Software Ate the World, Stablecoins Are Eating Blockchains
Software ate the world; stablecoins are eating blockchains.
This time the headlines are not about Coinbase’s Base or Robinhood’s L2. Circle and Stripe have—almost in lockstep—decided to build their own Layer-1 blockchains purpose-built for stablecoins, freeing themselves once and for all from the constraints of existing networks. From consensus to gas token, every layer is re-engineered around the single use-case of moving stable value.

When the banks lose the deer, the stablecoins hunt it together.

A Cross-Industry Crisis: Card Schemes Yield to Stablecoin L1s
The Wintel alliance monopolised the PC for three decades until ARM upended mobile and Intel faded without ever making a mistake.
Credit cards and card networks were not born together. Diners Club, the first network in 1950, was a loyalty ledger for restaurants and superfans; only in the 1960s did it mesh with banking and become the springboard for US regional banks to burst across state and national borders.

Unlike banks, which must dance to the Fed’s leverage cycle, card schemes such as Visa and Mastercard run cash-flow machines that prosper in drought or flood. Capital One’s $35.3 billion acquisition of Discover in 2024 merely fused issuer and network into one behemoth.

Traditional banking’s vertical integration is the exact prelude to what stablecoin issuers are now doing: owning the full stack of issuance, distribution and settlement.
After the Genius Act, the anatomy of the US dollar changed for good. Commercial banks once created credit (M0/M1/M2), but today Tether and Circle hold more Treasuries than many sovereigns.

• Banks → Stablecoin issuers (USDT, USDC)
• Card schemes / SWIFT / PSPs → Stablecoin L1s

In the legacy flow, users, merchants, issuers, acquirers and networks are distinct roles. Programmable blockchains collapse them all into “users.” Whether an institution wants a private vault or an individual wants one-tap convenience is merely a matter of code. A purpose-built stablecoin L1 eliminates every non-user intermediary; user, coin and chain are sufficient to re-stack any function—even regulatory compliance.

Of course specialised issuance and tech-service firms will not vanish, but in a world of composable code they become plug-and-play vendors. Take crypto debit cards: upstream processors siphon all the margin, leaving issuers to burn cash for branding.

Technological revolutions precede organisational revolutions.
Today you can build a new Visa and keep the profits for your users.

Just as Capital One paid 1.5 % to Visa/MasterCard before buying Discover, USDT/USDC still pay gas to Tron and Ethereum. While Circle rolls out Arc, Coinbase Commerce plugs straight into Shopify, and Circle taps Binance as the launch partner for yield-bearing USYC. Tether once claimed it generates 40 % of all public-chain fees; Circle even “tips” Coinbase an extra $300 million per quarter. Cutting out the middlemen is not strategy—it is survival.

Circle chose to build solo; Tether is running external races with Plasma and Stable. The outlier is Stripe: coin-less but user-rich. After acquiring Bridge and Privy, the payments giant already owns the technical loop; it is only a matter of time before it mints or blesses its own stablecoin.

Stablecoin issuers, distributors and terminal networks are all building closed loops:

• Issuers: Circle’s Arc, Tether’s Plasma & Stable, USDe’s Converge
• Distributors: Coinbase, Binance, Ethereum, Tron
• Terminal networks: Stripe’s Tempo

French liberty is not English liberty; USDT’s L1 will not host USDC. Once no one wants to “make do,” the combined assault on legacy chains and card networks becomes a torrent that cannot be recalled.

Technology Diffusion: Chains Are Cheap, Distribution Is Hard
“Extreme defence of liberty is no vice; tempered pursuit of justice is no virtue.”

Privacy is no longer a mass-market concern. Qubic’s whale-swallow of Monero can’t match the heat of treasury strategies. In the libertarian frame, privacy is an institutional paywall; the average user cares only about fees.

Before Arc, Circle’s product line had already blossomed into complexity. Arc now aligns the stack so USDC can finally escape the “Coinbase annex” label.

Arc Architecture—A Quick Tour
(Interpreted by the author; may diverge from final specs.)

1. Product Map
   • USDC / EURC / USYC – dollar, euro and yield-bearing stablecoins
   • CPN – Circle Payment Network (SWIFT-like, USDC-based)
   • Mint – on-demand issuance portal
   • Circle Wallet – unified treasury for retail and institutions
   • Contracts – canonical token contracts
   • CCTP – cross-chain transfer protocol
   • Gateway – abstraction layer; users never see the chain
   • Paymaster – any token can pay gas
   • Arc – native L1; USDC is the gas token

2. Logical Stack
   Top-to-bottom: stablecoins → Gateway → CCTP // CPN → Arc
   Sidecars: Mint (on-ramp), Wallet (treasury), Contracts (programming), Paymaster (gas abstraction).

