Fintech 3.0: Blockchain Devours the World

Written by: Harj Taggar (YC), Jesse Pollak (Base)

Compiled by: Tim, PANews

PANews Editor's Note: The well-known Silicon Valley incubator Y Combinator has jointly launched the first phase of a crypto startup camp with crypto giant Coinbase. This article serves as a “call for participation,” hoping to encourage more entrepreneurs to begin on-chain development. It mainly discusses the current development of the crypto industry, such as how stablecoins and tokenized assets will permeate people's lives, while also indicating the investment areas they are interested in.

We believe that the time has come to shift towards on-chain development. Over the past decade, related tools have continued to evolve, and with the emergence of low GAS public chains, the global circulation of stablecoins, user-friendly wallet ecosystems, and an increasingly growing user base, the infrastructure has finally become complete. We have observed several important trends that are creating huge opportunities for developers globally.

This begins with a fact: we are at the dawn of a new era in financial technology—FinTech 3.0.

FinTech 1.0 is the initial stage of digitization in the financial industry during the 1990s, driven by companies like PayPal. The key breakthrough during this period was that consumers began to accept online payment methods.

Fintech 2.0 has occurred over the past decade, driven by companies like Stripe, Plaid, Brex, and Chime, with its core being the construction of application programming interfaces (APIs) on top of the existing financial system. A key breakthrough in this phase is the emergence of banking-as-a-service providers, which allow startups to innovate and develop on top of traditional financial systems.

At this moment, we are entering the era of FinTech 3.0. This era will reconstruct the financial system with code, enabling payment settlements to achieve instant transactions globally at any time, user assets stored in digital wallets and fully controlled by individuals, and traditional banks will no longer be a necessary option for asset custody.

For many years, the main obstacle to building Financial Technology 3.0 has always been regulatory uncertainty. With the enactment of the GENIUS Act and the potentially forthcoming CLARITY Act, the United States has now established a clear regulatory framework for cryptocurrencies, which will allow entrepreneurs to confidently build meaningful businesses on the blockchain. This is the biggest opportunity faced by cryptocurrency startups in recent years, and Y Combinator and Coinbase are willing to provide funding and support to help you seize this opportunity.

Although the following list is by no means exhaustive, we will particularly focus on and look forward to investing in the following key areas.

Stablecoin

Stablecoins are the first major success story of the FinTech 3.0 era.

Stablecoins are on-chain assets that are pegged to the value of fiat currencies or assets like gold, with the design goal of maintaining price stability. As a payment tool, stablecoins have significant advantages over traditional financial transactions, especially in the field of cross-border payments. Users can transfer stablecoins to any location in the world 24/7, with costs of less than 1 cent, settlement times of under 1 second, and no foreign exchange fees. This is not a theoretical assumption; trillions of dollars in stablecoins have already completed real-time payment settlements.

People have started building stablecoin applications with millions of users. YC alumni companies like Kontigo, DolarApp, and Aspora are providing instant, low-cost payment and remittance services for millions of users in Latin America and South Asia. El Dorado, a company supported by Coinbase Ventures and an application platform for sending and receiving stablecoins in Latin America, has processed $200 million in transactions for nearly 1 million users in the past year, demonstrating the growing demand in the region for cryptocurrencies as a hedge against currency depreciation.

This is not just an attempt by a startup: Coinbase has just launched an open-source commercial payment protocol in partnership with Shopify. This protocol supports any traditional online commerce scenario and on-chain stablecoin payment processes, combining all the advantages of crypto payments (lightning-fast settlement speeds, nearly zero transaction fees) with the security and scalability of typical e-commerce functionalities (delayed capture, tax finalization, and refund features).

