The Rise of Stablecoin-Focused Blockchains

Introduction:

Stablecoins have become the lifeblood of crypto trading and payments. As stablecoin usage soars, a new trend is emerging: major companies are launching their own Layer-1 blockchains purpose-built for stablecoin transactions.

Instead of relying solely on existing networks like Ethereum, Tron, or Solana, firms like Circle, Stripe (with Paradigm), and Tether’s affiliates are developing custom blockchains optimized for stablecoins. Four notable new networks lead this movement: Arc (by Circle), Tempo (by Stripe and Paradigm), Plasma, and Stable.

In this article, we’ll explore each of these new Layer-1s, their unique features and use cases. We’ll also examine the motivations driving this shift – from regulatory integration and cost control to infrastructure independence and fee revenue – and analyze how these developments could impact existing blockchains like Ethereum and Tron.

Arc – Circle’s Stablecoin-Optimized Blockchain

Arc is a new Layer-1 blockchain developed by Circle (the issuer of the USDC stablecoin) and purpose-built for stablecoin finance. In Circle’s vision, Arc will be an enterprise-grade network for stablecoin payments, foreign exchange (FX), and capital markets applications. Unlike general-purpose chains, Arc’s design zeroes in on the needs of stablecoin users and businesses.

Arc introduces several features tailored to stablecoin use cases:

USDC as the Native Gas: Arc uses USDC for gas fees, meaning transaction costs are paid in a stable currency rather than a volatile coin. This makes fees low, predictable, and dollar-denominated, addressing a common enterprise complaint that they “can’t hold volatile crypto assets to pay gas fees”.

High Performance & Instant Finality: Arc is built for speed. It promises deterministic sub-second settlement finality – once a transaction is confirmed, it’s final and irreversible almost immediately. This kind of instant finality (enabled by a custom consensus engine called Malachite) is critical for payments and financial trades where you need certainty fast.

Built-In FX Engine: Uniquely, Arc will have an integrated foreign exchange engine at the protocol level. This is an institutional-grade request-for-quote (RFQ) system for on-chain price discovery and 24/7 settlement of trades between different stablecoins or currencies. In plain terms, Arc can natively support swapping, say, a digital dollar for a digital euro in a way that’s fast and transparent – useful for global payments and forex on blockchain.

Opt-In Privacy Controls: Recognizing that businesses have privacy and compliance needs, Arc offers selectively shielded transactions. Users and enterprises can opt to hide sensitive details of their transactions or balances, while still staying compliant with regulations.

Full Circle Ecosystem Integration: Being built by Circle, Arc will natively integrate with Circle’s existing products and services. This includes support for multiple Circle-issued stablecoins (USDC, Euro Coin EURC, and even tokenized cash deposits like USYC), as well as Circle’s payment APIs, wallets, and the Cross-Chain Transfer Protocol (CCTP) for moving assets across blockchains. Developers can use familiar Ethereum tools (Arc is EVM-compatible, meaning it supports Ethereum smart contracts), making it easy to build on Arc or bridge assets to and from Ethereum.

Arc’s feature set is geared toward enterprise and institutional uses of stablecoins. Think of large fintechs, payment providers, banks, or corporates that want to leverage stablecoins for things like global payments, treasury operations, FX trading, or tokenizing financial assets. Circle explicitly mentions use cases from payments and stablecoin FX to capital markets (like tokenized securities, treasuries, and commodities).

By launching Arc, Circle is pursuing a “full-stack, sovereign” approach for stablecoin transactions. The advantage is vertical integration: Circle can control and optimize the entire stack – from the stablecoin issuance to the underlying blockchain that processes transactions.

