Stablecoin Blockchains and the Fight for the Float

• Reserve income was $668 million of Circle’s $701 million second-quarter 2026 total, and stablecoin chains are a bid to keep more of it.
• Arc, Plasma, Tempo and Stable held under 1% of stablecoin supply on 7 October 2026.
• Arc and Tempo finalize in under a second, against about 15 minutes on Ethereum.
• USDT0, the gas token on Stable and the default dollar on Plasma, is backed by USDT locked in one Ethereum contract.
• With equal voting power, four of Arc’s 11 permissioned validators refusing to sign would halt finality, on top of Circle’s freeze power over USDC.

Circle booked $701 million of revenue and reserve income in the second quarter of 2026, and $668 million of it came from interest on reserves. Distribution, transaction and other costs took $412 million. A fiat-backed stablecoin issuer earns the float and then hands a large share of it to the exchanges, wallets and platforms that put the token in front of users.

The stablecoin blockchains launched over the past year are an attempt to own that distribution layer. Circle launched Arc with USDC as gas. Plasma and Stable were built around Tether’s USDT, with Bitfinex money behind both. Tempo, incubated by Stripe and Paradigm, is the native home of Open USD, a consortium stablecoin that passes most of its reserve income to participating businesses. Every one of them is pitched as payments infrastructure, with dollar fees and finality measured in milliseconds. The ownership tells a different story. These chains are distribution plays for reserve income, and a buyer of the rail should price them that way.

So far the dollars have mostly stayed put. On 7 October 2026, Arc, Plasma, Tempo and Stable together held about $2.7 billion of stablecoins, under 1% of a $307.8 billion market. TRON held $94.8 billion on the same day. For a treasury desk, an exchange or a payments company picking a rail, the integration carries a second consequence. The companies behind each chain’s dominant dollar now also run, finance or select its validators, and the issuer’s control rights and the chain’s security assumptions have to be assessed together.

The future of finance is here. Trade crypto and more

Where stablecoin supply sits in October 2026

On 7 October 2026, Ethereum carried $146.5 billion of stablecoins, 47.6% of the total, according to DeFiLlama’s chain breakdown. USDT made up 97.8% of TRON’s $94.8 billion, and Plasma, the largest of the purpose-built chains, ranked tenth among all networks.

Hyperliquid’s L1 is a derivatives venue, and it holds more stablecoins than the four payments chains combined, almost all of it USDC. Dollars collect where counterparties already trade. Most large chains also have a house dollar. USDT dominates TRON, USDC dominates Base, and Ripple’s RLUSD is 93% of the stablecoins on the XRP Ledger. The purpose-built chains extend a pairing of issuer and ledger that the market had settled on before any of them launched.

LayerZero reported that USDT0 supply on Plasma reached $5 billion in the weeks after the chain’s late-September 2025 launch. DeFiLlama counted $1.4 billion of stablecoins of all kinds on Plasma a year later. Stable, the chain that uses USDT0 for gas, held $20.7 million.

Issuer concentration runs higher than chain concentration. USDT stands at $184.2 billion and USDC at $74.3 billion, together about 84% of the market. Totals vary by data vendor, and every figure in this section comes from DeFiLlama on that one day.

Arc, Plasma, Tempo and Stable compared

Arc runs Malachite for consensus and Reth for execution. Arc’s documentation describes a proof-of-authority validator set of regulated institutions, deterministic finality in under one second, and a benchmark of under 350 milliseconds with 20 validators. The founding validator cohort has 11 members operating a permissioned set. BlackRock, Visa, Mastercard, Standard Chartered and DTCC are among them. Circle minted 10 billion ARC tokens and targets a proof-of-stake transition in 2027, with network fees staying in USDC, according to its mainnet announcement. Arc’s testnet processed more than 700 million transactions in under a year, and more than 100 institutional and ecosystem builders were live when the public mainnet opened.

Plasma raised $24 million in February 2025 in a round led by Framework, with Bitfinex, Peter Thiel and Tether CEO Paolo Ardoino participating. Its consensus documentation describes PlasmaBFT as a pipelined, Rust-based implementation of Fast HotStuff and says a small group of known validators secures the network at launch. Validators who misbehave lose block rewards and keep their capital. The chain went to mainnet beta alongside its XPL token.

Tempo went live on 18 March 2026 after a testnet that drew Mastercard, UBS, Klarna and Visa. It runs Simplex BFT from Commonware, produces a block about every 600 milliseconds, and its consensus page describes institutional validators, permissioned at the start. Open USD launched on 30 June 2026 with more than 140 partners, including Visa, Mastercard, BlackRock and Coinbase, and distributes most of its reserve income to participating businesses after a management fee. It issues natively on Tempo and makes up about 64% of the chain’s stablecoin supply.

Stable launched on 8 December 2025 after a $28 million seed round led by Bitfinex. Its token, STABLE, has a fixed supply of 100 billion and no emissions, and stakers are paid from a share of a protocol fee vault. Stable’s tech overviewlists StableBFT as live and DAG-based Autobahn consensus as planned.

