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Stablecoin Chains

· 10 min read
Dora Noda
Dora Noda
Software Engineer

What if the most lucrative real estate in crypto isn't a Layer 1 protocol or a DeFi application—but the pipes beneath your digital dollars?

Circle, Stripe, and Tether are betting hundreds of millions that controlling the settlement layer for stablecoins will prove more valuable than the stablecoins themselves. In 2025, three of the industry's most powerful players announced purpose-built blockchains designed specifically for stablecoin transactions: Circle's Arc, Stripe's Tempo, and Plasma. The race to own stablecoin infrastructure has begun—and the stakes couldn't be higher.

From Tool to Infrastructure: The Paradigm Shift​

Stablecoins started as a convenience—a way to park value without exiting to fiat during volatile markets. USDT launched in 2014 as a simple dollar-pegged token. For years, stablecoins lived as tenants on general-purpose blockchains like Ethereum and Tron, paying rent in the form of gas fees and competing for block space with NFT mints and DeFi protocols.

That model is breaking down. The stablecoin market has exploded to over $312 billion in January 2026, up from $120 billion just 18 months prior. Transaction volumes reached $33 trillion in 2025—a 72% increase from the previous year. Citigroup projects the market could hit $1.9 trillion by 2028, with a bull case of $4 trillion.

At this scale, relying on external infrastructure becomes a liability. Ethereum gas fees can spike above $10 during congestion, making small payments uneconomical. Stablecoin transactions compete with unrelated activity for block space. And protocol governance decisions by third parties can impact stablecoin operations without warning.

The solution? Build your own blockchain.

The New Stablechain Triumvirate​

Circle's Arc: The Institutional Play​

Circle launched Arc's public testnet in October 2025 with an all-star roster of participants: Visa, BlackRock, HSBC, State Street, Deutsche Bank, Coinbase, Kraken, Mastercard, and over 100 other firms. The numbers from the testnet are striking—150 million transactions processed, 1.5 million active wallets, and average settlement times of 0.5 seconds.

Arc isn't trying to be a general-purpose blockchain. It's purpose-built for what Circle calls "stablecoin finance," featuring:

  • Deterministic sub-second finality powered by Malachite, a high-performance consensus engine
  • Predictable dollar-denominated fees eliminating volatile gas costs
  • Opt-in configurable privacy with selectively shielded balances and transactions
  • Built-in FX engine with institutional-grade RFQ systems for 24/7 PvP settlement

"Arc's focus on deterministic finality, auditable privacy, and stablecoin-denominated settlement presents a valuable opportunity to assess how trusted custodians can interact with onchain networks in an enterprise-grade environment," said Zahid Mustafa, Head of Digital Asset Custody at State Street.

Visa has committed to operating a validator node on Arc's mainnet and plans to utilize the network for USDC settlement within its payment infrastructure.

Stripe's Tempo: The Payments-First Architecture​

When Stripe and Paradigm unveiled Tempo in September 2025, they weren't subtle about their ambitions. The project immediately attracted technical contributions from Anthropic, Deutsche Bank, Mercury, Nubank, OpenAI, Revolut, Shopify, Standard Chartered, and Visa.

Tempo's architecture reflects Stripe's 15 years of payments experience:

  • 100,000+ TPS capacity with sub-second finality
  • Enshrined AMM allowing transaction fees to be paid in any stablecoin—no volatile gas tokens required
  • EVM compatibility for developer familiarity
  • Purpose-built for payments use cases: payroll, remittances, tokenized deposits, microtransactions, and agentic payments

The project raised $500 million at a $5 billion valuation in October 2025 and recruited Dankrad Feist, a top Ethereum Foundation researcher, to lead technical development. The public testnet launched in December 2025, with Mastercard, UBS, and Klarna among the early partners. Klarna has already announced plans to launch a stablecoin on Tempo.

Mainnet is expected in 2026.

Plasma: Tether's Vertical Integration Gambit​

While Circle and Stripe pursued institutional partnerships, Tether took a different route. Plasma launched as a Bitcoin sidechain with full EVM compatibility, backed by $75 million from Peter Thiel's Founders Fund, Framework Ventures, Bitfinex, DRW/Cumberland, and Nomura.

Plasma's differentiator is aggressive USDT integration:

  • Zero-fee USDT transfers within the network
  • Custom gas tokens allowing users to pay fees in USDT
  • Confidential transactions with built-in compliance features
  • Native neobank product (Plasma One) offering 10%+ yields in emerging markets

The market responded dramatically. Plasma's mainnet launched in September 2025 with $2 billion in initial liquidity. Within one week, TVL reached $5.6 billion.

Plasma represents what some observers call "stablecoin infrastructure verticalization"—Tether controlling not just the stablecoin, but the entire settlement layer beneath it.

The Economic Logic: Why Own the Pipes?​

The financial incentive is straightforward: settlement layer revenue could dwarf traditional payment processing margins.

Today, stablecoin issuers depend on Ethereum, Tron, or Solana for settlement. That reliance means exposure to external fee markets, protocol governance decisions, and technical bottlenecks beyond their control. Every transaction fee paid to validators on Ethereum is revenue that could flow to Circle or Stripe instead.

