After several years publishing as Fintech Ruminations, I am introducing a new name: Lombard Notes. The change reflects a broader focus, extending beyond fintech to the wider architecture of financial systems — from historical innovations to emerging digital markets. The content remains consistent in spirit, with only the name evolving.
A few months ago, in my post Stablecoins 2.0, I suggested that we were still in the “pre-Google” phase of stablecoins. Back in the early days of the web, Yahoo was the biggest search engine in circulation. But Yahoo wasn’t really a search engine as we think of it today — it was a curated directory, a hierarchy of links through which users could browse their way to an answer. Then Google arrived with its radically different crawling technology, and the entire paradigm shifted.
Stablecoins are obviously a different story, but the analogy holds. Today, two tokens dominate the space — USDT and USDC — both following a very similar model that feels more like incremental innovation than a true breakthrough. Around them, other projects are experimenting with new approaches, building stablecoins as platforms or infrastructure, hoping to be the “Google moment” of this market.
When I first wrote about this, my untold assumption was that these incumbents were about to be disrupted by more radical entrants. After a few months, I can say I was at least partially wrong. The market share of USDT and USDC has barely shifted; they remain the dominant players. But something more interesting has happened: they are no longer “just tokens.” Both are building/backing their own dedicated rails, competing not just as instruments of payment but as infrastructure providers, positioning themselves at the center of new financial ecosystems.
At the same time, a handful of challengers are emerging — less as rival issuers and more as infrastructure providers in their own right, offering alternative rails or middleware layers rather than competing head-on with USDC and USDT.
The goal of this post is to map this evolution — from standalone stablecoins to stablecoin-centered rails — to present the main players, and to evaluate the competing paradigms that might define the next phase of the industry.
From Tokens to Rails
What do we mean with rails?
In finance, rails are the underlying networks and standards that money and assets move on — the pipes that make transactions possible.
Right now, every financial company in the world that wants to do business has to adhere to a patchwork of standards and plug into a variety of legacy infrastructures:
The common thread is that each asset class sits on its own domain-specific infrastructure, with unique rules, APIs, and institutions.
Blockchains flip this model: instead of many silos, they offer a single abstraction layer where everything takes the form of a token. The big buzz behind blockchain technology is precisely this: it provides a more modern and unified architecture, standardising the representation and transfer interface for any asset.
The evolution of stablecoins
Phase 1: Token. On these new blockchain rails, stablecoins first appeared as simple representations of fiat currency onchain — digital wrappers around the US dollar, mainly used for payments and trading.
Phase 2: Ecosystem. As the industry matured and adoption grew, stablecoin issuers shifted their strategy: rather than being just tokens, they became ecosystem builders. The priority was to support as many chains and protocols as possible, ensuring that their token sat at the center of liquidity flows. Circle’s CCTP or Circle’s gateway are examples of this “ecosystem phase,” designed to extend reach and make the stablecoin indispensable infrastructure.
Phase 3: Chain. Now that the stablecoin market is approaching $300B, this ecosystem model is not enough. The next step is to embody the ecosystem in a new physical rail: a branded chain built around the stablecoin itself.
Why does this make sense?
- Ecosystem control. By owning the rail, a stablecoin issuer no longer just plugs into someone else’s infrastructure; it dictates the rules of settlement, sequencing, and interoperability.
- Distribution. A dedicated layer gives control over distribution — who gets to transact, under which compliance regime, and with what offchain credentials. Identity, KYC, creditworthiness, and risk scoring — all of which live outside blockchains today — can be anchored directly into the issuer’s L2. This makes the stablecoin not just a token but the gatekeeper of financial participation.
- Monetization. Stablecoins currently monetize through reserve yields, but transaction activity itself accrues to the underlying base chains. A branded chain allows issuers to capture additional revenue streams: network fees, MEV capture, and sequencer revenue. More importantly, it opens the door to value-added services: payments APIs, credit issuance, merchant services, FX rails, even identity-as-a-service. Once you control the settlement environment, you can layer services on top, much like Visa did on top of card clearing.