Dollar gas, fee sponsorship and finality

Each chain takes the volatile gas token out of a dollar transfer, by a different route. Arc uses USDC as the unit of account for gas and smooths the base fee with an exponentially weighted moving average to damp short spikes. On Stable, gas is priced in USDT0, and a plain 21,000-gas transfer costs about 0.0000021 USDT0 at a 1 gwei base fee. Tempo lets users pay in any USD stablecoin through a fee AMM and routes payments into dedicated lanes, with an average payment fee under $0.001. Plasma’s site advertises zero-fee USD₮ transfers on Plasma routes and adds that third-party fees may apply.

Buy bitcoin and stocks. Signup to Coinbase today

Dollar gas removes a treasury chore. A business sending USDT on TRON or USDC on Ethereum has to buy, hold and account for TRX or ETH as a separate volatile asset just to move its dollars.

Ethereum takes about 15 minutes to finalize a block. TRON produces a block every three seconds, and a block solidifies once at least 19 of its 27 Super Representatives have produced blocks at or above that height. That takes about a minute when block production is healthy. Arc and Tempo both reach deterministic finality in under a second, and Plasma’s documentation puts block finality in seconds.

An exchange crediting a deposit or a merchant releasing goods carries the risk between inclusion and finality. On a deterministic BFT chain the exposure closes inside a second. On Ethereum it stays open for about 15 minutes.

Converting back to bank money depends on the issuer’s operations. Tether’s fee schedule sets a $100,000 minimum for direct acquisition or redemption, a redemption fee of the greater of $1,000 or 0.1%, and a $150 verification fee. The fee floor makes mid-sized exits expensive in percentage terms, since $1,000 on a $500,000 redemption works out to 0.2%. At $5 million the fee falls to the 0.1% rate, or $5,000. Holders below the minimum exit through the secondary market at whatever price exchanges quote that day.

Cross-chain transfers through CCTP and USDT0

Circle moves USDC between chains by burning it on one and minting it on another through the Cross-Chain Transfer Protocol. A user calls depositForBurn on the source chain. Circle’s off-chain attestation service, Iris, signs the burn message, and the destination chain’s MessageTransmitterV2 contract checks that attestation before minting. Each message carries a nonce that can be used only once on the destination domain. Standard transfers wait for hard finality and take 15 to 19 minutes on Ethereum and its layer 2s. Fast transfers settle in about 8 to 20 seconds.

Circle backs them with a Fast Transfer allowance, one pool shared across every supported chain. Each fast burn draws the pool down, and the amount returns to it once the burn reaches hard finality. The allowance is Circle extending credit against source-chain finality, and its size caps how much USDC can move faster than finality at any moment.

Native USDC now runs on 38 mainnets in Circle’s contract address list, Arc and Plasma among them. CCTP has a version lifecycle of its own. Circle’s documentation labels V1 as legacy and tells developers to use V2, though Noble, Sui and Aptos still require V1. Wallets and treasury systems wired to the old contracts carry a migration on their roadmap.

USDT0 follows a lock-and-mint design. OFT contracts mint and burn USDT0 on each connected chain, and Ethereum alone locks the USDT that backs them all. Everdawn Labs operates USDT0, which reaches 26 or more networks through LayerZero’s OFT standard. USDT0 is the gas token on Stable, and LayerZero describes it as Plasma’s default gas token and unit of account from launch. The same case study cites a single $800 million USDT0 transfer that cost $0.81 in fees.

An OpenZeppelin audit of the USDT0 child token on Polygon lists a default admin role that “can mint and burn tokens, destroy funds of blocked users, override blocklist restrictions during transfers.” A separate depositor role is the only entity allowed to call the cross-chain mint and burn functions. LayerZero sells the same pattern as a service. Its lzAsset documentation lists PYUSD0 and USDG0, which lock native PayPal USD and Paxos’s USDG in an escrow lockbox and are maintained by LayerZero Labs.

The future of finance is here. Trade crypto and more

A risk team comparing the two designs should start with who can create supply on the destination chain. CCTP keeps that power with Circle’s attester, and Circle stays the single source of supply. USDT0 hands it to a lock on Ethereum plus a LayerZero message, with every connected chain’s backing held in one adapter contract.

Freeze powers and permissioned validators

Tether said in February 2026 that it had frozen about $4.2 billion of USDT over links to illicit activity, $3.5 billion of it since 2023. The GENIUS Act makes that capability a condition of issuing. Permitted issuers need “technical capabilities, policies, and procedures to block, freeze, and reject specific or impermissible transactions,” and may issue only if they can comply with lawful orders to seize, freeze, burn or prevent the transfer of their tokens. Those issuer freeze powers travel with the token to every chain it is deployed on.

The purpose-built chains add a second control layer at the block level. Arc and Tempo launched with permissioned institutional validators and Plasma with a small trusted group of known operators, while Stable relies on delegated proof of stake with STABLE as the staking token.

BFT consensus needs more than two-thirds of validators to commit a block. Assuming equal voting power across Arc’s 11 validators, the chain finalizes with eight and stalls if four go offline or refuse to sign. Four regulated institutions acting under one court order or one sanctions designation could halt finality for every user on the chain.

