The Stablecoin Infrastructure Battle: 6 Major Projects Competing, Who Will Emerge Victorious?

2025.08.29

The Stablecoin Infrastructure Battle: 6 Major Projects Competing, Who Will Emerge Victorious?

Six major projects compete for the market, the future financial landscape remains to be seen!

2025.08.29 - 04:10:26

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Navigating Web3 tides with focused insights

Six major projects compete for the market, the future financial landscape remains to be seen!

Author: stablewatch & Castle_Labs

Translation: TechFlow

Summary

Stablecoins are dominating headlines in 2025. This raises the question: which blockchain network will carry and facilitate this asset class? As tokenized dollars gain broader acceptance and regulatory scrutiny, six upcoming Layer 1 blockchains are entering the race to compete with established stablecoin networks like Ethereum, Tron, Solana, and Base.

These blockchains include Plasma, Codex, 1Money, Arc, Stable, and Monad—following its recent acquisition of Portal Labs—each with distinct designs and visions to penetrate this booming industry.

This comparative analysis cuts through marketing noise, examining these networks across architecture innovation, consensus mechanisms, performance metrics, specialized features, and momentum. We'll use these findings to assess their positioning within the stablecoin economy.

With Citigroup projecting a $3.7 trillion market by the end of this decade, over $277 billion in current stablecoin market cap is up for grabs—stakes couldn't be higher. The winner won't just become another alternative Layer 1; given the momentum behind stablecoin adoption, it may become the infrastructure redefining how money flows in the digital age.

Disclosure:

Information in this article is primarily sourced from project documentation and official press releases. All discussed chains have not yet launched on mainnet, so statements do not guarantee actual performance or future outcomes.

The Infrastructure War Begins

Stablecoins emerged as an on-chain alternative asset class due to the need for a fiat-pegged token allowing crypto traders to avoid volatility. However, their unique properties as programmable and borderless fiat equivalents make them strong competitors to traditional financial channels in applications such as cross-border remittances, payroll, and treasury management.

While stablecoins have achieved strong adoption, especially in countries suffering from local currency inflation, at the technical level they still rely on general-purpose blockchains not specifically designed for these use cases.

There are countless examples of general-purpose blockchains failing to meet the requirements of a globally scalable stablecoin network. They were not designed with predictable fees or execution guarantees in mind.

Examples of these shortcomings include:

The minting of Yuga Labs' "Otherside" NFT burned over $200 million in gas fees on Ethereum.
MEV and arbitrage opportunities on low-fee networks like Solana and Base have incentivized massive transaction spam.

Source: MEV and the Limits of Scaling by Flashbots and Robert Miller

This infrastructure gap has spawned a new category of blockchains: stablecoin-dedicated Layer 1s. Five projects have emerged as leading contenders: Plasma was first to announce a public chain focused on stablecoin usage, backed by leading stablecoin issuer USDT0 and its partner exchange Bitfinex. Stable followed closely, also supported by USDT0 and Bitfinex, building a dedicated public chain for USDT. Meanwhile, Monad joined the race with its high-profile acquisition of stablecoin infrastructure provider Portal Labs. Codex, while independent like Plasma, is primarily funded by Circle and Coinbase and aims to become a custom layer for USDC payments. However, Circle recently announced creating its own payment blockchain, Arc. Founded by former Binance.US CEO Brian Shroder, 1Money positions itself as a stablecoin-dedicated payment network.

Requirements for Stablecoin Chains: What Truly Matters for Global Adoption

Real-world demand drives the stablecoin movement forward. This is particularly true in inflation-hit countries. Stablecoin users include Turkish freelancers seeking protection from 35% lira inflation, Nigerian manufacturers wanting to pay unbanked suppliers, and Filipino families who should be able to receive remittances in seconds without paying high Western Union fees.

Beyond individuals, more enterprises see stablecoins as tools to improve back-end efficiency and bypass the high costs of existing payment networks like Mastercard and Visa.

These users care less about ideology and decentralization—they care about solving practical problems. Therefore, successful stablecoin infrastructure must excel in specific criteria that directly impact user experience and economic viability.

Transaction Fees and Gas Tokens

To offer meaningful improvements over traditional payment gateways, stablecoins must address some frictions inherent in conventional systems.

Among these, stablecoin payments aim to eliminate friction taxes associated with traditional remittances. According to the World Bank, remittance users lose an average of 6.35%, with banks charging an average of 12.66% on $200 transfers.

Source:World Bank

Truly zero-cost transactions enable microtransactions and remove adoption barriers for the world's poorest users—precisely those most in need of this technology.

This is not just about cost reduction but also enhancing user experience competitiveness:

Users don’t have to deal with hidden provider fees embedded in transactions
They don’t need to understand dual-token systems or gas economics when using stablecoins for payments
Transfers become as simple as sending a text message

Instant Transaction Finality

Traditional banking’s 3–5 day settlement times create working capital traps, forcing the global economy to operate on implicit credit, increasing costs and inefficiencies tied to every transaction. As commerce goes global, payments should keep pace. When a manufacturer in Lagos pays a supplier in Vietnam, the payment should settle in seconds—not minutes or hours—eliminating any implied trust assumptions and working capital needs from credit-based systems. Instant finality enables new business models like real-time payroll for global remote workers, just-in-time inventory financing, and instant settlement for e-commerce.

