The Great Unbundling: Why Everyone Is Building a Stablecoin Chain (And Why Most Will Fail)
A 2025 Year-End Analysis
The stablecoin chain explosion isn’t about technology. It’s about margin capture.
Stripe, Circle, and Tether have all arrived at the same conclusion: if stablecoins become the default rails for global payments, whoever owns the chain owns the economics. This is infrastructure economics, not payments innovation.
Within twelve months, we’ve seen Tempo, Arc, Plasma, and Stable all enter the race, with additional entrants rumored. The underlying math is too compelling to ignore. In November 2025, Tron generated $29.4 million in total fees, with 84% attributable to USDT transfers, roughly $0.8 million per day in chain-level fee extraction, not issuer revenue. At scale, chain ownership is a printing press.
Most analysis frames this as competition. I think it’s actually a sign of coordination failure. Fragmentation doesn’t slow experimentation. It slows standardization, liquidity convergence, and enterprise confidence. That’s where the three to five years of adoption are lost. The market would be better served by two or three dominant rails, but incentives are pushing toward ten or more.
The GENIUS Act, signed into law in July 2025, created the regulatory clarity that opened the floodgates. Everyone rushed the door simultaneously. Now we’re watching what happens when too many well-funded teams chase the same opportunity.
The Stablecoin Chain Landscape
Tempo: Stripe’s Bet That Distribution Beats Technology
Tempo isn’t interesting because of its technical specs. It’s interesting because Stripe already processes over a trillion dollars annually and can flip a switch to route that volume.
Announced in September 2025 by Paradigm as payments-first stablecoin infrastructure, Tempo is a Trojan horse for merchant stablecoin adoption. Even if Tempo remains structurally separate from Stripe, its design assumptions are clearly informed by Stripe’s merchant distribution and compliance posture. With design partners including Shopify, Klarna, Deutsche Bank, UBS, Mastercard, and Visa, adoption happens by default for Stripe-dependent merchants.
The no-token model isn’t ideological. It’s strategic. Stripe wants Tempo to feel like infrastructure, not a speculative asset. They’re betting that boring wins in payments.
The real moat: Stripe’s existing merchant relationships. When your distribution list looks like a Fortune 500 directory, you don’t need to convince anyone to try your blockchain. You just make it the default option.
The risk: Stripe has never operated decentralized infrastructure. Validator economics are foreign to their DNA. And the promise of sub-cent transactions assumes volumes that haven’t materialized yet.
Arc: Circle’s Existential Pivot
Arc isn’t a product launch. It’s Circle admitting that being a token issuer isn’t defensible. Anyone can issue a stablecoin. Owning the chain is the only durable moat.
Circle deployed Arc’s public testnet on October 28, 2025 with over one hundred institutional partners, including BlackRock, Visa, Goldman Sachs, Deutsche Bank, HSBC, and AWS. The roster reads like a TradFi infrastructure play wearing blockchain clothes.
The StableFX engine and Partner Stablecoins program reveal the real strategy. Circle is positioning Arc as the settlement layer for all regulated stablecoins, not just USDC. If BRLA from Brazil, MXNB from Mexico, and JPYC from Japan all settle on Arc, Circle becomes the SWIFT of stablecoins, not SWIFT in architecture, but SWIFT in network position, even for competitors’ tokens.
Circle’s public company status on the NYSE as CRCL means they’ll face pressure to monetize quickly. Long-term infrastructure building doesn’t match quarterly earnings cycles. Their Q3 2025 revenue of $740 million shows the business is real, but Wall Street patience is finite.
Plasma: The Cautionary Tale Already Unfolding
Plasma’s trajectory is the story everyone building in this space should study carefully.
Launched in September 2025 with backing from Peter Thiel and Tether’s Paolo Ardoino, Plasma saw a sharp early liquidity spike followed by a major drawdown. The XPL token fell roughly 80 to 90 percent from its early peaks.
This is what happens when you subsidize growth with yield farming. Zero-fee USDT transfers are a venture-funded subsidy, not a sustainable fee-free architecture.
The incentives suggest Plasma’s long-term value is less about payments and more about compliance arbitrage. By owning the chain, Tether can implement freeze and seize capabilities faster than third-party chains. This matters for their ongoing regulatory negotiations. But the MiCA problem is structural: Tether has not pursued EU authorization and has been delisted from major EU exchanges including Coinbase, Crypto.com, and Kraken. This means Plasma faces material constraints on EU market access. Plasma may quietly pivot to become Tether’s compliance layer rather than a general-purpose payments chain.
