Stablecoins and the Fall of Legacy Payments

For years, the stablecoin market has been viewed through the lens of issuance. The most visible winners have been the companies minting the assets, holding reserves, and benefiting from interest income. But Rob Hadick, General Partner at Dragonfly, believes that view is too narrow for where the market is heading.

In Hadick’s view, stablecoins do not simply improve the existing payment system. They compress much of it.

“ Stablecoins collapse the legacy payment infrastructure and reduce the dependency on intermediaries,” Hadick said. “When you’re a stablecoin native, everything is just a book transfer.”

That shift changes where value accrues. In the traditional payments system, value was spread across banks, card networks, processors, settlement layers, compliance vendors, and middleware providers. Stablecoins make many of those roles less necessary, or at least less defensible.

The result, Hadick argues, is an inversion of the 2010s fintech playbook. During that era, major companies were built by creating connections between software startups and legacy banking payment rails. In the stablecoin era, the opportunity is not simply connecting to those legacy banking payment rails. It is replacing them.

That means in the future, the most valuable businesses may sit at the edges of the system: the companies that own customer distribution, merchant relationships, compliance workflows, banking access, and regulatory infrastructure.

From Reserve Yield to Payments

Within the stablecoin vertical of crypto, stablecoin issuers have been the clearest winners so far. Tether and Circle built large networks, accumulated liquidity, and benefited from high interest rates on reserves, which they haven’t had to pass on to users. That model has proven powerful, especially while rates remain elevated.

But Hadick does not expect reserve yield alone to define the next stage of the market. “Going forward, both have started investing heavily in moving from asset management models to payment models,” he said.

That transition is already visible. Hadick pointed to Tether’s investments in companies and ecosystems such as Whop, Transfi, Rumble, and Plasma, while Circle has launched the Circle Payments Network and Arc. These moves suggest that the largest issuers understand the limits of being purely reserve-backed asset managers. In other words, issuance was the first business model, but it will not be the final one.

The Full Stack Starts to Collapse

One of the largest open questions is what the winning stablecoin companies will actually look like. Will they resemble banks, software platforms, payment networks, protocols, or something else entirely?

Hadick answers that today’s market contains all of the above. But he believes stablecoins create room for a new kind of company that blends several financial functions into one.

Imagine a company issuing its own stablecoin, serving users directly, handling merchant settlement, and performing identity, fraud, and compliance checks on an open ledger. In that world, the need for separate issuing banks, merchant banks, card networks, clearing systems, and settlement intermediaries begins to shrink.

“You don’t need both an issuing and merchant bank,” Hadick said. “You don’t need the card network if the merchant and consumer are already known to the provider. You don’t need the network to facilitate clearing and settlement.”

For Hadick, the winners will not be simple network aggregators sitting in the middle. They will be companies that control the last mile, solve compliance problems, face customers directly, and take real operational responsibility.

Where Retail Investors Can Partake

Hadick remains strongly bullish on stablecoin growth. “ Stablecoins are here to stay,” he said. “I think they’re going to grow tenfold.”

He pointed to an estimate from McKinsey that stablecoins account for roughly 3% of cross-border payments, up from almost nothing a year earlier. Hadick expects that share to continue rising sharply.

As for retail investors, Hadick believes the investment map is not just about who issues the token; it is about who owns the flow.

Overfunded Middleware and Crowded Consumer Fintech

Not every part of the stablecoin market looks equally attractive. Hadick is particularly skeptical of aggregated API (application programming interface) platforms that simply wrap or connect third-party services without taking on compliance or operational risk themselves. These companies may be able to charge high fees today, but Hadick believes their margins are vulnerable.

“They call themselves ‘Plaid for stablecoins,’ forgetting that blockchains already solve many of the original pain points Plaid solved for traditional banking,” he said.

The critique is straightforward. If a company is only aggregating APIs and not owning the customer, compliance layer, liquidity, or operational burden, it may be squeezed as the market matures. To remain valuable, these platforms may need to move closer to the end customer or take on more of the stack.

Hadick also sees risk in consumer fintech. Stablecoin infrastructure makes it easier than ever to launch a neobank or payment app. But that accessibility creates a crowded field.

Established brands such as Nubank, Robinhood, and Revolut can add stablecoin features to existing user bases. That makes it difficult for new consumer startups to stand out unless they offer a clear wedge, strong distribution, or a differentiated regional use case.

Hadick expects failure rates in this category to be high. Still, he does not dismiss the sector entirely. A small number of consumer fintech winners could become large global businesses if they solve real customer problems and use stablecoins as infrastructure rather than branding.

The biggest winners so far may not be the final winners. As the stack collapses, the real value will move toward the companies that own users, flows, compliance, and trust.