Stable – Tether’s Dedicated USDT Network

Stable is a new Layer-1 blockchain being built explicitly around Tether’s USD₮ (USDT) stablecoin. It’s essentially a custom blockchain for the USDT ecosystem, aiming to be “the backbone for stablecoin payments” and to increase USDT adoption globally. The Stable network was incubated by Bitfinex and came out of stealth in mid-2025, announcing a $28 million seed funding round led by Bitfinex and venture firms to kickstart its development

Stable’s approach is to leverage USDT itself as the core of the blockchain:

USDT-Powered Blockchain: On Stable, USDT will serve as the native currency for paying transaction fees (gas). Similar to Arc’s model with USDC, this removes the need for a separate utility token for fees – users only need USDT to transact. It also ensures transaction costs are predictable (denominated in dollars).

Fast, Seamless Transactions: Stablechain is designed for high speed and instant finality, targeting sub-second block times and final settlement.

Enterprise-Friendly Features: The roadmap for Stable hints at features catering to large-scale and institutional users. It will introduce “USDT transfer aggregators and guaranteed blockspace for enterprises”. We can also expect compliance features, given Tether’s increasing engagement with regulators: since Stable is being built post-GENIUS Act (the new U.S. stablecoin law), it will likely align with regulatory requirements to make banks and institutions comfortable using it.

Deep Integration with Tether/Bitfinex Ecosystem: Stable was incubated by Bitfinex and has Tether’s CTO (now CEO) Paolo Ardoino as an advisor.

Stable’s main use case is payments and settlements using USDT on a massive scale. It’s aiming for everything from everyday retail transactions (your coffee paid in USDT) to large corporate transfers. The wording from the team highlights replacing or improving “payments infrastructure around the world” which has failed to deliver fast, reliable digital payments.

Institutional settlements are also key – banks could settle interbank stablecoin transfers on Stablechain under the clarity of the new U.S. law (GENIUS Act), with regulatory oversight. In fact, Tether signaled intent to launch a U.S. compliant version of USDT; Stablechain could be the network facilitating that within a clear regulatory framework.

Plasma – Stablecoins on a Bitcoin Sidechain

Plasma is a new Layer-1 blockchain (technically a sidechain) that focuses on stablecoin transactions, with a twist: it’s built as a Bitcoin-sidechain that’s EVM-compatible. This means Plasma runs its own consensus and tokens, but it is anchored to Bitcoin (for security or connectivity) while also being able to run Ethereum-like smart contracts. Plasma grabbed headlines for its explosive launch – in July 2025 it conducted a public token sale for its native token XPL that drew $373 million in commitments, over 7x the target.

Plasma’s design philosophy is to combine the strengths of Bitcoin’s network with the flexibility of Ethereum, all focused on stablecoins:

Bitcoin Sidechain with EVM Compatibility: Plasma is built as a sidechain to Bitcoin, meaning it can be pegged or connected to Bitcoin and likely benefits from Bitcoin’s robust security model. At the same time, it’s EVM-compatible, so it can run smart contracts and DeFi apps like an Ethereum-like chain.

Fee-Free Stablecoin Transfers: Plasma’s headline feature is that it will offer fee-free transfers for stablecoins, starting with Tether’s USDT. In other words, sending USDT on Plasma would not require a typical gas fee. This is a big deal: fees are a friction point, and even on cheap chains like Tron, large volumes of stablecoin transfers incur some costs.

Massive Initial Liquidity & Support: At launch, Plasma is expected to hold $1 billion in stablecoins locked on its network – making it the fastest blockchain to ever reach the $1B mark. This huge liquidity is likely coming via partnerships (for example, Tether might be seeding the network with USDT liquidity, given Plasma’s focus on USDT). Additionally, Plasma has garnered backing from heavyweight investors like Peter Thiel’s Founders Fund, Framework Ventures, and Bitfinex (the crypto exchange closely associated with Tether). The involvement of Bitfinex and the focus on USDT strongly suggest that Plasma is part of the Tether ecosystem strategy, even if it’s a separate project.