Stablecoin-branded chains
The most interesting experiments in this new “stablecoin-as-rail” model are already visible.
Plasma is a stablecoin-native L1 developed by the Plasma Foundation and backed by Peter Thiel and Bitfinex (sister company to Tether). It’s EVM-compatible and optimized for gasless USDT0 transfers (the omnichain version of USDT). Its native token is XPL, and went live this week with a solid set of partners (Aave, Ethen Fluid, Euler) and it already announced Plasma One – the native “neobank” on Plasma chain.
Stable (also backed by Bitfinex) is another USDT-centric chain. Here, USDT is the native gas unit, peer-to-peer transfers are effectively gas-free, and the protocol is designed to guarantee blockspace for institutions. It also supports confidential-with-compliance transactions, positioning itself explicitly as the dedicated payments rail for Tether’s ecosystem.
Arc is Circle’s branded chain. It is being built as an EVM-compatible L1 where USDC is not just another token but the native currency of the chain. Arc isn’t only about cheap settlement: it integrates higher-level services such as predictable fees, built-in FX engines for cross-currency flows, privacy modes balanced with regulatory oversight, and hooks for institutional settlement. It aims to be the default operating system for USDC, collapsing today’s fragmented cross-chain deployment strategy into a unified home rail.
Tempo, incubated by Stripe and Paradigm, is even more explicitly designed as a payments-first blockchain. Unlike DeFi-optimized chains, Tempo is tailored for real-world flows: payroll, remittances, merchant settlement, microtransactions, and even AI-driven agentic payments. Stripe’s DNA means compliance, identity, and enterprise integration are built into the protocol itself. Design partners are Visa, Shopify, Deutsche Bank, Nubank, Revolut, among others — making it effectively a consortium network optimized for scale. Tempo’s ambition is clear: to become the VisaNet of stablecoins.
Taken together, these projects highlight a clear shift: stablecoins are no longer just passive tokens, but full-stack rails with their own blockspace, compliance models, and ecosystem rules. And – interestingly – none of them is fully permissionless but there is always a certain degree of control retained by the centralised entity.
Conclusions
The ones presented above are only the first wave of stablecoin-native chains, with more already in the works — Robinhood, for example, has announced its own chain. It’s impossible to know today who the eventual winners will be, or if a single winner will emerge. My bet is that, as in every business, distribution will decide the outcome: those who control access to users and merchants will ultimately control the market. What is at stake is not just which chain becomes the “home” of stablecoins, but which ecosystem ends up controlling the future of payments — at least in their first truly global, programmable form.
Regardless of who wins, one fact is already clear: we are watching a radical transformation in the essence of crypto. These branded chains are more user-centric, performant, and enterprise-ready — but they also push the industry firmly toward centralisation, the very dynamic crypto was designed to challenge. This shift will face pushback from OGs and crypto natives, yet it feels inevitable if crypto wants to mature into the backbone of the global financial system. Decentralisation will likely persist at the deepest layers — in settlement networks like Ethereum and Bitcoin — but it won’t be preserved for the average user of a branded stablecoin chain. The trade-off in efficiency and UX is simply too high.
As always in technology, the pendulum between centralisation and decentralisation is swinging back — this time toward centralisation, as mainstream adoption begins.
Resources
- https://www.thisweekinfintech.com/the-stablecoin-adoption-journey/
- https://a16zcrypto.com/posts/article/understanding-stablecoins-banking-history/
- https://x.com/ccatalini/status/1852394789276197353?s=46
- https://blog.starpointllp.com/?p=7064
- https://blog.starpointllp.com/?p=7059
- https://www.forbes.com/sites/christiancatalini/2025/08/11/stripe-is-building-a-blockchain-can-openness-survive-branded-rails/
