Fiat to Crypto Assets on-chain native coin purchase closed-loop solution - taking the latest practices led by Chainlink and Mastercard as an example.

With the continuous evolution of Blockchain technology and the rapid development of the crypto assets market, market participants have been seeking to attract more capital inflow into the crypto assets market. Additionally, some users, apart from using traditional Centralized Exchanges, hope to complete the exchange from fiat to Crypto Assets directly through on-chain methods. However, existing coin purchase paths usually involve off-chain payments, cumbersome identification verification, and complex cross-chain operations, which still have certain limitations in user experience, transaction efficiency, and compliance risks. To address this pain point, Chainlink, MasterCard, ZeroHash, Swapper Finance, Shift4 Payments, XSwap, and Uniswap have collaborated to build a closed-loop solution from fiat payment to on-chain asset delivery, aiming to create a safer, more transparent, and convenient on-chain native coin purchase channel. Roles and Responsibilities In this new on-chain coin purchasing mechanism, each participant has a clear division of labor, taking on different but highly complementary responsibilities, together constructing a technical and compliance closed loop "from fiat payment to on-chain asset delivery," ensuring the efficiency, safety, and compliance of the conversion process from fiat to Crypto Assets:

1. MasterCard: As a global leading payment network provider, Mastercard offers a fiat payment gateway that supports credit and debit card payments. In addition to processing fiat transactions, its extensive user base and mature payment system allow users of traditional financial channels to directly participate in the digital asset market through familiar scenarios.

2. Shift4 Payments: As a global leading payment processor, Shift4 is primarily responsible for providing card payment processing for users in this collaboration. Through its mature payment network, Shift4 supports various fiat card payment methods (such as USD, EUR, etc.) and ensures that the payment process complies with regulatory requirements, providing users with a stable and compliant entry.

3. ZeroHash: As a regulated digital asset clearing institution, ZeroHash is responsible for the conversion and settlement of fiat to Crypto Assets. It converts the fiat funds received from Shift4 into equivalent Crypto Assets and performs necessary regulatory Compliance measures, such as KYC (Know Your Customer) and AML (Anti-Money Laundering) reviews, to ensure the Compliance of the asset conversion process.

4. Chainlink: As a decentralized oracle network, Chainlink provides real-time exchange rate data between fiat and Crypto Assets. By aggregating multiple reliable price sources, Chainlink ensures price transparency and data accuracy during the exchange process, avoiding malicious manipulation or quote distortion.

5. Swapper Finance: As a cross-chain liquidity protocol, Swapper Finance is responsible for bridging the Crypto Assets provided by ZeroHash across different Blockchains. For example, if users need assets from non-Ethereum chains like Bitcoin or Solana, Swapper Finance can efficiently complete the transfer and mapping of assets through its cross-chain technology.

6. XSwap: XSwap is a decentralized exchange platform that undertakes the functions of liquidity provision and trade matching. In this collaboration, XSwap provides a trading market for newly imported Crypto Assets, allowing users to immediately exchange, provide liquidity, or participate in other DeFi activities.

7. Uniswap: As a top-level decentralized exchange, Uniswap takes on the ultimate task of ensuring asset liquidity. Through its deep liquidity pools, Uniswap ensures that users' Crypto Assets can be traded seamlessly worldwide, providing a reliable trading market for the entire ecosystem. on-chain native coin purchase closed-loop model From the user's perspective, the entire on-chain native coin purchase process can be divided into the following steps: Users pay fiat through Shift4 → ZeroHash executes asset exchange and on-chain injection → Chainlink provides exchange rate pricing → Swapper Finance performs cross-chain transfer → XSwap matches initial liquidity → Uniswap completes market access and free trading → The exchanged Crypto Assets are paid to the user's wallet.