Stable: The Newest Entrant
Stable launched its mainnet on December 8, 2025, positioning itself as a Layer 1 blockchain optimized exclusively for stablecoin transactions. Backed by $28 million in seed funding from Bitfinex and Hack VC, with Paolo Ardoino as an advisor, Stable raised over $1.1 billion in pre-deposits from more than 10,000 wallets.
The differentiator: USDT-denominated gas fees. Instead of paying transaction costs in a volatile native token, users pay in USDT directly. For enterprises processing millions in stablecoin payments, this eliminates treasury complexity.
Pre-deposits signal interest, not durability. Whether this liquidity persists without incentives remains the open question. And whether Stable can differentiate from Plasma, given the shared Tether/Ardoino connection, is unclear. The market may not need two Tether-adjacent chains.
The Emerging Pattern: Single-Issuer Chains Are a Trap
Every major stablecoin issuer building their own chain creates a principal-agent problem. Users are trusting the same entity to hold the reserves, operate the chain, and set the rules. That’s not decentralization. It’s vertical integration.
The market is treating these chains as infrastructure plays. I think they’re actually regulatory moats. If you own the chain, you control who can build on it. You can satisfy regulators’ demands for control while calling your network “decentralized.”
But decentralized stablecoin chains that answer to a single issuer aren’t decentralized in any meaningful sense. The question is whether users care. So far, convenience has beaten principle every time.
The Bank Response: Tokenized Deposits Aren’t Competing, They’re Flanking
Banks aren’t trying to beat stablecoin chains at their own game. They’re defining a different game entirely.
Tokenized deposits preserve the thing banks care most about: the deposit relationship. Stablecoins disintermediate. Tokenized deposits digitize. That distinction matters enormously for how banks think about this market.
The yield prohibition in the GENIUS Act is a feature for banks, not a bug. Stablecoins can’t pay interest directly. Deposits can. For institutional treasury use cases where yield matters, tokenized deposits win by default. Banks are happy to let stablecoins have the remittance market. They want to keep the ten trillion dollars or more in corporate treasury flows.
JPMorgan’s JPMD: The Template
On November 12, 2025, JPMorgan rolled out JPMD, its tokenized deposit token, on Base blockchain. This is a public chain, not permissioned. That surprised a lot of observers.
The real use case is collateral management and 24/7 settlement for institutional clients. B2C2, Coinbase, and Mastercard all completed near-instant issuance and redemption as part of the pilot. When the world’s largest bank by market capitalization legitimizes public blockchain infrastructure for TradFi, the signal is unmistakable.
Naveen Mallela, co-head of JPMorgan’s blockchain division Kinexys, has been explicit: deposit tokens are a superior alternative to stablecoins for institutional use. They can earn interest. They may be eligible for deposit insurance. They represent a direct claim on a regulated bank’s balance sheet. For treasury managers who think in terms of counterparty risk, that distinction is everything.
Banks Will Issue on Stablecoin Chains
If regulatory pilots continue at their current pace, at least one major bank will issue tokenized deposits on Tempo or Arc by the end of 2026. Not on a private blockchain. On the public stablecoin infrastructure.
Why? Because building chain infrastructure is expensive and banks are bad at it. It’s cheaper to let Stripe or Circle operate the rails and just issue the deposit token on top.
The technical work is straightforward. The regulatory questions are harder, but the GENIUS Act created enough clarity to start experimenting.
This creates a strange outcome: stablecoin chains become infrastructure for bank-issued money, not just stablecoin-issuer money. The lines between these categories are blurring faster than most analysis acknowledges.
Where Each Rail Wins
The question isn’t stablecoins versus tokenized deposits. It’s which use case, which corridor, which counterparty type. The market is segmenting. The winners will own specific segments rather than trying to be everything.
Where Stablecoin Chains Win:
Remittances to emerging markets, where no bank account is required and existing corridors like the Philippines, Mexico, and Nigeria are already stablecoin-native. Consumer cross-border payments, where speed and cost beat banks and regulatory burden is lower for retail amounts. Crypto-native treasury, where companies holding stablecoins as working capital want chain-native settlement. And AI agent payments, where agents need programmable, permissionless rails and bank APIs are too slow.
