Are you a Merchant? Unlock Revenue Potential with Stablecoins Subscriptions!
The Maturing Stablecoin Landscape
The total market capitalization for stablecoins have multiplied by an eye-watering 370x over the past year to hit USD$190 billion, accounting for close to 9% of the total cryptocurrency market cap. This meteoric rise underscores the pent-up demand from crypto-natives for on-chain store of value; seen as crypto safe harbors to shield their assets from the volatility of the general market.
The maturing stablecoin landscape has also created new opportunities for real world integrations, as crypto-natives (identified as a transnational group of like-minded people who prefer to have their assets on-chain than to rely on TradFi institutions) seek ways to pay for goods and services on chain. This shift in sentiments may then finally bring to fruition Satoshi’s original vision for blockchain technology to allow for “online payments to be sent… without going through a financial institution”.
Demand for Crypto Subscriptions
As digital currencies becomes more widely accepted, we will potentially see an increase in the number of crypto-natives. Crypto-natives typically have a large portion of their assets in cryptocurrencies, eschewing credit cards in favor of crypto wallets. As a result, they are looking for ways to spend while remaining on-chain, minimizing their footprint outside of the blockchain. Many companies have woken up to the existence of this new consumer group, and have been testing payments through various cryptocurrencies.
While current incumbent offerings such as Bitpay and Coinpayments have worked well for single payment transactions, subscription models have proven a harder nut to crack. This stems from the fact that the privacy and security features afforded by the blockchain typically mean users have to sign each transaction, thus defeating the purpose of a frictionless recurring payments model.
At Suberra, we seek to change this.
We have built a recurring payments protocol on top of Terra that allows subscribers to subscribe to their favorite merchants in a couple of clicks. Merchants that incorporate Suberra will be able to enjoy all the benefits of blockchain payments through our easy onboarding process.
Read on to find out how you can unlock revenue potential with stablecoins to reduce your payment processing costs, increase your market reach while reducing chargebacks and frauds cases.
💡 What are Stablecoins? Stablecoins are cryptocurrencies that are specifically designed to minimize volatility by pegging its value 1:1 to a stable asset, through various mechanisms described below. The most popular stablecoins tracks fiat currencies like USD and the Euro, essentially emulating the role of fiat currencies on-chain. Stablecoin designs are affected by the trilemma of Price Stability, Capital Efficiency and Decentralisation.
How do they work? Without going into too much details, Stablecoins can be largely categorized into 3 groups, based on their pegging mechanism.
Fiat-backed Stablecoins
Stablecoins that are backed by fiat currencies, often in a 1:1 ratio. This model prioritizes price stability at the expense of capital efficiency and centralization, by having a centralized entity (often a company) that holds collateral and in return mints the same amount of stable. Prominent examples are Tether, USDC.
Crypto-backed Stablecoins
Stablecoins that are backed by cryptocurrencies instead of fiat. This model achieves decentralization by overcollateralization of reserves with other crypto-currencies, maintaining the peg through a series of specialized mechanisms that influences demand and supply of the stablecoin. However, due to the over-collaterization nature, these coins suffer from capital inefficiency. Prominent examples are DAI and MIM.
Algorithmic Stablecoins
Stablecoins that achieve stability via algorithms that adjusts supply constantly to maintain the 1:1 peg, often in conjunction with another token. At a very high level, these stablecoin relies heavily on arbitrage models and incentives to maintain the peg. Prominent examples are UST and FRAX.
For a deeper dive into stablecoins, you can check out this fantastic set of primers by @_namsso. link here
Advantage to Crypto First Subscriptions Models for Merchants
- Reduced transaction costs
Why pay the middlemen? Traditional payments processers often charge an exorbitant fee for payment processing. For example, Stripe charges 2.9% + 30c fee for each online transaction. The additional transactions costs can add up to a hefty sum for a merchant, especially smaller businesses. With settlement on-chain, the myriad of middlemen are removed from the equation, thereby severely reducing the fees involved.
2. Instant Settlement
Merchants can enjoy close to instant settlement for any payments which is a vast improvement over traditional credit card systems with settlements that often take days to complete. Instant settlement greatly improves merchant’s cashflow cycles and overall business health, allowing you greater flexibility in growing your business.
3. Eliminate chargebacks and reduce fraud
Chargebacks are a bane for many honest businesses that receive payments via traditional credit card systems. Not only are they unnecessary hits to the bottom line, it also wastes valuable business hours dealing with disputes. The immutable nature of blockchain removes chargebacks from the payment flow, thereby saving merchants significant amount of headache.
4. Expanded market potential
Crypto payments are borderless, they do not depend on availability of traditional payment processers like Visa and Mastercard. Anyone around the world with a crypto wallet and working internet connection is able to access your goods and services, thereby expanding your market reach.
5. Community first
Crypto-natives are tribal in nature. Once they have chosen their camp, they tend to be vocal proponents. It’s not hard to imagine how this can boost your conversion and retention metrics for your business. Traditional web 2.0 merchants can even start to harness the power of web 3.0 with Suberra, by rewarding subscribers based on their on-chain data (more to follow from Suberra on this front 👀)
6. DeFi compatible
Composability with DeFi protocols allows for unique payment economics. With Suberra, subscribers can utilise the yield from DeFi protocols to offset a portion, or even the entirety of their subscription payments.
Delphi Digital — Case Study
Delphi Digital is an independent research boutique that has emerged as one of the leading crypto-focused research firms.
Through integration with Suberra, Delphi Digital now boasts the claim of the world’s first yield-backed membership programme where subscribers are able to offset the cost of their subscription through yields generated on our platform (powered by Anchor Protocol).
Since the launch, Delphi has reported an increase in conversion rate and positive subscriber feedback on the ease of usage. Many crypto-natives have taken to Twitter to express their support for such real-world usage for cryptocurrency. Even Do Kwon (founder of Terra) himself had chimed in with his piece.
We are excited for the infinite possibilities for yield-backed subscription models. Move your business forward by integrating with Suberra.
Integrate with Suberra today
If you are a merchant interested in transcending your business model to the next level, do reach out to us at hello@suberra.io. We will be more than happy to help you with integration efforts!
