News slowly trickles out that Stripe has acquired Bridge, a stablecoin platform for an estimated $1.1 billion.
The acquisition is among the biggest ever in crypto, and it gave some credence to the idea that stablecoins — which provide crucial liquidity for crypto markets and show promise for making TradFi more efficient — might be the killer non-bitcoin use case for crypto.
It comes only a couple of days after Stripe officially announced its decision to reenable crypto payments for US residents using stablecoins.
Here are some quick thoughts on this deal. Let’s start with the implications it has for Solana.
1. Solana’s not the only one betting on stablecoins
Stablecoins show promise for things like money transfers and payments — as opposed to more store of value cryptocurrencies like bitcoin — and Solana’s north star of being fast and cheap makes the blockchain an intuitively good fit for stables.
In recent months, Solana saw a large number of bets on stablecoins. PayPal’s stablecoin was brought to Solana with the help of a large amount of money spent on liquidity incentives. Perena Sphere Lulo and other startups are developing Solana businesses centered around stables. Although stablecoins have a large market, they’re not widely used by mainstream investors yet.
Stripe purchasing Bridge shows that Solana’s not the only track to be cutting back on its stables.
“All payment and [infrastructure] providers will be following [Stripe’s] lead or at least begin looking around,” Jesse Brauner is the co-founder at Lulo. He told me about it in a short text.
2. The process of building a stablecoin payment platform is very difficult
Daniel Lev, the CEO of Coinflow and its founder on Lightspeed’s podcast made an important point regarding this deal. Stripe does not consist of dinosaurs. Fintech giant Stripe has been interested in bitcoin for a decade and built some payment infrastructure from 2014 to 2018.
Stripe has re-integrated cryptocurrency payments, presumably through this expensive acquisition. Stripe is an established internet payment company. You’d have thought they would at least consider building their own stablecoin off- and on-ramps.
“You can’t just spin it up overnight,” Lev spoke about the stablecoin payment businesses. “There is this regulatory and partnership moat where you have to meet a ton of [criteria], so it’s not like a bunch of developers can just rush on this opportunity today or tomorrow. They have to do a ton of things to even launch a compliant and legal product in the space.”
3. More M&A could open up crypto venture
Crypto startups are rarely listed on the stock exchange. This is one of the biggest issues for crypto ventures. If VCs need to track returns, token distributions can be used. But relying on airdrops as the sole exit option for venture capital may lead to poor pricing and short-term thinking. Bridge has just proven that there is a way to get out of VC investments.
“Everyone in crypto VC knows that it would be much healthier for the industry as a whole to have two viable paths to exit — i.e. equity-based (IPOs, acquisitions) and token launches+listing,” Sam Lehman is the principal of Symbolic capital. He said this in a message.
Lehman explained that another effect of token dependence is that crypto venture capitalists are wary of investing into startups who don’t intend to launch tokens. This stance has begun to change following the Stripe purchase.
“To be clear, it’s not a silver bullet. Web2 VCs don’t make their livings off of acquisitions, they need IPOs to get their 100x returns. I don’t think anyone thinks this means that the NYSE is going to start teeing up crypto IPOs after this, but it is a step in the right direction,” Lehman said.
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