Where Tokenized Deposits Win:
Institutional treasury, where FDIC insurance, yield, and existing bank relationships matter. Collateral management, where regulatory clarity on deposit status beats uncertain stablecoin treatment. High-value B2B settlement, where counterparty risk matters more and bank backing provides trust. And regulated entity flows, where compliance burden is lower when staying within the banking system.
The Contested Middle:
Cross-border flows have been estimated around $150 trillion annually. The B2B segment of that market is where the real battle happens. Neither rail has won. Corporates want the speed of stablecoins and the trust of bank deposits. The winning rail will be the one that figures out how to offer both.
Current state: most corporates are waiting. They’re watching pilots. They’re not committing volume. 2026 is when this changes.
The Risk Topology
Understanding the different risk profiles is crucial for anyone building on or integrating with these systems.
Stablecoin Chain Risks:
Centralization risk manifests in two forms: validator capture, where a small number of validators creates a single point of failure, and issuer dependency, where if Circle has a regulatory problem, Arc has a regulatory problem. Bridge risk compounds the exposure, with Plasma using USDT0 via LayerZero rather than native Tether, and every bridge is an attack surface. Subsidy exhaustion looms over every zero-fee model. What happens when the venture capital runs out?
Tokenized Deposit Risks:
Interoperability is fragmented. JPMD and HSBC’s tokens don’t talk to each other natively. Speed to market is slow, because bank IT projects move in quarters, not weeks. Geographic reach is limited, with no help for the unbanked since these systems assume existing bank relationships.
The Shared Risk:
The biggest risk for both tracks is regulatory divergence across jurisdictions. The EU with MiCA has locked out Tether while making Circle compliant. The US with the GENIUS Act has enabled both tracks, but implementation details remain uncertain. Singapore has the USDG consortium model. Emerging markets are a wild west where stablecoins are winning by default.
For enterprises, this means compliance teams reviewing the same transaction across three regulatory frameworks before approving volume. If these frameworks don’t converge, we get balkanized money rails. Which defeats the purpose of global infrastructure.
2026 Predictions
Here are my 2026 predictions:
If regulatory pilots continue at their current pace, a top-twenty global bank will announce tokenized deposits on a public stablecoin chain by Q3 2026. Most likely candidate: a European bank on Arc where MiCA provides regulatory clarity, or an Asian bank on Tempo where Stripe relationships run deep. This is the moment that collapses the distinction between stablecoin infrastructure and bank infrastructure.
Corridor-specific winners will emerge. By year end, we’ll see clear rail preferences by corridor. US-Mexico will likely favor stablecoins, probably MXNB on Arc or Tempo. US-Philippines will stay stablecoin, building on existing USDC usage. US-UK/EU will lean toward tokenized deposits, given regulatory preference. The market won’t converge on one winner. It will segment.
At least one chain will fail or pivot dramatically. Failure here doesn’t necessarily mean shutdown. It means failing to become a broadly adopted, independent settlement rail. The stablecoin chain space is overcrowded. At least one of the chains launched in 2025 will either shut down, merge, or pivot to an entirely different use case by year end. Plasma is an obvious candidate given its token drawdown, but smaller players are even more dependent on ecosystem support that may not materialize.
I’m watching for these two signals:
Mainnet launches will disappoint. At least one major chain will delay or launch with significant feature limitations. The testnet-to-mainnet transition for payments infrastructure is harder than anyone is admitting publicly.
Even if volumes remain small, AI agent payment activity will become a narrative driver for stablecoin chains. When OpenAI or Anthropic needs to give agents payment capabilities, they’re not going to integrate with SWIFT. They’ll use programmable stablecoin rails. This becomes the proof of concept that pulls other use cases forward.
The Intelligence Gap
The fragmentation everyone is complaining about is actually the opportunity. When there are ten rails instead of one, the value shifts to whoever can see across all of them.
The questions enterprises will need answered in 2026: For this corridor, which rail has the best liquidity right now? What’s the regulatory status of this chain in this jurisdiction? Which stablecoin has the lowest slippage for this amount? What’s the real-time bridge risk between these two chains?
The rails themselves are becoming commoditized. The intelligence layer on top of them isn’t.
This is where the next wave of value creation happens. The opportunity isn’t building another chain. It’s building the connective tissue that helps enterprises navigate the fragmented future. Providing visibility across all of them, rather than picking winners.
When everyone is building rails, the value is in the map.