8. Fiat Payment: Users first make payments using a MasterCard credit or debit card through the front-end interface of the Swapper platform. This process is quite simple; users only need to enter their card number and other information to initiate the payment. MasterCard and Shift4 Payments play a role here, responsible for receiving and processing users' fiat payments, ensuring that the payment process complies with relevant laws and payment network regulations.

9. Payment information transmission and processing: After the user submits the payment information, the front end of the Swapper platform will pass this information to Shift4 Payments for processing. Shift4 will perform necessary payment verification and work with ZeroHash to carry out customer identification (KYC) and other anti-money laundering compliance processes to ensure the transaction is compliant and legal. ZeroHash will also provide necessary support for subsequent crypto asset exchanges and asset settlements.

10. On-chain exchange rate data: At this time, Chainlink provides critical real-time exchange rate data. As a decentralized oracle, Chainlink ensures that the exchange prices are accurate and transparent by obtaining data from multiple market sources, so they are not subject to manipulation by a single market. In this process, users can ensure that the fiat they pay can be converted into Crypto Assets at a reasonable price.

11. Asset Exchange and Settlement: After payment confirmation, ZeroHash will convert fiat to Crypto Assets and execute the corresponding settlement operations. ZeroHash is a regulated entity that ensures all transactions comply with legal requirements while ensuring there are no discrepancies in the process of converting fiat to Crypto Assets.

12. Transaction Execution and Asset Delivery: Finally, the tokens selected by the user will be exchanged through a decentralized exchange (DEX) to ensure the liquidity of the assets. Here, decentralized exchanges like Uniswap provide the necessary liquidity pools, enabling users to complete transactions quickly and ultimately deliver the target token to the user's wallet. Through this complete closed-loop process, users not only experience a convenient fiat to crypto assets exchange process but also ensure the security and compliance of the transaction. The entire process is based on decentralization and smart contracts, allowing users to quickly, transparently, and cost-effectively complete the purchase of cross-chain crypto assets. Key considerations under the legal and regulatory framework

13. Payment Compliance: Shift4 and ZeroHash must adhere to the payment license regulations of each jurisdiction, especially when handling fiat currencies such as USD and EUR, and should implement payment compliance frameworks according to the region, such as FinCEN, MSB registration requirements, or PSD2 compliance requirements.

14. Identification and Anti-Money Laundering: Users are required to complete the KYC process during the payment stage. ZeroHash can leverage its regulatory license to connect with KYC service providers and conduct AML reviews. This mechanism completes verification off-chain and marks the verification results on-chain, balancing privacy protection and compliance disclosure.

15. Tax Compliance and Information Disclosure: In jurisdictions such as the United States and the European Union, digital asset transactions may be subject to capital gains tax. ZeroHash and Swapper should cooperate to generate transaction reports for users or tax authorities to verify. At the same time, the exchange rate data provided by Chainlink can serve as a standard source for assessing the tax base.

16. Cross-chain and Asset Security: Swapper Finance must implement strict auditing, signing mechanisms, and risk control models when transferring assets across chains to prevent contract vulnerabilities and asset losses. At the same time, it should interface with insurance protocols or on-chain collateral mechanisms to enhance user confidence.

17. Data Transparency and User Protection: In addition to Chainlink providing data support as an oracle, platforms like XSwap and Uniswap adopt an on-chain public mechanism, allowing Chainlink and users to verify transaction records, pricing information, and asset flow through block explorers, minimizing information asymmetry to the greatest extent. Industry Significance and Future Outlook Behind this collaboration is a cross-industry partnership involving multiple industry giants, with the ultimate goal of achieving interoperability between traditional payment systems and the decentralized financial ecosystem. Chainlink and Mastercard are leading the way in providing users with this on-chain coin purchasing channel, which is not just a technological breakthrough but also a significant innovation in business models. This closed-loop system not only enhances the efficiency of transactions but also brings about profound impacts on the entire industry.

