What is Tether's true purpose in being a Stablecoin?

Original Title: "Stable: The New USDT Trojan Horse for the Stablecoin Era"

Original Author: Ryan Yoon, Tiger Research

Original Translation: BlockBeats

TL;DR

· Stable positions itself as the "Trojan Horse" of the stablecoin market, driving mass adoption by focusing on USDT's infrastructure.

· It offers gas-free USDT transfers, sub-second settlements, and a simplified user interface to address key barriers such as high fees, slow transactions, and complexity.

· The expected roadmap is to first attract users with free, seamless transfers, then gradually expand to payments, DeFi services, and institutional partnerships.

1. Stablecoin: Entering the Market in Trojan Horse Fashion

Stablecoins have quietly entered the cryptocurrency market, much like a Trojan horse.

Subsequently, they have grown to become a dominant force in the ecosystem. Initially, they were primarily seen as a tool to hedge against volatility. Over time, they have evolved into a core part of the market's infrastructure.

Led by USDT, the stablecoin market currently has a circulation exceeding $150 billion, with a user base of over 350 million, and a transaction volume surpassing even Visa. This has made stablecoins not only crypto assets but also a truly operational global payment network.

Their growth embodies a bridging role between traditional finance and digital finance. On centralized exchanges, stablecoins are the primary medium of exchange between fiat and crypto. In decentralized finance (DeFi), they serve as the benchmark asset for liquidity provision and lending. In cross-border remittances, they offer a faster and more cost-effective alternative to traditional banks.

The shift in market behavior is also significant. Early crypto trading relied on direct token-to-token exchanges, such as BTC/ETH or BNB/ETH, with values often measured against Bitcoin. Today, pairs like BTC/USDT and ETH/USDT dominate. DeFi yields are often quoted in USDT. In some regions of Southeast Asia and Latin America, USDT is even increasingly used for direct payments, replacing physical US dollars.

Once reliant on the valuation of volatile tokens, the market has now seen stablecoins become a universal unit of account.

Originally introduced out of necessity, they have now become the central axis of the cryptocurrency ecosystem.

II. The Other Side of Growth: The Manifestation of Infrastructure Limitations

Rapid expansion has also exposed structural weaknesses. The current stablecoin infrastructure faces three key constraints.

Source: Tiger Research

· Unpredictably High Transaction Fees: Stablecoins operate on multiple blockchain networks, but when the network is congested, gas fees skyrocket, making small transactions impractical. In some cases, a $10 transfer could require a $20 fee. This directly undermines the core value of stablecoins as a day-to-day payment tool.

· Slow Settlement Times: On Ethereum, stablecoin transactions may take several minutes or even longer to confirm, depending on the network's condition at the time. For scenarios like online checkout or in-store retail that demand real-time settlement, this delay is almost unacceptable.

· Complex User Experience: For the majority of regular users, calculating gas fees, using wallets, and managing private keys still pose significant hurdles. In contrast, consumers are already accustomed to simple and intuitive payment interfaces like PayPal, while the current stablecoin experience appears overly complex.

These infrastructure limitations have become significant barriers for stablecoins to enter the next stage of development. Ironically, within the cryptocurrency ecosystem, stablecoins have already become the de facto benchmark asset, but for mainstream users, their everyday utility remains low.

Stablecoins have fulfilled their initial mission as a Trojan horse: bringing stability to turbulent markets and establishing themselves as the core of the ecosystem.

The next challenge lies outside the crypto world: penetrating the traditional financial market and mainstream consumer payment system. To achieve this, the existing technological constraints must be fundamentally addressed, requiring a new "Trojan Horse" strategy.

III. A New Trojan Horse: Stable

Creating a new trojan horse does not require inventing another stablecoin. Stablecoins are essentially just tools pegged to the US dollar. The new trojan horse is specialized infrastructure built for existing and dominant stablecoins.

Source: Stable

This is precisely Stable's purpose. Unlike a general-purpose blockchain, Stable is a chain specifically built for USDT. It not only supports USDT alongside other tokens but serves as a dedicated high-speed network specifically handling USDT transactions.

Source: Tiger Research

Source: Tiger Research

Stable has three missions:

· Eliminate Gas Fees for USDT Peer-to-Peer Transfers: Completely removing gas costs to address the inefficiency problem on existing networks where even a $10 transfer might incurr high fees.

· Achieve Sub-Second Settlement: Settling all transactions within one second, eliminating the common wait times in online and offline payments.

· Simplify User Experience: Shielding users from gas fee calculations and wallet management complexities, enabling users to intuitively operate like traditional payment tools without technical burdens.

The key is that these improvements are interrelated. Removing gas fees simplifies the user experience, while faster transaction processing enhances usability in real-world commercial settings. These factors together lay the foundation for stablecoins to emerge from the crypto world and enter the mainstream payment market.

Stable's vision is not to become just another ordinary blockchain but to be the core infrastructure supporting the USDT ecosystem. With USDT's market size already reaching $160 billion, Stable aims to accommodate this massive market demand by addressing structural limitations in existing stablecoin infrastructure, including unpredictable fees, slow settlement speeds, and complex user interfaces.