Under a nominal PoS (effectively DPoS) design with at most 20 validators, Arc claims 3 k TPS, sub-second finality, and gas below $1. Privacy vaults and compliance modes are built for enterprise treasuries. The generic L1 framework also leaves hooks for RWA tokenisation. Based on Informal Systems’ CometBFT fork “Malachite”, theoretical ceilings reach 50 k TPS. EVM equivalence, MEV mitigation, FX engines and trading optimisation are all table stakes; launching a Hyperliquid-grade product is closer to spinning up a Docker container than to rocket science.

Arc will blend TEE, ZK, FHE and MPC into one cryptographic soup. The hard part is not the tech—it is the distribution. Visa needed 50 years. USDT-Tron took eight. USDT itself is already 11. Time is the enemy, so stablecoin L1s decouple saying from doing:

• Do: retail usage → distributors → institutional adoption
• Say: institutional compliance → mass adoption

Plasma and Converge both court Pendle; Circle quietly pushes yield-bearing USYC and 24/7 USDC swaps; Tempo’s CEO is Paradigm founder Matt Huang—the brief is “more crypto, less fintech.”

Institutional adoption is merely the regulatory veneer. Meta also claims to protect user privacy, yet in practice you need users first. Recall that USDT’s earliest and still largest user base is retail in Africa, Asia and Latin America; only later did institutions take notice.

Distribution is not a skill incumbents master—boots on the ground are the DNA of the internet age.

Emerging L1 Comparison
Most new stablecoin L1s either raised oceans of capital or sit on giant balance sheets. Under Genius Act and MiCA rules they cannot pay interest to users or use yield as acquisition. Yet USDe hit $10 B in supply within a month via looping strategies. The gap between on-chain yield and user conversion leaves room for interest-bearing stablecoins: USDe manages the chain side, while USDtb—via Anchorage—slots neatly into Genius Act compliance. Yield is catnip for adoption, and the rules merely define where the games will be played.

Epilogue
Before stablecoin L1s, TRC-20 USDT was the de-facto global clearing network for USDT, and USDT the only stablecoin with real users. Hence Tether owes exchanges nothing; USDC is merely its compliant doppelgänger, just as Coinbase is Binance on Nasdaq.

Stablecoin L1s are gunning for Visa and for Ethereum. Global dollar adoption is waning, yet these chains already eye FX markets. Markets are always right, and stablecoins want to do more.

More than a decade after blockchains were born, innovation in Layer-1 design is still alive—reason enough for cheer. Let us hope these new chains remain heirs to the original blockchain ethos.

Web3 is not Fintech 2.0, DeFi is reshaping CeFi/TradFi, and stablecoins are reshaping banks—deposits, wires and all.

Software Ate the World, Stablecoins Are Eating Blockchains
Software ate the world; stablecoins are eating blockchains.
This time the headlines are not about Coinbase’s Base or Robinhood’s L2. Circle and Stripe have—almost in lockstep—decided to build their own Layer-1 blockchains purpose-built for stablecoins, freeing themselves once and for all from the constraints of existing networks. From consensus to gas token, every layer is re-engineered around the single use-case of moving stable value.

When the banks lose the deer, the stablecoins hunt it together.

A Cross-Industry Crisis: Card Schemes Yield to Stablecoin L1s
The Wintel alliance monopolised the PC for three decades until ARM upended mobile and Intel faded without ever making a mistake.
Credit cards and card networks were not born together. Diners Club, the first network in 1950, was a loyalty ledger for restaurants and superfans; only in the 1960s did it mesh with banking and become the springboard for US regional banks to burst across state and national borders.

Unlike banks, which must dance to the Fed’s leverage cycle, card schemes such as Visa and Mastercard run cash-flow machines that prosper in drought or flood. Capital One’s $35.3 billion acquisition of Discover in 2024 merely fused issuer and network into one behemoth.

Traditional banking’s vertical integration is the exact prelude to what stablecoin issuers are now doing: owning the full stack of issuance, distribution and settlement.
After the Genius Act, the anatomy of the US dollar changed for good. Commercial banks once created credit (M0/M1/M2), but today Tether and Circle hold more Treasuries than many sovereigns.

• Banks → Stablecoin issuers (USDT, USDC)
• Card schemes / SWIFT / PSPs → Stablecoin L1s

In the legacy flow, users, merchants, issuers, acquirers and networks are distinct roles. Programmable blockchains collapse them all into “users.” Whether an institution wants a private vault or an individual wants one-tap convenience is merely a matter of code. A purpose-built stablecoin L1 eliminates every non-user intermediary; user, coin and chain are sufficient to re-stack any function—even regulatory compliance.

Of course specialised issuance and tech-service firms will not vanish, but in a world of composable code they become plug-and-play vendors. Take crypto debit cards: upstream processors siphon all the margin, leaving issuers to burn cash for branding.

Technological revolutions precede organisational revolutions.
Today you can build a new Visa and keep the profits for your users.

