cryptocurrency history highlights the clear product that the stablecoin and regulated payments industry has achieved Market fit and undeniable utility. Value transfer remains the most compelling use case for cryptocurrencies, and regulated stablecoins are becoming the primary medium of payments.

Bridge is a stablecoin platform that enables businesses and users to use Blockchain technology transfers, stores and pays tokenized dollars. Bridge manages all compliance and regulatory issues in the background.

Bridge's strength lies in its compliance and the partnerships it has secured. It complies with all U.S. and European financial regulations and anti-money laundering laws and works with reputable partners such as the U.S. House of Representatives and the Treasury Department.

Regions without direct access to financial systems can benefit greatly from Bridge due to the economic security provided by the U.S. dollar.

Businesses can now participate in DeFi and maximize capital efficiency on idle assets. Bridge acts as a link to inject more capital into stablecoins and is expected to boost the overall DeFi economy.

Lower fees, faster settlement and data security are some of the key advantages of blockchain compared to today's electronic payment solutions. Bridge has the potential to replace or become a better alternative to current payment systems.