Thread by @SquishChaos

For the #DeFi project to succeed, it must become an existential threat to traditional finance.

This is capitalism at its finest, and the war will be fought on many fronts.

I can't stop thinking that the @Visa - USDC announcement represents the first major battleground. 👇

Why would visa do this? Why now? The is not casual intrigue. For visa to settle with stable-coins they have to significantly invest in the crypto space.

Disclaimer on quality: this is stream of consciousness. I'm just riffing here haha

usa.visa.com/about-visa/new…

I think a lot of people shrugged this off as "a sign of adoption."

At best it's Visa showing leadership in an area of potential growth...but I don't think so.

I think Visa's move into settling with USDC represents a sharp strategic move to hedge against an existential threat.

On May 28th, @arbitrum goes live. We've already seen the magic of @0xPolygon, and @optimismPBC is coming soon after.

If the cost to send USDC from peer to peer were a fixed cost of ....a few cents? That's a HUGE threat to a 2-3% credit card fee.

Today, Visa has a moat in distribution. Everyone takes Visa. Competition without razor thin costs is a non-starter.

A new card with near-zero costs settling on $ETH blockchain actually gets off the ground

Retailers who abhor the 3% fees = new adoption in global marketplace.

While Visa-USDC is framed as "a growth opportunity," I think Visa is just defending their moat.

Visa will have the infrastructure to be cost-competitive with any crypto-based lower cost entrant.

If low cost credit cards are first major TradFi battleground, Visa isn't waiting.

If $ETH scaling goes as planned, expect @Visa to announce plans for their own L2 solution in 2022-2023.

Instead of losing market share to newcomers and dealing with existential concern from investors, they'll market steal share from laggards by building on crypto early.

It's not obvious Visa loses this battle. They have a real distribution edge.

It's not obviously bullish for them either though - if it cuts into their margins long term, can they make it up in more volume?

Visa is early, but they won't be the last either. Likely countless centralized L2s will enter as CeFi attempts to find its place in the #DeFi world.

However, the most important result will be the quiet explosion of $USDC, an unprecedented flow of money being settled on-chain.

Explosive growth in $USDC transactions, representing retail adoption of $ETH as payment rail, will be an unmistakable signal to the world.

It shows quite literally profits that would be going to Visa being unlocked to consumers by #DeFi.

If the market cap of stablecoins explodes, it sets the stage for other #DeFi products to compete as well.

If crypto wallets with $USDC gain massive retail adoption, you can now tokenize...everything.

The world will awaken to crypto and nothing will ever be the same.

Fin.