An entrepreneur's account: From beginning to end, why I stopped developing Web3 payments.

Over the past six months, I've gone from being an observer of Web3 to entering the payment industry. Now, I've chosen to stop and no longer work on Web3 payments.

This wasn't a retreat after a failure, but rather a judgment and adjustment made after truly getting involved. In the past six months, I've been to Yiwu, Shuibei, Putian, and even Mexico, to see the most bustling places mentioned in reports and how payment systems are actually developed. I've also been involved, building a Web3 payment MVP, taking over accounts, and developing Web3 payment tools, trying to run the imagined path from the first step to the last.

But the deeper I went, the clearer it became to me that this is not an industry where "making a good product guarantees success." Payment systems are not about features, but about bank relationships, licenses, capital efficiency, and the ability to manage risk in the long term.

Many seemingly "profitable" payment businesses are essentially earning risk premiums, not capability premiums—they just haven't collapsed yet. What truly determines how far a payment company can go is never how much money it makes, but whether it can withstand and survive before the risks become apparent.

This article is not intended to negate the industry, but rather to remove the filters, lay bare its true structure, and provide newcomers with a more sober assessment. (A few weeks ago, I also recorded a podcast with Robert, former VP of Kun Global, Alex, CEO of Nayuta Capital, and Alex, former CEO of Didi Finance, to discuss the same issues.)

I. Why did I get involved in Web3 payments?

As a serial entrepreneur, I ended a multi-year startup project last year. During the company's closure, I also gave myself some time to rest, return to a more "empty" state, and seriously consider where I should focus my energy next.

Six months ago, a friend invited me to Hong Kong to try my hand at a Web3 payment-related startup. At the time, I wasn't familiar with Web3 itself, nor did I have much knowledge of the payment industry. However, from a macro perspective, it was clearly a large enough industry that was still in an upward cycle, and there was potential for integration between Web3 and AI.

In our previous entrepreneurial endeavors, we've handled multinational business and developed platforms and software related to remote work. Throughout these experiences, I've consistently encountered the same reality: while business can quickly expand globally, cash flow remains consistently lagging. Slow settlements, fragmented processes, opaque costs, and uncontrollable payment terms—these problems might be circumvented with experience and patience when the scale is small; however, as the business grows, they are not solved by "management capabilities," but rather amplified. Money cannot be transferred as freely as information; this is inherently the hidden ceiling for many globalized businesses.

It was against this backdrop that, when I began to systematically understand how Web3 payments are actually used in clearing and settlement, I found that it was not an abstract technical narrative, but a solution that could logically address these pain points: faster settlement speeds, greater transparency, and clearing capabilities that operate almost 24/7.

At the time, it seemed like a direction that could solve real problems and was also a viable option for Day 1 Global . I didn't get involved because of Web3 itself, but because it seemed to offer a better structure in the specific context of payments. At least logically, it seemed capable of addressing the long-standing but overlooked frictions.

Looking back now, I've gradually realized that, like many others, I assumed a premise that has been constantly challenged by reality: as long as clearing and settlement efficiency is high enough, payments will naturally migrate to the blockchain. This was even simplified to an intuition—payments are simply about matching transactions; as long as the process runs smoothly, cash flow can be generated manually.

Given my lack of understanding of the Web3 and payment industries, I decided to spend three months truly immersing myself in the industry, figuring out its structure, before deciding what to do and where to stand.

Second, the real competition in payment has never been about the product.

When I first arrived in Hong Kong, my initial plan was not complicated. My initial idea was simple: to leverage the resources and connections my friends already had, start with OTC or relatively simple payment scenarios, get the cash flow going, and then decide what to do next based on actual needs.

I'm not here to do research, nor am I here to observe in the long term. I just want to see if it's possible to first develop something that works, and then calibrate the direction in real business applications.

But soon, the external environment underwent a significant acceleration. In May, the United States passed the GENIUS Act, igniting the entire industry almost overnight. Capital, projects, and entrepreneurs poured in rapidly, transforming Web3 payments from a relatively niche infrastructure topic into a frequently discussed "new opportunity." From the outside, this seemed like a positive development; however, for a newly established startup team, this sudden surge of activity was not necessarily a good thing.

The more chaotic, noisy, and rapidly forming a consensus, the easier it is to obscure the real problems. Internet giants, financial institutions, banks, traditional Web2 payment companies, and Web3 Native teams all entered the market, everyone talking about opportunities, but few discussing structure. At the time, I felt it was even more important to immerse myself in the industry and truly understand it.

1. The "bustling" scene described in the report is not the same as what is actually seen on the front lines.

Once I started working on the front lines, the first thing I did wasn't to continue optimizing the product solution, but to find out: Who is using web3 payment? Why are they using it? Where are they using it? I first went to Yiwu, which was the most frequently mentioned place in the report.

In many studies and presentations, Yiwu is often cited as a representative example of "the large-scale application of Web3 payments." However, my actual observation reveals a different picture. Stablecoins do exist, but their use is more fragmented, relationship-driven, and hidden behind the scenes .