Its direction is to move away from the fragmented model where each chain independently supports USDT and instead build a unified environment optimized for USDT operation.

IV. Architecture Operation Mechanism

Source: Stable

In order for Stable's core vision to function in practice, various technical elements must work together. Stable is currently in the testnet phase, and the team is preparing for the mainnet launch. Its target architecture clearly illustrates how the system operates.

Gas-Free USDT0 Transfer: EIP-7702 and Account Abstraction

There are two types of tokens in operation on the Stable network.

USDT0 represents USDT transferred from an external network via cross-chain bridging. gasUSDT is a token specifically used to pay for network fees and is pegged 1:1 to USDT0, only usable for transaction fee payment. Both can be exchanged 1:1 for real USDT.

In order to achieve gas-free peer-to-peer transfers, Stable has adopted EIP-7702 and Account Abstraction. This way, users only need to hold USDT0 to complete all transactions.

Source: Tiger Research

In existing blockchain systems, accounts are mainly divided into two types:

· Externally Owned Account (EOA): A standard wallet (e.g., MetaMask) controlled by a private key, capable of signing transactions but with limited functionality.

· Contract Account (CA): Smart contract accounts capable of executing complex logic but unable to initiate transactions proactively.

Account Abstraction merges these two types of accounts, enabling standard wallets to have smart contract capabilities. Users can therefore directly specify actions such as "Pay Gas with USDT" or "Request Gas Fee Waiver."

The first attempt to address this issue was ERC-4337, which required users to create a new smart wallet and transfer funds from the original wallet to the new wallet, a process that could easily lead to user errors.

· Previous Approach: Create a new smart wallet → Transfer funds from the original wallet → Use the new address

· Approach of EIP-7702: Preserve the original wallet → Add smart contract functionality → Keep the address unchanged

EIP-7702 eliminates the migration step, allowing existing wallet addresses to directly possess smart capabilities without moving funds. Users can continue to use their original MetaMask wallet while gaining additional smart features.

In Stable, all wallets natively support EIP-7702, so smart wallet functionality can be used without additional setup. This also includes features such as Gas fee sponsorship, which can be directly enabled in the existing wallet.

Source: Tiger Research

Example:

· Ryan transfers 100 USDT0 to Jay via MetaMask.

· The wallet supports EIP-7702 and requests Gas fees to be waived.

· The Paymaster service provider pays the Gas for the transaction.

· Ryan's balance is reduced by exactly 100 USDT0, and Jay receives the full 100 USDT0.

No additional Gas is deducted during the process, and Ryan does not need to hold or calculate fees, experiencing the transfer similar to using PayPal. This means there is no need to hold Gas tokens separately or manually calculate fees.

Sub-second Transaction Finality

Stable employs the StableBFT consensus algorithm, producing a block approximately every 0.7 seconds, achieving transaction finality after a single confirmation. This eliminates the common "pending" stage found in many blockchains, providing an experience similar to instant approval at payment terminals.

To further accelerate speed, Stable is developing Block-STM for parallel processing, enabling the simultaneous execution of independent transactions, which represent 60% to 80% of network activity. This approach is akin to opening multiple checkout lanes in a supermarket simultaneously, reducing wait times.

In the longer-term roadmap, Stable plans to upgrade to the Autobahn DAG consensus structure. This architecture allows for the simultaneous proposal of multiple blocks and separates data propagation from ordering, reducing bottlenecks. Internal testing has shown that its throughput can reach up to 200,000 transactions per second, but it is still in the pre-production phase.

Simplified User Experience

Stable has removed the burden of Gas fee calculation and separate Gas token management, while maintaining compatibility with the Ethereum ecosystem. Users can still continue to use familiar tools such as MetaMask and Etherscan without additional learning.

Building on this foundation, these tools will operate more smoothly under the USDT optimization feature: MetaMask supports gasless USDT0 transfers, and Etherscan presents USDT transactions in a more intuitive way.

It's like upgrading to a new phone, but all existing apps are still usable. Users retain a familiar environment while gaining enhanced functionality.

USDT from other networks can also be seamlessly imported through the existing LayerZero cross-chain bridges. USDT0 uses LayerZero's OFT (On-Chain Fungible Token) standard, fundamentally solving the complexity of traditional cross-chain transfers. In the traditional model, each network maintains an independent version of USDT, leading to liquidity fragmentation.

By adopting the OFT standard, USDT0 is entirely consistent across all networks. Whether it's bridged from Ethereum or Arbitrum, the end result is the same USDT0, thereby eliminating liquidity fragmentation issues and simplifying asset transfers.

The future roadmap also includes the Stable Name System, which will replace complex wallet addresses with human-readable names, further enhancing usability. Similar to email addresses, users in the future can directly send funds to identifiers like "ryan.stable" or "jay.stable". Although still in the planning stage, implementation and adoption may take time. From a technical perspective, it is expected to adopt a structure similar to Ethereum's ENS (Ethereum Name Service) but will include features optimized for USDT transactions.

