From start to giving up, why I no longer engage in Web3 payments.

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Author: Yokiiiya

In the past six months, I transitioned from being an observer of Web3 to being inside the payment industry. And now, I choose to stop and no longer continue with Web3 payments.

This is not a retreat after a failure, but a judgment adjustment made after truly stepping onto the field. In the past six months, I have been to Yiwu, Shuibei, Putian, and even Mexico, to see how payments are actually made in the most vibrant places mentioned in those reports. I have also stepped onto the field, built an MVP for Web3 payments, managed accounts, created Web3 payment tools, and tried to run the imagined path from the first step to the last.

But the deeper I go, the more clearly I realize one thing: this is not an industry where “making a good product guarantees success.” In payments, it's not about functionality, but rather about banking relationships, licenses, capital efficiency, and the long-term ability to manage risks.

Many payment businesses that seem to be “profitable” do not actually earn a capability premium, but rather a risk premium—it's just that nothing has gone wrong yet. What truly determines how far a payment company can go is never how much money it has made, but whether it can still withstand and survive before the risks become evident.

This article is not meant to deny the industry, but rather to remove the filters, lay bare the real structure, and leave a clearer judgment for future entrants. (A few weeks ago, I also recorded a podcast with former Kun Global VP Robert, Nayuta Capital CEO, and former Didi Finance CEO Alex to discuss the same issues.)

1. Why did I step into Web3 payments?

As a serial entrepreneur, I ended a long-running startup project last year. During the process of closing the company, I also took some time to rest, returning to a more “cleared” position to seriously think about what direction I should focus my energy on next.

Half a year ago, a friend invited me to Hong Kong to explore entrepreneurship related to Web3 payments. At that time, I was not familiar with Web3 itself and did not have any understanding of the payment industry. However, from a macro perspective, it is clearly a sufficiently large industry that is still in an upward cycle. At the same time, there is potential for a combination between Web3 and AI.

In the previous entrepreneurial process, we have engaged in cross-border business and developed platforms and software related to remote employment. In these practices, I constantly encountered the same fact: business can quickly go global, but the flow of funds always lags behind. Slow settlements, fragmented pathways, opaque costs, and uncontrollable payment terms—these issues, when the scale is still small, can perhaps be circumvented through experience and patience; but once the business scales up, they will not be solved by “management capability,” but will only be amplified. Money cannot be transmitted freely like information, which itself is the invisible limit of many globalization businesses.

It is also against this backdrop that when I began to systematically understand the actual usage of Web3 payments in the settlement layer, it presented itself not as an abstract technical narrative, but as a solution that could logically act directly on these pain points: faster settlement speed, higher transparency, and nearly round-the-clock clearing capability.

At the time, this seemed like a direction that could solve real problems and align with Day 1 Global – I didn’t enter the space because of Web3 itself, but because it appeared to offer a better structure in the specific context of payments – at least logically, it seemed sufficient to leverage those long-standing frictions that had been overlooked.

But looking back now, I gradually realize that, like many people at the time, I took for granted a premise that was continuously challenged by reality: as long as the clearing and settlement efficiency is high enough, payments would naturally migrate to the blockchain. It was even further simplified into an intuition – that payments are merely about facilitating transactions, and as long as the process is streamlined, cash flow can be “manually generated.”

Based on my lack of understanding of the web3 and payment industry, I decided to take three months to truly immerse myself in this field, clarify the structure, and then determine what to do and what position to take.

2. What payment really competes on is never the product.

When I arrived in Hong Kong, the initial vision was not complicated. The original idea was very simple: relying on some resources and relationships that friends already had, to start from OTC or relatively simple payment scenarios, first get the cash flow running, and then determine what to do next based on real needs.

I'm not here to do research, nor am I observing for the long term; I just want to see—whether it's possible to first create something that works, and then calibrate the direction in real business.