It hasn't become a standardized, product-replicable settlement method as described in the report. Many transactions aren't based on "optimal efficiency." I then visited Shuibei, Putian, and Mexico, and also learned about penetration rates in different places like Africa and Argentina; the situation wasn't fundamentally different.

Web3 payments aren't nonexistent, but they've never formed a stable, scalable mainline; more often than not, they're just a "patch" embedded in the existing system. The actual penetration rate doesn't match the level of interest we perceive in reports, communities, and discussions.

But it was during these exchanges that I gradually shifted my perspective from "whether we can make a product" to the industry structure itself . I began to realize that the incremental market for stablecoins might not be "within the crypto world," but rather in those existing business scenarios in the Web2 world that have long been slowed down by traditional clearing and settlement systems.

This isn't a narrative shift, but rather a slow-moving upgrade in fintech. At the same time, questions begin to emerge: if real-world usage is so fragmented, is the productization path truly sustainable?

2. When we actually started developing the application, all the problems pointed to the same thing: the channel.

From July to September, I continued my field research while also systematically contacting potential clients. Human resources companies, insurance companies, tourism companies, MCN agencies, service trade companies, cross-border business partners, game companies... their needs varied, but the core issue they all addressed was highly consistent: money should flow faster, cheaper, and more stably.

Payroll processing, task settlement, and B2B payments are all logically well-suited for stablecoins. Initially, we also believed that the application layer was a viable entry point. However, an unavoidable prerequisite soon became apparent: you must possess a stable, compliant, and sustainable fiat-to-digital currency channel.

We started by connecting with several service providers that seemed reputable, but after real-world testing, it was hard to say that any of their channels were "reliable in the long run." To meet business needs, we even tried to build our own channels, but only after actually doing so did we realize that this wasn't a product issue at all, but an infrastructure problem.

Bank relationships, licensing structure, KYB/KYC compliance, risk control capabilities, credit limit management, regulatory communication... the entire channel layer highly relies on long-term accumulated credit, experience, and capital, which are not capabilities that a small team with an internet background can acquire in a short period of time.

It was here that I first truly realized that the payment industry is not one where "you can win by making a good product".

3. You think you're making money, but you're actually profiting from a risk premium.

One sentence struck me deeply during this process: Payment isn't about how much money you earn, but how much you can spend. Many seemingly "work-ready" Web3 payment methods are essentially risk premiums, not capability premiums.

The more dangerous aspect is that many people are unaware of the risks they are taking, or where those risks are specifically hidden.

• Is it a compliance issue with the counterparty?

• Is it a mismatch in the fund pool structure?

• Is it due to outdated risk control rules?

• Or is it a gray area of regulatory interpretation?

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

4. The essence of payment is a business of "flowing water".

Gradually, I began to understand payment from a simpler perspective. The essence of payment is actually a "water flow" business. Whoever controls the waterway makes money; the larger the flow from the tap, the greater the profit potential. You get a cut as the water flows past your door—this sounds like a business where you can almost "earn money while lying down."

But precisely because of this, payment is never a simple business. Not all companies "standing by the water" can make money. The payment companies that truly make money in the long run are often those that have extremely strong control over water volume, pressure, backflow, pollution, and leaks .

How much water you can collect depends on how much risk you can tolerate; how long you can let the water flow depends on your tolerance in compliance, risk control, and regulatory environments. Many seemingly "high-flowing" paths are essentially just temporary measures where no one is shutting down the dam. It is precisely in this process that I have developed a more complex, but also more genuine, sense of awe for the payment industry.

Its appeal lies not in who has created another new product, but in the fact that it honestly tells you which industries are truly profitable and which are just making a lot of noise. Standing on the waterway, you can see where the real money is flowing, not who is constantly doing PR.

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

Having reached 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's not the type of business we're best at. This isn't a rejection of our direction, but rather a respect for our resource endowments .

What the payment industry truly needs is not the ability to rapidly experiment and iterate on products, but rather long-term, stable banking relationships, a sustainable compliance system, mature risk control capabilities, and the credit built up through repeated trials in the regulatory environment. These capabilities cannot be acquired simply by "trying hard," nor can they be acquired in the short term through intelligence or effort. They are more like industry-level assets , often gradually formed only within specific types of teams and specific time windows.

After I truly viewed payment as a "water flow business," I realized more clearly that what determines whether a team can stand on the water flow in the long run is not whether you want to or not, but whether you have the structure to withstand the pressure.

Given this premise, continuing to move forward is no longer a rational investment for us, but rather a battle against an industry structure that is not on our side, relying on time and luck. This issue ultimately led me to my next choice.

Third, I remain optimistic about payments, but I've finally seen its true battleground.

It's important to clarify first that my decision to discontinue working on Web3 payments is not because I'm bearish on the industry. On the contrary, over the past six months, I've become increasingly convinced that the payment industry still presents significant structural opportunities.

However, when I truly broke down these opportunities, I gradually realized something more brutal, but equally important—payment is a business with a longer time cycle, a heavier structure, and higher resource requirements. Its opportunities truly exist, but they are not evenly distributed among every entrepreneurial team.