Custom chains allow issuers to:

  1. Issue their own gas tokens or eliminate volatile gas requirements entirely
  2. Control transaction costs and keep them predictable
  3. Isolate network performance from unrelated blockchain activity
  4. Integrate compliance tools directly into the protocol layer
  5. Capture sequencer and validator revenue that currently flows to third parties

Consider the scale. Tron processes approximately $714 billion in monthly stablecoin transfer volume with fees under one cent per transaction. Even at basis-point economics, that's billions in potential annual revenue for whoever controls the settlement layer.

24/7 Settlement: The TradFi Killer App​

The stablecoin chain thesis aligns with a fundamental pain point in traditional finance: settlement windows.

Banks operate on daytime-only clocks. SWIFT transfers take days. Even "real-time" payment systems like FedNow and RTP have limitations. Treasury teams can't execute transfers at 2 AM on Saturday.

Stablecoin chains offer genuine 24/7/365 settlement with sub-second finality. This isn't a marginal improvement—it's a structural advantage that traditional banking infrastructure cannot match without wholesale redesign.

Visa recognized this early. In 2025, the company launched a stablecoin settlement program allowing businesses to send funds internationally without traditional intermediary banks, cutting settlement times from days to minutes. The U.S. framework features 7-day settlement windows instead of the traditional 5-business-day model.

According to a June 2025 EY-Parthenon survey, 13% of financial institutions and corporates globally are already using stablecoins, with 54% of non-users expecting to adopt within 6-12 months. The primary drivers cited: cost savings and settlement speed.

Regulatory Clarity Accelerates the Race​

The GENIUS Act, signed into law by President Trump in July 2025, provided the regulatory framework these projects needed. Key provisions:

  • Stablecoin issuers limited to insured depository institutions, bank subsidiaries, or Fed-approved nonbank entities
  • Mandatory 1:1 reserves in physical currency, Treasury bills, or other low-risk assets
  • Payment stablecoins explicitly excluded from securities law
  • Required compliance with Bank Secrecy Act for AML purposes

Regulations take effect by July 2026, with the prohibition on unauthorized stablecoin issuance beginning around November 2026.

This regulatory clarity creates a moat for established players. Circle, with its Arc blockchain and USDC's status as a regulated payment stablecoin, is positioned to capture institutional demand. Smaller stablecoin issuers will need to either partner with compliant networks or exit the U.S. market entirely.

The Competitive Landscape​

The stablecoin chain race isn't limited to Circle, Stripe, and Plasma. Other contenders include:

  • Stable: Raised $28 million (led by Bitfinex and Hack VC) to build a Tether-focused settlement chain
  • Tron: The incumbent workhorse with $79 billion in stablecoin supply and consistently sub-cent transaction fees
  • Solana: Still competitive for high-throughput stablecoin payments, though facing competition from purpose-built alternatives
  • Hyperliquid: Launched USDH, its native stablecoin, signaling intent to own its settlement and collateral layer

Traditional finance isn't standing still either. JPMorgan's JPM Coin allows institutional clients 24/7 money movement. Citi is targeting a 2026 crypto custody launch alongside Citi Token Services.

What This Means for the Future​

If 2025 was about announcements, 2026 will be about execution. Arc and Tempo are both targeting mainnet launches this year. Plasma is already live and scaling.

The implications extend beyond stablecoin issuers:

For DeFi protocols: New settlement rails with native stablecoin integration could attract liquidity away from Ethereum and Solana

For enterprises: Purpose-built infrastructure with predictable fees and integrated compliance reduces friction for corporate treasury operations

For traditional banks: The Federal Reserve notes that stablecoins "compete directly with traditional bank payment services"—and dedicated stablecoin chains intensify that competition

For developers: EVM compatibility on Tempo and Plasma means existing codebases can migrate with minimal friction

The most consequential question isn't whether stablecoin chains will succeed—it's whether they'll fragment the market or consolidate it. Will USDC transactions flow primarily through Arc, while USDT lives on Plasma? Will Tempo become the default for Stripe's 12 million business customers? Or will interoperability bridges make the underlying chain invisible to end users?

The Trillion-Dollar Settlement Layer​

The stablecoin market is projected to exceed $1 trillion by late 2026. If Citigroup's base case holds, we're looking at $1.9 trillion by 2028. At these scales, the value of controlling settlement infrastructure—capturing even basis points on trillions in annual volume—becomes immense.

Circle, Stripe, and Tether have recognized what Ethereum and Tron proved over the past decade: the real value in blockchain isn't the application layer. It's the infrastructure beneath it.

The race to own the pipes has begun.

BlockEden.xyz provides enterprise-grade blockchain infrastructure across 30+ networks, including high-performance RPC endpoints and indexed data services. As stablecoin infrastructure evolves, our multi-chain platform ensures developers can build on whatever settlement layer their applications require. Explore our API marketplace to access the infrastructure powering the next generation of stablecoin applications.

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