But soon, the external environment experienced a significant acceleration. In May, the United States passed the GENIUS Act, igniting the entire industry almost overnight. Capital, projects, and entrepreneurs quickly flooded in, turning Web3 payments from a relatively niche infrastructure topic into a frequently discussed “new opportunity”. From the outside, this seems beneficial; however, for a newly launched startup team, this sudden excitement is actually not a good thing.

The more chaotic, noisy, and quickly formed the consensus, the easier it is to obscure the real issues. Internet giants, financial institutions, banks, traditional Web2 payment companies, and Web3 Native teams are all entering the scene, everyone is talking about opportunities, but very few are discussing the structure. At that time, I felt that it was even more necessary to dive into the front lines and truly understand this industry.

1. The “bustle” in the report is not the same as what is seen at the front line.

After truly starting to run on the front line, the first thing I did was not to continue optimizing the product plan, but to see: who is actually using web3 payments? Why are they using it? Where are they using it? I first went to Yiwu, which is most frequently mentioned in reports.

In many studies and discussions, Yiwu is often used as a representative sample of “web3 payment already scaled applications.” However, what I observed on the ground is a different picture. Stablecoins do exist, but more often they are scattered, relationship-driven, and hidden behind the scenes.

It has not become a settlement method that can be standardized and productized as described in the report. Many transactions are not due to “optimal efficiency.” I then went to Shuibei, Putian, and Mexico, and also learned about the penetration rates in different places like Africa and Argentina; the situation is fundamentally no different.

Web3 payment does exist, but it has not yet formed a stable and scalable backbone. More often, it is just a “patch” embedded within the existing system. The actual penetration rate does not match the enthusiasm we perceive in reports, communities, and discussions.

But it was precisely during these exchanges that I gradually shifted my perspective from “can we create a product” to focusing on the industry structure itself. I began to realize that the incremental market for stablecoins is likely not within the “crypto world,” but rather in the business scenarios of the Web2 world that already exist but have long been slowed down by traditional clearing and settlement systems.

This is not a narrative migration, but rather a slow-occurring upgrade in financial technology. Meanwhile, questions begin to emerge: if real use is so fragmented, does the productization path really hold up?

2. When we really started developing applications, all the problems pointed to the same place: the channel.

From July to September, I continued field research while starting to systematically engage with potential clients. Human resources companies, insurance, tourism, MCN institutions, service trade, cross-border businesses, gaming companies… their needs varied, but the core issue they pointed to was highly consistent: money should flow faster, cheaper, and more stably.

Payroll, task settlement, and B2B payments are all scenarios that logically fit stablecoins very well. Initially, we also believed that the application layer was a viable entry point. However, it quickly became clear that there was an unavoidable premise: you must have a stable, compliant, and sustainable fiat ⇄ digital currency channel.

We started connecting with a few service providers that seemed promising in the market, but after real experiences, it's hard to say that any of them is “long-term reliable.” To meet business needs, we even attempted to create our own channels, but it was only after we actually started that we realized: this is not just a product issue, but a fundamental infrastructure issue.

Banking relationships, licensing structure, KYB/KYC compliance, risk control capabilities, credit limit management, regulatory communication… The entire channel layer heavily relies on long-term accumulated credit, experience, and capital, which are not capabilities that a small team with an Internet background can quickly make up for.

It was also here that I first truly realized: payment is not an industry where “making a good product is enough to win.”

3. You think you are making money, but in fact, you are eating risk premium.

In this process, there is a saying that deeply resonates with me: payment is not about how much money you earn, but about how much you can spend. Many Web3 payment paths that seem to have already “run through” are essentially not about ability premium, but about risk premium.

The more dangerous aspect is that many people do not know what risks they are taking on, nor do they know where the risks are specifically hidden.

Is it a compliance issue for the counterparty?

Is it a mismatch of the capital pool structure?

Is it the lag of risk control rules?

Is it still a gray area for regulatory interpretation?

If the feasibility of a business is based on “nothing has gone wrong yet,” then it is not a structure that can be safely scaled.

