U Card struggles to overcome the limitations of a short lifecycle, where is the future of encryption payment?

The current payment sector is in a transitional stage before a qualitative change. Compared to the early days, existing products have significantly improved in design, experience, and compliance, but there is still some distance to building a complete and sustainable Web3 payment framework. This "unformed" state has instead become one of the focal points of recent market discussions.

The U card, as the latest form of encryption payment, is essentially a transitional mechanism. It is neither a simple copy of Web2 recharge cards nor the final form of the next generation of on-chain wallets or payment channels, but rather a product of the current compromise between on-chain payments and off-chain consumption needs.

The U card achieves a hybrid model between the Web2 experience and Web3 asset logic by binding on-chain accounts and stablecoin balances, and providing compliant off-chain consumption interfaces. This model has rapidly gained attention in the past six months, partly due to users' ongoing imagination of "on-chain assets being usable for daily consumption"; on the other hand, it also indicates that stablecoins are attempting to further penetrate into C-end retail and local payment systems from traditional scenarios such as cross-border remittances and OTC settlements.

However, the operating model of the U card heavily relies on the permission of the traditional financial system, barely maintaining between compliance pressure and thin profits, making it difficult to sustain in the long term. Strictly speaking, the "U card" is not a stable and profitable business model, but merely a service form that depends on external permissions.

The project party needs to rely on multiple layers of financial intermediaries to complete the settlement, and is merely an executor at the end of the chain. The greater challenge is that the operational costs of U cards are extremely high, essentially making it a loss-making business. The project party neither has stable fee income from the exchange nor possesses the authority like first-level card issuers, yet it has to bear the pressure of user services.

To change this situation, there are two paths: one is to join the account system, to connect the encryption industry as an ecosystem and have a say in compliance mechanisms; the second is to wait for the further improvement of the US stablecoin bill, to bypass the existing clearing system, and seize the new opportunities brought by US dollar stablecoins as the status of the dollar declines.

For wallets and exchanges, U Card is more of an auxiliary feature that enhances user engagement rather than a primary source of profit. However, for Web3 startup teams lacking traffic entry points and experience in financial infrastructure, attempting to create a sustainable U Card project through subsidies and scaling is akin to a desperate struggle.

The core issue troubling encryption payments is the settlement system of traditional finance. However, there is a divergence in the market's definition of encryption payments. Is it a complete imitation of daily life through QR code payments, or is it about finding new meanings in anonymous networks? For the latter, the meaning of payment lies not in transfer, but in accumulation; the essence of payment is not settlement, but circulation.

Taking underground banks as an example, they have built a digital ecosystem based on relationships, trust, and asset circulation. This model essentially relies on trust, and the asset accumulation brought about by fund circulation and delayed settlement is based on trust. In this mechanism, payments are no longer a one-to-one relationship, but rather a one-to-many-to-one form that continuously circulates within a value network.

However, although the "digital bank" style closed ecological structure has been operating on the chain for many years and has solved some of the gray capital circulation problems, it has never managed to push encryption payments into mainstream applications. On the contrary, the on-chain settlement system that is genuinely global in potential and gradually approaching the user end is built around USD stablecoins and relies on a compliant network.

The underground bank-style on-chain structure has long existed, but its aim is not "how to get more people to pay with encryption currencies," but rather "how to enable a few people to make untraceable payments." Its starting point is to circumvent rather than connect, serving scenarios that do not wish to be covered by regulation, rather than user groups that require legal protection.

From a systemic perspective, a truly scalable payment system requires that funds can freely "enter and exit," rather than being "able to enter but not exit." While the circulation of funds in a closed system is important, it does not constitute the foundational logic of "payment" as a global service.

What drives Web3 payments from the "dark web" to the "mainnet" is the support of U.S. policy for stablecoin payment networks. With the advancement of relevant legislation, stablecoins have been given the policy positioning of "strategic payment infrastructure" for the first time. Multiple fintech companies are actively promoting the application expansion of US dollar stablecoins in international settlement, merchant acquiring, and platform settlement.

The future of the encryption industry is not to coexist with the gray industry, but to fully integrate and interweave with traditional finance. Traditional finance is rapidly entering the on-chain world, where their standards are compliance, transparency, and regulation, which naturally excludes the expansion of underground money logic.

The true future of Web3 payments is built on a network based on USD stablecoins and compliant settlement channels. It can embrace the decentralization and openness while leveraging the credit foundation of the existing fiat currency system. It allows funds to flow in and out freely, emphasizes identity abstraction without evading regulation, and integrates user intent without straying from legal boundaries.

In this system, funds can not only enter the Web3 world but also leave freely; they not only serve on-chain financial activities but are also embedded in the global exchange of goods and services. The next stage of encryption payments should be like light, able to merge with each other yet have its own origin, capable of being clearly traced back, focusing on illumination rather than consumption.