Identity-based validation suits institutions that want a counterparty they can take to court. It also gives authorities two places to act. The issuer can freeze a balance in the token contract, and a small, known validator set can be ordered to exclude transactions before they reach a block. On Arc both levers sit with Circle and the institutions it selected. On Plasma and Stable the dollar is Tether’s, and Bitfinex money stands behind both chains.

Stablecoin rules in the US, EU, UK and Hong Kong

Regime obligations land on issuers and reach a chain through the token contract, key custody and the issuer’s choice of networks.

In the United States, the GENIUS Act was signed on 18 July 2025. Treasury names 18 January 2027 as the expected effective date, after which a person generally may not issue a payment stablecoin in the US without a federal or state license.

Under Treasury’s August 2026 proposal, digital asset service providers must offer or sell only stablecoins from qualified issuers starting 18 July 2028. They must also confirm that foreign issuers will comply with lawful orders. Issuers with $10 billion or less outstanding can opt into a state regime certified as substantially similar to the federal one, a route open to the smaller dollars launching on new chains. The OCC’s proposed rule permits custody of the “private keys used to issue payment stablecoins” only by a supervised or regulated person, and that covers the mint key behind every chain an issuer supports.

MiCA bars issuers of e-money tokens, and crypto-asset service providers working with them, from granting interest to holders.

Buy bitcoin and stocks. Signup to Coinbase today

The UK runs two tracks. The FCA published its final rules on 30 June 2026, and the regime takes effect on 25 October 2027. Its application gateway opened on 30 September 2026 and closes on 28 February 2027 for firms that want to keep operating under the saving provision. For systemic sterling stablecoins, the Bank of England’s June 2026 policy statementrequires 30% of backing in unremunerated central bank deposits and 70% in UK government debt of up to six months. It sets an initial £40 billion issuance cap per systemic stablecoin, and the Bank intends to finalize its Code of Practice by the end of 2026.

Hong Kong licenses issuers under its Stablecoins Ordinance, in force since 1 August 2025. The HKMA granted its first two issuer licenses on 10 April 2026, to HSBC and to a Standard Chartered joint venture with Hong Kong Telecommunications and Animoca Brands, from 36 applications. HSBC plans a Hong Kong dollar stablecoin for the second half of 2026, integrated into its PayMe wallet.

A stablecoin license in any of these jurisdictions governs reserves, redemption and controls. The choice of chain stays with the issuer, and so does the risk of every network it supports.

A due diligence checklist for a stablecoin rail

1. Native or wrapped. Confirm whether the token on the chain is issuer-minted, like USDC through CCTP, or a lock-and-mint claim like USDT0, PYUSD0 or USDG0, and find the contract that holds the backing.
2. Finality. Get the chain’s deterministic finality figure and the confirmation policy your counterparties use, then price the gap between them.
3. Validator set. Identify the validators, count them, and work out how many can halt the chain. On an 11-member BFT set with equal weights, four is enough.
4. Control roles. List the mint, burn, freeze, pause and upgrade roles on the token contract on that chain, and who holds each key.
5. Redemption path. Confirm direct redemption eligibility, minimums and fees. Tether’s $100,000 minimum and $1,000 fee floor put direct exit out of reach for small holders.
6. Messaging dependencies. Identify the attester or verifier behind each cross-chain mint, any caps such as CCTP’s Fast Transfer allowance, and pending deprecations such as CCTP V1.
7. Depth on the chain itself. Stable held $20.7 million of stablecoins on 7 October 2026 and TRON held $94.8 billion, and moving size in or out of a thin chain costs more.

Validator economics and other open questions

Validators on a dollar-gas chain earn dollars in fractions of a cent per transfer. Stable pays stakers from a fee vault with no emissions. Arc keeps fees in USDC and plans proof of stake for 2027 around a 10 billion ARC supply. Plasma penalizes validators through rewards alone, and Tempo has no native token. The oldest of the four has run for about a year, too short a record to show whether fee revenue alone can pay for validator security.

Issuers and their partners are hedging. Native USDC runs on Plasma, whose backers include Bitfinex and Tether’s chief executive, while USDC makes up 98.7% of the stablecoin supply on Arc. Standard Chartered validates Arc and partners in one of Hong Kong’s two licensed stablecoin issuers. Bank tokenized deposits compete for the same corporate treasury flows.

Arc is also betting on currencies beyond the dollar. Circle launched StableFX for round-the-clock programmable FX trading on Arc, with EURC integrated and more than 25 local stablecoins listed as active or onboarding. Liquidity in those pairs will decide whether a corporate treasury can settle euro or other local-currency invoices on the same chain it uses for dollars.

Arc lists confidential transactions and balances, with view keys, as in development. Until that ships, payroll and supplier payments on Arc are readable by anyone with a block explorer.

Tempo launched with a Machine Payments Protocol, co-developed with Stripe, that lets software pay for data or compute without a person approving each transaction. Whether agents or treasurers move first, the four chains combined still hold less in stablecoins than Hyperliquid’s L1.