The essence of payment is a business of “flowing water.”

Gradually, I began to understand payments from a simpler perspective. The essence of payment is actually a business of “water flow.” Whoever controls the waterways can make money; the larger the flow from the faucet, the greater the profit potential. When water passes by your doorstep, you can take a cut—this sounds like a nearly “easy money” business.

But it is precisely for this reason that payment has never been a simple business. Not all companies “standing by the water's edge” can make money. The payment companies that truly make money in the long term are often those with a strong ability to control water volume, pressure, backflow, pollution, and leaks.

How much water you can take in depends on how much risk you can bear; how long you can let the water flow depends on your tolerance under compliance, risk control, and regulatory environments. Many paths that seem to have “a lot of water flowing” are essentially just situations where no one has come to close the gate temporarily. It is also in this process that I have developed a more complex but also more genuine awe for the payment industry.

Its charm lies not in who has created a new product, but in its honest representation of which industries are truly making money in the real world and which are just making a lot of noise. Standing on the waterway, you can see where the real funds are flowing, rather than who is constantly PR-ing from the outside.

5. Payment is a good business, but it is not a business we can do well.

Reaching this point, I also have to face a judgment that is not easy for entrepreneurs, but is very important. Payment is a good business, but it is not the type of business that we can do best. This is not a denial of direction, but a respect for resource endowments.

What the payment industry truly needs is not the ability to quickly trial and error, or to constantly iterate on products, but rather long-term stable banking relationships, a sustainable compliance system, mature risk control capabilities, and the credit accumulated after repeated games in the regulatory environment. These capabilities are not something that can be achieved by mere “effort” or “smartness” in the short term. They are more like an industry-level asset, which often only gradually forms within specific types of teams and specific time windows.

When I began to see payment as a “water flow business,” I became more aware that what determines whether a team can stay on the waterway for the long term is not whether you want to, but whether you have the structure to withstand pressure.

Under this premise, continuing to push forward is no longer a rational investment for us, but more like using time and luck to fight against an industry structure that does not stand on our side. This issue ultimately led me to the next choice.

3. I still have faith in payments, I just see its true battlefield more clearly.

It should be noted that my decision to stop engaging in Web3 payments is not due to a bearish outlook on this industry. On the contrary, over the past six months, I have become increasingly convinced that there are still significant structural opportunities in the payment sector.

It was only when I truly broke down these opportunities that I gradually became aware of a more brutal but equally important thing—payments are a business with a longer time cycle, heavier structure, and higher resource demands. The opportunities do exist, but they are not evenly distributed beneath every entrepreneurial team.

1. The incremental payment is not a short-term bonus, but a long-term reconstruction.

If we broaden our perspective, cross-border payments are not an issue of “whether it can explode,” but rather an ongoing process of infrastructure rebuilding. The continuous overflow of global supply chains, the growth of cross-border service trade, and the acceleration of distributed team collaboration are trends that, when combined, are constantly amplifying the frictions in traditional clearing and settlement systems.

In this process, the value of web3 payments is not reflected in being 'cheaper', but in three aspects:

Significant improvement in turnover efficiency

Transparency of the settlement path

Unified settlement capability across currency zones and regulatory zones

This is a structural improvement rather than a tactical optimization. For this reason, it inherently belongs to a project that spans a decade rather than a market that can be leveraged by product sprints.

2. The real challenge is not “collecting money”, but the funding system in the Marketplace.

After enough exposure to real scenarios at the front line, I increasingly realize that the challenge of payment has long moved beyond just “collecting money” itself. Especially in the Marketplace context, payment has never been an independent component, but rather a complete ecosystem-level financial system.

Buyers, sellers, platforms, logistics, streamers, couriers, tax authorities, frozen accounts, subsidy accounts - all roles are interlinked in the same financial chain. In such a system, the real determinant of the threshold is not the payment interface, but rather:

Custody and Freezing Mechanism

Revenue Sharing and Billing Cycle Design

Risk control and anti-fraud capabilities

Cross-regional compliance and regulatory obligations

Once these systems stabilize, they inherently possess the ability to extend into financial capabilities; however, they also impose extremely high requirements on the team's financial strength, risk control systems, and long-term patience.

