Stablecoin Issuers Build Custom Blockchains to Cater to Payment Settlement Needs

The stablecoin market has seen rapid growth in recent years, with over $310 billion in circulation and transfer volumes rivaling those of legacy card networks. This surge in adoption has led to the development of dedicated blockchains designed specifically for moving stablecoins, known as stablechains.

Companies such as Stripe, Circle, and Tether are building these custom chains to cater to the needs of their respective stablecoin products. For example, Stripe's Tempo and Circle's Arc are both being developed with payment settlement in mind, featuring throughputs and sub-second finality tailored for this purpose.

The most successful stablechain so far is Tron, which has emerged as a primary USDT settlement rail despite not originally being designed as such. It hosts $91.5 billion in stablecoins, nearly half of all USDT in circulation. This success can be attributed to the fact that users pay an estimated $2.9 billion annually in fees to blockchains Tether doesn't control.

The four new players in the stablechain landscape, Plasma, Tempo, Stable, and Arc, have collectively raised over $1 billion for their projects. However, they face significant challenges in catching up with Tron and Ethereum, which still dominate the market.