Compliant Confidential Transactions

While this feature might surprise crypto-native users who prioritize transparency at all costs, commercial payments require full privacy:

Companies paying employee salaries cannot have their payroll data publicly visible
Supply chain payments need confidentiality to prevent competitors from analyzing proprietary information about business relationships
Imagine a world where having a public wallet means everyone can track you through your daily payments

Blockchains enabling future payments need to provide inherent privacy safeguards for users. However, this cannot be Monero-style complete anonymity but rather selective privacy that allows transparency to comply with global KYC and AML regulations.

Cross-Chain Interoperability

For stablecoins to achieve broad adoption, they must be interoperable across different blockchain networks. Currently, the launch of new networks continues fragmenting this landscape. Successful stablecoin infrastructure must seamlessly integrate with other blockchains, allowing users to transfer value and access active DeFi ecosystems on Ethereum, Solana, Hyperliquid, Base, and Arbitrum.

Native cross-chain functionality prevents ecosystem lock-in (a common issue in traditional fintech) and liquidity fragmentation, letting users access the best apps regardless of underlying blockchain.

Traditional Finance Integration

For stablecoins to become a primary means of value transfer and surpass traditional finance, they must seamlessly integrate with existing systems to facilitate this transition. This means direct bank account connections, integration with credit/debit cards, and support for traditional banking functions like ACH, wire transfers, and merchant services. During the transition, users need to switch seamlessly between both worlds, and blockchain networks must enable this, offering users a seamless application experience.

Developer Experience and Ecosystem

Network effects are one of the main drivers pushing application adoption. This requires attracting developers into your ecosystem, placing developer UX at the core of blockchain success. To achieve this, successful platforms must provide:

Excellent developer tools
Comprehensive documentation
Strong ecosystem support
Sufficient liquidity to build stablecoin-centric applications

A robust developer ecosystem not only attracts existing flagship DeFi and payment products onto the chain but also has the potential to inspire creation of chain-specific new products.

Enterprise-Grade Infrastructure

As stablecoin usage expands beyond retail, enterprises will need customized features—from guaranteed transaction throughput to dedicated development SDKs. Institutions demand reliable performance; this doesn’t change even as they move on-chain. Consumer-focused blockchains unable to meet these requirements will miss out on mass adoption. We’ve already seen companies like Robinhood choose to build their own blockchains to have a controllable environment. Successful stablecoin chains will have these features built in from day one.

Competitors

Plasma｜@PlasmaFDN

Plasma is building the foundational stack to scale global stablecoin adoption. Their approach focuses on USDT payments—the leading stablecoin with over 60% market share—to meet user needs. However, Plasma is also onboarding a broad range of stablecoin issuers and protocol ecosystems, making diversity a strength. Additionally, Plasma has proactively built a native Bitcoin bridge, aiming to become the central hub for BTC finance backed by stablecoins. This strategy positions Plasma as a nexus for the two most widely adopted on-chain asset classes.

Plasma has raised $74 million across multiple funding rounds, including a $24 million seed and Series A led by Framework Ventures and Bitfinex/USD₮0. Key investors include Bybit and Japan’s leading investment bank Nomura, along with trading and venture firms: IMC, Cumberland, Flow Traders, Founders Fund, Katarage, and 6th Man Ventures. Notable angel investors in Plasma include Peter Thiel, Paolo Arduino, Cobie, and Zaheer Ebtikar. Recently, Plasma conducted a public sale of its native token XPL, oversubscribed by over 700%, with total committed funds reaching $323.5 million.

Chain Architecture

Plasma’s architecture combines its consensus mechanism PlasmaBFT (derived from Fast HotStuff) for ordering and finalization, with a Reth-based execution layer ensuring state transitions, transaction execution, and EVM logic. These two components communicate via the Engine API, creating a system optimized for both performance and compatibility, allowing Plasma to inherit full EVM equivalence without modifications.

Plasma BFT supports pipelining, allowing new blocks to begin proposing while the previous block is still being finalized. This overlaps block proposal and finalization steps, improving performance and throughput.

Plasma’s proof-of-stake model innovates on traditional approaches by slashing rewards instead of stake for misbehaving validators. Additionally, validators are not penalized for liveness faults, and the team is exploring optional non-locked staking allowing instant unstaking.

Plasma’s consensus follows a phased decentralization approach:

Phase 1

Trusted Validator Launch: At mainnet launch, a small set of known validators secures the network, allowing stability and protocol iteration without operational risk.

Phase 2

Validator Expansion: Expand the validator set to test horizontal performance at larger committee sizes and verify throughput under additional trusted entity load.

Phase 3

Permissionless Participation: Open validator access to the public, achieving full decentralization through built-in safeguards while maintaining protocol-level security guarantees.

Another core component of Plasma’s chain architecture is the native Bitcoin bridge, enabling BTC usage in smart contracts without relying on custodians, synthetic assets, or isolated wrapped tokens. This is achieved through pBTC, a synthetic version of the underlying asset inheriting cross-chain interoperability from the LayerZero OFT standard. According to Plasma, the bridge is secured by a network of validators that will decentralize over time, composed of independent institutions each running their own infrastructure. The signing process involves multi-party computation (MPC) or threshold Schnorr signatures, ensuring no single validator holds the complete private key.

Plasma is currently in testnet phase, with 338.47k confirmed transactions from 137,927 addresses.

Transaction Fees and Gas Token

Plasma offers fully sponsored gas for USDT through its protocol-level payment system. This mechanism provides gas sponsorship for eligible USDT transfers via lightweight authentication and rate limiting, funded from a protocol-managed XPL quota. Additionally, users can pay gas using whitelisted assets like USDT and BTC, automatically swapped, completely eliminating the need to hold native XPL tokens when making payments.