Other Technical Components

The network is also developing StableDB, which is a specialized database architecture that separates state commitment from state storage.

In most blockchains, a new block must be fully written to disk before processing the next block, and the delay in disk writing can slow down the processing speed. StableDB eliminates this bottleneck by confirming the execution result in memory first and then parallelly writing to disk.

This architecture also incorporates memory-mapped file I/O (mmap), which directly maps files stored on disk to the operating system's memory space, making read and write operations of frequently accessed data almost as fast as in-memory operations, bypassing the slower disk access and significantly improving processing speed. It's like a waiter in a restaurant quickly taking the order, the kitchen immediately starts preparing, and later entering it into the POS system.

For enterprise clients, Stable plans to introduce "Guaranteed Block Space," which involves allocating a dedicated portion of transaction capacity to ensure stable throughput during network congestion, similar to a dedicated bus lane on a highway. Additionally, a "Confidential Transfer" feature is also in development, which can hide transaction amounts while meeting anti-money laundering and KYC compliance requirements. Looking ahead, the current Go-based execution engine will be replaced by StableVM++, based on C++. This upgrade will provide low-level memory control and performance optimizations, aiming to achieve up to six times faster execution speed improvement.

5. Expansion Scenarios for the Stable Ecosystem

Stable positions itself as a new "Trojan Horse."

Gas-free USDT transfers, sub-second settlement, and a simplified user experience are all entry incentives that attract users. This "loss-leading drain" strategy aims to drive mass adoption. Once a user base is established, Stable can generate revenue through a wide range of complementary services.

Building on this foundation, three main expansion paths seem most feasible.

Source: Tiger Research

Scenario One: Expansion of Institutional Services and Partnerships

Stable can expand its ecosystem through enhanced institutional services and partnerships. One key factor is premium services such as "guaranteed block space," which can ensure low cost and high reliability.

This strategy is particularly effective in enterprise cross-border settlement. Using Stable for international transfers instead of traditional methods can significantly reduce time and costs. However, during end-of-month peaks, processing speed becomes critical. Dedicated block space can ensure consistent speed, and enterprises are willing to pay a premium for this reliability.

The same logic applies to fintech collaborations. Remittance companies like Limitless and Wise can enhance their services to customers by integrating Stable's infrastructure; in return, Stable charges fees based on transaction volume.

This model also applies to cryptocurrency exchanges. By using Stable for USDT deposits and withdrawals, exchanges can gain a reliable partner. While individual users access these services for free, the true business objective is high-frequency institutional traders.

Scenario 2: Rapid Growth of On-Chain Service Ecosystem

Free transfers and high performance will greatly enhance the usage frequency of on-chain services. On the current Ethereum network, even a $10 DeFi transaction often incurs high gas fees. With Stable, small-scale DeFi operations become economically viable.

Users can provide $100 in liquidity or participate in staking without significant costs, expanding the DeFi user base. Stable benefits from smart contract execution fees for these activities, and as transaction volume grows, overall scale increases.

A more significant change is the emergence of new on-chain services. Real-time microtransactions will enable content subscriptions, in-game items, and tips to be settled directly on the blockchain. Paying $1 to a YouTube creator or $0.10 for a news article becomes feasible.

Once this microtransaction ecosystem is established, transaction volume will experience exponential growth. While individual transaction fees may be small, the cumulative transaction volume will reach a significant scale.

Scenario 3: Deep Integration with the Real Economy

The most ambitious scenario is for stablecoins to become the standard payment method in the real economy. In Southeast Asia and Latin America, USDT payments are on the rise, but high fees and slow speeds have hindered widespread adoption.

If Stable can solve these problems, offline businesses may quickly undergo a transformation. Spending $2 on coffee at a café in Vietnam or buying groceries with USDT at a convenience store in the Philippines could become a daily occurrence.

This would fundamentally change Stable's business model, transitioning it from a blockchain network to a global payment infrastructure provider. It could offer payment terminals to merchants, digital wallets to consumers, and charge fees from both sides.

By charging a minimal fee for every USDT transaction on the Stable network, it can establish a stable revenue base while experiencing transaction volume growth.

The delayed launch of Central Bank Digital Currencies (CBDCs) has also presented an opportunity. If private stablecoins are more convenient and easier to access than government-issued digital currencies, users will naturally choose the former.

Six. Stable's True Strategy

Stable's strategy is very clear: attract users through free USDT transfers and ease of use. As the ecosystem expands, build a business model around the diversified services derived from this.

Individual transactions may not bring in much revenue, but rapidly growing transaction volumes can create a massive overall scale. This is akin to Amazon's early strategy: selling books at close to cost to attract customers and then making huge profits through cloud services and advertising.

Free transfers are just bait. The real goal is to become the central hub of the USDT ecosystem, where all transactions go through Stable. Once network effects take hold, users will find it challenging to move to other platforms.

Ultimately, Stable will firmly establish its market position. This is the true power of the new Trojan Horse.

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