Just as Capital One paid 1.5 % to Visa/MasterCard before buying Discover, USDT/USDC still pay gas to Tron and Ethereum. While Circle rolls out Arc, Coinbase Commerce plugs straight into Shopify, and Circle taps Binance as the launch partner for yield-bearing USYC. Tether once claimed it generates 40 % of all public-chain fees; Circle even “tips” Coinbase an extra $300 million per quarter. Cutting out the middlemen is not strategy—it is survival.

Circle chose to build solo; Tether is running external races with Plasma and Stable. The outlier is Stripe: coin-less but user-rich. After acquiring Bridge and Privy, the payments giant already owns the technical loop; it is only a matter of time before it mints or blesses its own stablecoin.

Stablecoin issuers, distributors and terminal networks are all building closed loops:

• Issuers: Circle’s Arc, Tether’s Plasma & Stable, USDe’s Converge
• Distributors: Coinbase, Binance, Ethereum, Tron
• Terminal networks: Stripe’s Tempo

French liberty is not English liberty; USDT’s L1 will not host USDC. Once no one wants to “make do,” the combined assault on legacy chains and card networks becomes a torrent that cannot be recalled.

Technology Diffusion: Chains Are Cheap, Distribution Is Hard
“Extreme defence of liberty is no vice; tempered pursuit of justice is no virtue.”

Privacy is no longer a mass-market concern. Qubic’s whale-swallow of Monero can’t match the heat of treasury strategies. In the libertarian frame, privacy is an institutional paywall; the average user cares only about fees.

Before Arc, Circle’s product line had already blossomed into complexity. Arc now aligns the stack so USDC can finally escape the “Coinbase annex” label.

Arc Architecture—A Quick Tour
(Interpreted by the author; may diverge from final specs.)

1. Product Map
   • USDC / EURC / USYC – dollar, euro and yield-bearing stablecoins
   • CPN – Circle Payment Network (SWIFT-like, USDC-based)
   • Mint – on-demand issuance portal
   • Circle Wallet – unified treasury for retail and institutions
   • Contracts – canonical token contracts
   • CCTP – cross-chain transfer protocol
   • Gateway – abstraction layer; users never see the chain
   • Paymaster – any token can pay gas
   • Arc – native L1; USDC is the gas token

2. Logical Stack
   Top-to-bottom: stablecoins → Gateway → CCTP // CPN → Arc
   Sidecars: Mint (on-ramp), Wallet (treasury), Contracts (programming), Paymaster (gas abstraction).

Under a nominal PoS (effectively DPoS) design with at most 20 validators, Arc claims 3 k TPS, sub-second finality, and gas below $1. Privacy vaults and compliance modes are built for enterprise treasuries. The generic L1 framework also leaves hooks for RWA tokenisation. Based on Informal Systems’ CometBFT fork “Malachite”, theoretical ceilings reach 50 k TPS. EVM equivalence, MEV mitigation, FX engines and trading optimisation are all table stakes; launching a Hyperliquid-grade product is closer to spinning up a Docker container than to rocket science.

Arc will blend TEE, ZK, FHE and MPC into one cryptographic soup. The hard part is not the tech—it is the distribution. Visa needed 50 years. USDT-Tron took eight. USDT itself is already 11. Time is the enemy, so stablecoin L1s decouple saying from doing:

• Do: retail usage → distributors → institutional adoption
• Say: institutional compliance → mass adoption

Plasma and Converge both court Pendle; Circle quietly pushes yield-bearing USYC and 24/7 USDC swaps; Tempo’s CEO is Paradigm founder Matt Huang—the brief is “more crypto, less fintech.”

Institutional adoption is merely the regulatory veneer. Meta also claims to protect user privacy, yet in practice you need users first. Recall that USDT’s earliest and still largest user base is retail in Africa, Asia and Latin America; only later did institutions take notice.

Distribution is not a skill incumbents master—boots on the ground are the DNA of the internet age.

Emerging L1 Comparison
Most new stablecoin L1s either raised oceans of capital or sit on giant balance sheets. Under Genius Act and MiCA rules they cannot pay interest to users or use yield as acquisition. Yet USDe hit $10 B in supply within a month via looping strategies. The gap between on-chain yield and user conversion leaves room for interest-bearing stablecoins: USDe manages the chain side, while USDtb—via Anchorage—slots neatly into Genius Act compliance. Yield is catnip for adoption, and the rules merely define where the games will be played.

Epilogue
Before stablecoin L1s, TRC-20 USDT was the de-facto global clearing network for USDT, and USDT the only stablecoin with real users. Hence Tether owes exchanges nothing; USDC is merely its compliant doppelgänger, just as Coinbase is Binance on Nasdaq.

Stablecoin L1s are gunning for Visa and for Ethereum. Global dollar adoption is waning, yet these chains already eye FX markets. Markets are always right, and stablecoins want to do more.

More than a decade after blockchains were born, innovation in Layer-1 design is still alive—reason enough for cheer. Let us hope these new chains remain heirs to the original blockchain ethos.

Web3 is not Fintech 2.0, DeFi is reshaping CeFi/TradFi, and stablecoins are reshaping banks—deposits, wires and all.