3. Web3 payment is not a front-end revolution, but a back-end upgrade.

One point that has become increasingly clear to me over the past six months is that the real scaling of Web3 payments will not happen on the user side.

It will not explode because users start actively using the wallet, but rather because companies begin to upgrade their Treasury, reconciliation systems, cross-border settlement paths, and fund pool management methods.

In other words, the mainstream path is likely to be: the front end remains Web2, while the back end is restructured to Web3. This is a “hidden” upgrade. Such an upgrade precisely means that it relies more on system stability, regulatory certainty, and long-term operational capability, rather than market education.

The real breaking point is not in the most mature markets. Looking at it geographically, the growth in payments is also not balanced.

The Asia-Pacific region is already a relatively mature market, and real structural growth is more likely to occur in regions such as Latin America, Africa, the Middle East, and South Asia.

The payment system is severely fragmented.

High cost, complex path

Users have a stronger willingness to migrate with merchants.

But the other side of these markets is: high localization, strong regulatory differences, and strong operational requirements. What they need is not “smartness,” but long-term dedication.

When I truly put these opportunities together, I also have to face a clear conclusion: payment is indeed a good business, but the resource endowment it requires —

Long-term stable banking relationship

A mature and sustainable compliance system

Risk control capability that can withstand stress testing

Credit accumulated after repeated games in the regulatory environment.

It is not within the current capability boundaries of our team. This is not a denial of direction, but a respect for reality. The battlefield of payment still exists, but it is no longer under our feet. It is precisely under this judgment that I ultimately chose to stop and rethink: if I do not stand on the waterway, where else can I stand to continue participating in this structural change that is happening.

Four, when I decided to stop making payments.

When I truly made the decision to stop pursuing Web3 payments, there wasn’t a strong sense of “finality.” It felt more like a journey of exploration had finally reached a point where it was time to pause. I haven’t left the industry. I simply transitioned from trying to stand in the waterway to collect water, to observing from the side how the water flows and ultimately where it leads.

In the process of repeatedly breaking down the payment structure, one judgment has become increasingly clear: payment solves the liquidity problem, which is whether money can move and how fast it can move; however, what truly determines long-term value is not the liquidity itself, but rather—after the liquidity, where the money stops and how it is managed.

If we look back at the development path of China's financial technology over the past twenty years, the logic is actually very clear. Payment is just the entry point, the balance is a transfer station, and what truly forms scale and barriers is the subsequent fund management and asset allocation system. Yu'e Bao, Tian Tian Fund, and Tianhong are not successful because they “do payment better,” but because they stand behind payment, taking on and reorganizing the already scaled capital flow.

Payment is the gateway, but not the destination. Looking at this structure within the Web3 world, I also see similar issues gradually emerging. A large number of assets have appeared on-chain that are not aggressive but robust enough—lending, short-duration RWA, neutral strategies, composite products… They resemble on-chain money market funds, short bond funds, and stable allocation tools. The real issue is not whether “there are assets”, but rather: most people don't understand what kind of risks they are facing, and there is a lack of an entry point that can help them comprehend, compare, and assess these assets.

As more and more funds begin to flow on-chain, this issue will only become more pronounced. It is also at this point that I started to realize: if I do not continue to engage in payments, I can still stay within this change in another way. Instead of competing for waterways, it is about clarifying the structure of the flow of water, laying out the boundaries and risks, letting people know which places are worth staying and which places require extra caution. This is also the direction that I and my team will continue to explore moving forward.

This article does not draw conclusions about Web3 payments, nor does it persuade anyone to enter or exit; it simply attempts to clarify why I have chosen not to continue with payments. I hope it can serve as a reference for those who come after me, perhaps helping them avoid some detours.