Despite facing regulatory hurdles, stablecoins have still achieved success, which precisely indicates that the market demand for them is very strong. Following the successful passage of the GENIUS Act in the United States, the adoption of stablecoins is about to witness explosive growth. The Act creates a comprehensive federal regulatory framework for stablecoins that is similar to the banking system. Since the enactment of the GENIUS Act, the total market capitalization of stablecoins has increased by over 30 billion dollars, with large companies like Amazon and Walmart expressing their intention to issue their own stablecoins.

There are many development directions in the stablecoin field, but we are particularly interested in the following aspects:

Comprehensive access to stablecoins: Platforms that handle payments, lending, and other financial services can achieve a significant increase in efficiency through stablecoins. This allows businesses and consumers to trade seamlessly on the platform, unlocking tremendous value.

Local currency stablecoins: Stablecoins pegged to the local currency allow people in high-inflation countries to gain benefits from cryptocurrencies without solely relying on the US dollar. Governments and consumers concerned about dollarization can use such stablecoins as the foundation for local payment, savings, and credit systems.

Crypto-native enterprises: With the emergence of the Commerce Payments protocol and other tools, merchants, lending institutions, and consumers will have the opportunity to handle acceptance, credit, and payment operations in a crypto-native manner. Based on the platform's global characteristics, this will provide new possibilities for serving customers.

Tokenization and Trading

The infrastructure for stablecoin operations can be used for any asset. This is where FinTech 3.0 becomes truly fascinating. Through tokenization, we will fundamentally change the definition of assets and the range of their holders.

Tokenization refers to the representation of real-world assets (such as government bonds, equity in startups, artwork, or loans) in the form of digital tokens on the blockchain. Its core value lies in the fact that assets that have traditionally lacked liquidity and have been monopolized by layers of intermediaries can now be held, traded, and used by anyone, anytime and anywhere.

In reality, this may mean:

You don't have to wait a month to receive a check; you can get your rental income share from your property in real-time, credited every second.

Instead of exercising your startup stock options through complex paperwork, it’s better to have a “real-time equity cap table” that converts your equity into truly owned programmable tokens that can be freely bought and sold on the open market.

You don't need to invest millions of funds into private credit; you just need to buy tokens that represent a portion of a diversified loan portfolio.

This has quietly begun to happen. Mainstream institutions like JPMorgan are introducing deposit tokens into the blockchain, and startups like Courtyard are also tokenizing physical collectibles. We have also witnessed a wave of tokenization of new on-chain native assets such as creator tokens and content tokens on platforms like Zora and Pump.fun.

All of this is giving rise to a large number of new things: companies like YC alumni company Axiom have become the fastest-growing YC companies we have ever witnessed.

The core infrastructure is ready. We are looking for founders to develop products to bring various assets online.

We are particularly interested in the following aspects:

New Credit Market: Lending agreements utilize on-chain identity and reputation to provide under-collateralized loans, offering funding to individuals and businesses overlooked by the traditional financial system.

On-chain capital construction: a tool for startups to raise funds directly from users, managing equity structure tables through programmable tokens, replacing traditional models of spreadsheets and legal services.

New Trading Frontend: With the surge in assets, new opportunities for trading and investment have emerged for consumers and businesses.

Applications and Proxies

On-chain technology has opened new frontiers for applications and smart agents that were not possible in the past internet era. One might consider blockchain as a new type of operating system: it is a globally shared platform where application development efficiency is an order of magnitude greater than traditional models, with no single company able to monopolize it, allowing any developer to build products on it without permission. With the characteristic of “money as software,” smart agents inherently possess the ability to participate in this new economic paradigm.

We believe this will trigger a surge of new applications. Social, financial, collaborative, gaming, various types of applications will be available. We have already witnessed this trend on platforms like Base: you can use these applications to accomplish almost everything, from getting loans in seconds, to earning money while playing games, to supporting your favorite creators while benefiting yourself.

We believe that such applications will also appear in chat in the form of agents. AI agents with digital wallets will be supercharged to help people participate in and navigate the rapidly growing global economy. They will simplify and enhance the user experience, just as they have done in other business sectors around the world.