1. The increase in payments is not a short-term bonus, but a long-term restructuring.

If we take a longer-term perspective, cross-border payments are not a question of whether they will "explode," but rather an ongoing process of infrastructure reconstruction . The continued spillover of global supply chains, the growth of cross-border service trade, and the accelerated collaboration of distributed teams are all trends that are amplifying frictions in the traditional clearing and settlement system.

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

• Significant improvement in turnover efficiency

• Transparency of the liquidation process

• Unified settlement capabilities across currency zones and regulatory regions

This is a structural improvement, not a tactical optimization. Because of this, it is inherently a project spanning a decade , rather than a market that can be driven by product sprints.

2. The real challenge isn't "collecting money," but rather the financial system within the Marketplace.

After experiencing numerous real-world scenarios firsthand, I've come to realize more and more clearly that the difficulty in payments lies far beyond simply "receiving money." Especially in the Marketplace context, payments are never a standalone component, but rather an entire ecosystem-level financial system .

Buyers, sellers, platforms, logistics, livestreamers, delivery riders, tax authorities, frozen accounts, subsidy accounts—all roles are interconnected and constrained within the same financial chain. In this system, the real barrier to entry isn't the payment interface, but rather:

• Custody and Freezing Mechanism

• Revenue sharing and payment period design

• Risk control and anti-fraud capabilities

• Cross-regional compliance and regulatory obligations

Once these systems stabilize, they naturally have the potential to expand into financial capabilities; however, they also place extremely high demands on the team's financial strength, risk control system, and long-term patience.

3. Web3 payments are not a front-end revolution, but a back-end upgrade.

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

It won't explode because users start actively using wallets, but because companies start upgrading their treasury, reconciliation systems, cross-border settlement paths, and fund pool management methods.

In other words, the mainstream path is likely to be: keep the front-end Web2 unchanged, and reconstruct the back-end Web3. This is a "hidden" upgrade. And this kind of upgrade means that it relies more on system stability, compliance certainty, and long-term operational capability, rather than market education.

The real breakthrough point is not in the most mature markets. If we look at it geographically, the increase in payments is also uneven.

The Asia-Pacific region is already a relatively mature market; genuine 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 and complex path

• Users and merchants have a stronger willingness to migrate.

But the other side of these markets is their high degree of localization, significant regulatory differences, and stringent operational requirements. What they need is not "cleverness," but long-term, in-depth cultivation.

When I truly put these opportunities together, I have to face a clear conclusion: payments are indeed a good business, but it requires specific resource endowments—

• Long-term stable banking relationship

• Mature and sustainable compliance system

• Risk control capabilities that can withstand stress tests

• Credit accumulated through repeated interactions within the regulatory environment

This is outside the current capabilities of our team. This is not a denial of our direction, but a respect for reality. The battlefield of payments still exists, but it is no longer beneath our feet. It is based on this judgment that I ultimately chose to stop and rethink: if I am not standing on the water, where else can I stand to continue participating in this ongoing structural change?

IV. After I decided to stop making payments

When I finally made the decision to stop working on Web3 payments, I didn't feel a strong sense of "ending." It was more like an exploration had finally reached a point where it was time to stop. I didn't leave the industry. I simply moved from trying to stand on the waterway to collect water, to standing beside the waterway, observing again how the water flows and where it ultimately ends up.

In the process of repeatedly dissecting the payment structure, a judgment has become increasingly clear: payment solves the problem of liquidity, whether money can be moved and how quickly it can be moved; but what truly determines long-term value is never liquidity itself, but rather—after the money has been circulated, where it stays and how it is managed.

Looking back at the development path of China's fintech over the past two decades, this logic is actually very clear. Payment is just the entry point, and balance is the transit point. What truly creates scale and barriers to entry is the subsequent fund management and asset allocation system. Yu'ebao, Tiantian Fund, and Tianhong are not successful because they "do better in payment," but because they stand behind payment, taking over and reorganizing the already established flow of funds.

Payment is the gateway, not the destination. Looking at this structure back into the Web3 world, I see similar issues gradually emerging. A large number of non-aggressive but sufficiently stable asset classes have appeared on-chain—lending, short-duration RWAs, neutral strategies, portfolio products… They are more like on-chain money market funds, short-term bond funds, and stable asset allocation tools. The real problem isn't "whether there are assets," but rather that most people don't know what kind of risks they face, and lack an entry point to understand, compare, and evaluate these assets.

As more and more funds begin to flow on-chain, this problem will only become more prominent. It was at this juncture that I began to realize: if I didn't continue with payments, I could still remain involved in this change in another way. Not by competing for the waterways, but by clearly explaining the structure of the waterways, laying out the boundaries and risks, letting people know where it's worth staying and where extra caution is needed. This is also the direction my team and I will continue to explore.

This article is not intended to draw conclusions about Web3 payments, nor is it meant to advise anyone to move forward or back. It simply attempts to explain why I chose to discontinue working in the payments field. I hope it can provide some reference for those who follow, perhaps helping them avoid some pitfalls.