18. The integration of traditional finance and Blockchain ecology This mode of cooperation is a deep integration of the traditional financial system and Blockchain technology, especially at the intersection of digital payments and Crypto Assets. Mastercard's extensive user base and mature payment system enable the spread of Crypto Assets to expand more rapidly to traditional users. This cross-industry collaboration provides traditional financial users with a convenient access point, allowing users to purchase digital assets through bank cards without relying on traditional exchanges or wallets, giving more people the opportunity to enter the crypto market.

19. User Experience Optimization This closed-loop process of on-chain native coin purchase allows users to avoid complex cryptocurrency wallet operations or the cumbersome processes of a centralized exchange during payment. By integrating with existing financial infrastructure, users can complete payments using familiar credit and debit cards, thereby enjoying the fast and low-cost asset transfer experience that blockchain technology offers.

20. A dual approach of technology and compliance In the process of cross-border payments and fiat currency exchanges, ZeroHash provides users with compliance-compliant clearing and custody services through a compliant framework, ensuring that this process meets regulatory requirements and that Crypto Assets will not be hindered at the exchange level due to regulatory issues. This is particularly important for traditional finance users, as they often have concerns about the compliance and transparency of the crypto market. ZeroHash's participation not only provides compliance assurance for this collaboration but also offers a suitable, controlled framework for regulators around the world. This framework can help financial institutions guide more traditional users into the crypto assets market while complying with the laws of various countries.

21. User Privacy Protection and Data Transparency Privacy protection and data transparency are two crucial aspects of financial transactions. Although traditional financial systems have strict regulations regarding privacy protection, in crypto assets transactions, users' data transparency and privacy rights often exist in a state of balance. As a representative of decentralized platforms, XSwap collaborates with decentralized exchanges like Uniswap to bring its strong market liquidity and trading depth into the on-chain coin purchasing process. Unlike traditional centralized exchanges, decentralized exchanges do not rely on central entities but execute transactions automatically through smart contracts. This decentralized characteristic greatly enhances the transparency, security, and censorship-resistance of transactions. As a decentralized oracle platform, Chainlink, through its decentralized data transmission network in this collaboration, avoids the manipulation risks that may arise from a single data source, ensures the fairness of exchange rate data and transaction data, and also provides regulatory agencies with effective data tracking and auditing capabilities.

22. Cross-chain liquidity innovation The integration of XSwap and Uniswap ensures that users can trade Crypto Assets instantly through decentralized markets after completing fiat payments. When market prices are highly volatile, decentralized trading platforms can also help users achieve more competitive prices and smoother trading experiences through optimized algorithms and liquidity pools. As the decentralized finance (DeFi) ecosystem continues to mature, these platforms are also continuously optimizing trading mechanisms to enhance users' overall experience and fund security.

23. Market Competitiveness and Industry Prospects Currently, multiple Blockchain projects and payment platforms worldwide are attempting to build similar closed-loop ecosystems, and the partnership between Chainlink and Mastercard will provide them with strong competitive pressure. With its robust Compliance assurance and innovative technological support, this model not only offers users convenient channels for asset purchases but also lays the foundation for the mainstreaming of the entire digital currency market. As the global regulatory framework for Crypto Assets continues to improve, the promotion of this model will become smoother and have broad application prospects. The collaboration between Chainlink and Mastercard provides new ideas for bringing fiat into the cryptocurrency market and creates a complete closed loop from fiat payments to on-chain asset usage for future DeFi applications. At the same time, with the integration of emerging mechanisms such as Decentralized Identity Verification (DID) and on-chain reputation systems, user experience and trust throughout the process will continue to improve. This collaboration also presents significant opportunities for emerging markets, where the limitations of traditional financial systems are more pronounced in many developing and underdeveloped countries, such as high cross-border payment fees, insufficient coverage of banking services, and financial exclusion issues. By introducing decentralized financial systems, users in these regions can more easily access the crypto market and enjoy low-cost, efficient payment and asset trading services.

Original Author: Huang Wenjing