Plasma’s primary target is stablecoin transfers and settlements at scale, especially leveraging Tether (USDT). Currently, Tron and Ethereum handle most USDT transfers. Plasma is clearly gunning for that market: by offering free and fast USDT transfers on a Bitcoin-secured network, it hopes to attract exchanges, traders, and payment users away from other chains.

Tempo – Stripe & Paradigm’s Payments-First Blockchain

Tempo is a forthcoming Layer-1 blockchain being developed by fintech giant Stripe in partnership with crypto VC firm Paradigm. It came to light in mid-2025 when reports and job postings revealed Stripe’s secret blockchain project. Tempo is described as a “high-performance, payments-focused” blockchain network that will be compatible with Ethereum’s Solidity smart contracts

While detailed specs of Tempo are still under wraps (Stripe has not officially launched it as of the latest info), some clear intentions have been outlined:

Full-Stack Control for Payments: The driving idea of Tempo is to give Stripe full control over the payment process from end to end. Today, Stripe processes digital payments but relies on banking networks and third-party blockchains for settlement when using crypto. By owning the blockchain layer, Stripe can optimize everything – transaction throughput, finality, and fees – specifically for payments.

Optimized for Stablecoins and Integration: Given Stripe’s business, Tempo will likely focus on stablecoin transactions (digital dollars moving between merchants, consumers, and banks). Stripe has already invested in crypto capabilities (e.g. acquiring a stablecoin startup and a crypto wallet developer) and adding a blockchain is the “final piece” to integrate stablecoins into its platform.

Potential Absence of a New Token: One unknown is whether Tempo will have its own native token. Stripe’s project is in stealth and hasn’t announced a token model. It’s possible Stripe might use an existing stablecoin as the gas currency (similar to Arc and Stable), or even introduce a new token for staking or governance. However, given Stripe’s mainstream focus, they may initially avoid a volatile token and stick to stablecoins for fees.

Tempo’s use cases align with global payments and commerce. Stripe has a vast merchant network; imagine those millions of online businesses being able to transact in stablecoins seamlessly via Stripe’s blockchain. Cross-border payments are a particular pain point that stablecoins can address – Tempo could allow, for instance, a merchant in one country to receive payment from a customer in another country instantly in a stablecoin, bypassing slow and costly bank wires or card networks. It also targets B2B payments and treasury movements (businesses sending large sums overseas, paying suppliers, etc.) where stablecoins can be faster/cheaper than legacy systems like SWIFT. Stripe could even use Tempo to displace or complement traditional payment rails (like ACH, SWIFT, or new systems like FedNow) by providing faster, cheaper settlement.

Impacts on Ethereum and Tron

The rise of these dedicated stablecoin L1s raises big questions for existing networks that currently handle the bulk of stablecoin traffic – notably Ethereum (home of USDC and many other stablecoins in DeFi) and Tron (the chain that, thanks to low fees, carries a huge portion of USDT transactions today)

In the immediate future, Ethereum and Tron are unlikely to lose their dominance overnight. They have large established user bases, integrations with exchanges and wallets, and liquidity deep in DeFi and CeFi. Newcomer chains like Arc or Stable will need time to ramp up.

Looking further out, these new L1s could significantly alter the market share in stablecoin settlement. If Arc, Stable, Tempo, and Plasma achieve their goals, a growing chunk of stablecoin transactions (especially high-volume and enterprise transactions) may relocate off Ethereum and Tron onto these specialized chains.

For example, Tron’s dominance in USDT could erode if Tether’s Stablechain and Plasma offer superior efficiency or incentives. If Stablechain provides not only low fees but direct support from Tether and perhaps better integration with fiat on/off-ramps, exchanges could favor it for USDT transfers.

However, Ethereum could retain a role as the settlement layer for composability: the rich DeFi ecosystem on Ethereum might still attract stablecoins from Arc or Stable back into Ethereum-based smart contracts. So Ethereum may become more of a backbone for complex multi-asset interactions, while routine point-to-point stablecoin payments happen on the new chains.