The Battle of Full-Chain Stablecoins: The Digital Dollar Game of Circle, Tether, and Frax

If you ignore this struggle, others will make rules to control your money. Most people may not realize that the largest on-chain power struggle in recent years is currently unfolding.

In Hans Holbein's masterpiece "The Ambassadors" from 1533, two dignitaries stand confidently, surrounded by the cutting-edge technology of their time.

On the left is the noble with hereditary power and global influence: the king.

On the right is the bishop representing the system and structure: a formally dressed official.

Between them is an alchemist's table: with a globe, a sundial, and scientific instruments, symbolizing their attempt to master the machinery of complex innovation.

But Holbein hid a warning. Beneath their feet, there is a distorted, gigantic human skull that can only be seen from a specific angle. The skull foreshadows a rupture: beneath the calm faces, a high-risk conflict is lurking, ready to disrupt the order.

Today, the same scenario is playing out in the world of digital currency.

The battle of the full-chain stablecoins is a contest among three forces: the current king with a massive global empire (Tether's USDT); the institutional power that emphasizes architecture and compliance (Circle's USDC); and the disruptive alchemist... the "full-chain" technology and concept itself, which both breaks and threatens the balance between the two sides. This is the story of this conflict, a war for control over the digital dollar, where everything seems to be at stake.

Full Chain War: Competing for the One True Dollar

In 2024, a formless financial empire handled a transaction volume exceeding that of Visa. At its core is Tether's USDT, a kingdom worth approximately $144 billion, yet it has a fatal weakness.

As Niccolò Machiavelli once said: "If you can detect trouble in advance, it can be easily resolved; if you wait until the trouble manifests, any remedy will be too late, for then it will be beyond cure... Politics is the same."

Nico may not know about stablecoins, but he understands power. The data on payment traffic indicates that even deeply entrenched dominance can be shaken.

Each chain is like a customs checkpoint; the US dollar flows between chains as if manually loading cargo before container transport.

This fragmentation is a weakness, and in the crypto world, a weakness means competition. A gradient descent war based on incentive mechanisms; a fight for control over the digital dollar itself.

The prize is: to become the only real, universal, cross-chain US dollar.

The groundbreaking new report "Stablecoin Payments from the Ground Up" (hereinafter referred to as "the report"), jointly released by Artemis, Castle Island Ventures, and Dragonfly, provides real and reliable data. The report, co-authored by industry veterans including Nic Carter, analyzes $94.2 billion in real-world payment flows from 31 companies, stating that stablecoins have evolved from speculative trading tools into a global high-volume settlement network.

This is a story about how the king of stablecoins launched the war of unification with battlefield intelligence: a new weapon called USD₮₀ (USDT0).

USDT is a reserve, USDT0 is a channel.

Contestants: a king, a businessman in a suit, and an alchemist

The battle of the full-chain stablecoins is a story of strategic games, where each game is influenced by the philosophy of power and can be fully revealed through data.

1. King: USDT / USDT0

The "Stablecoin Payment" report confirms many people's speculation: Tether's USDT is the king of digital dollars and a symbol of the entire royal family. In the vast number of real-world payment samples covered by the report, USDT's transaction volume market share reaches as high as 90%. These transactions come from streets and alleys around the world, not Wall Street. The report reveals that its empire is built on the Tron network, which is reported to be the most popular payment blockchain and is far ahead.

USDT0 is a fully chain-replaceable token (OFT) standard built by a certain laboratory based on a certain platform, and its design is a clever integration. It allows traditional USDT to be locked in an Ethereum vault while minting an equal amount of brand new, fully replaceable USDT0 on the target chain. This is a single, standard asset that can circulate anywhere. The market demand for this solution has been immediate. In just a few months since its launch in 2024, USDT0 has facilitated over $2 billion in cross-chain transfers.

2. Dressed to the Nines: USDC / CCTP

If USDT is the king of the people, then USDC is the long-awaited challenger, eyeing the throne in the institutional space. Reports confirm that USDC, although trailing, has firmly secured the second position, making its strategic choices increasingly crucial. The strength of USDC comes from trust, compliance, and its deep connections with traditional finance. It is worth mentioning that Circle's recent IPO was very successful.

The cross-chain transfer protocol (CCTP) launched by Circle directly addresses the weaknesses of Tether to tackle the fragmentation issue.

By allowing users to burn real USDC on one chain and mint an equivalent native USDC on another chain, Circle has created a standard for clean and high-integrity value transfer. This strategy has already shown effectiveness in specific markets. The report notes that although USDT dominates globally, USDC has also captured a significant share, with its trading volume accounting for nearly half of the total in markets like Argentina and India, indicating that its compliance-first strategy resonates with the emerging venture-backed fintech companies in these regions. The risks of single-signature and other trade-offs are a topic in themselves.

3. Alchemist: FRAX

FRAX and other alternatives are "virtually nonexistent" in the payment report dataset.

This does not mean failure, but rather clarifies their role. Frax is not currently vying for dominance in the payment sector; it is more like an alchemist in a laboratory, constantly exploring the boundaries of the digital dollar and exerting pressure on the market, forcing the giants to evolve, or else face the risk of being eliminated.

FRAX combines algorithmic reactions with institutional support, but the memory of UST still keeps many cautious.

Like most closed financial systems that cannot use violent means, this saying is particularly apt: "In a closed financial realm, money decides the outcome."

Frax USD has now been minted into frxUSD, with its power derived from the "sacred custodian" appointed by the governance body.

A certain institution's token, a certain institution's token, and a certain institution's token, lock verifiable government bonds and cash, minting one coin for every dollar locked; after the coins are destroyed, the vault must return that dollar, so the peg depends on on-chain auditable reserves.

So far, these projects have achieved great success. How does it work?

Investors seeking returns will deposit frxUSD into the sfrxUSD vault, which will support the highest yielding combinations such as asset-backed short-term government bonds, DeFi arbitrage trading, or AMO market making, thereby increasing interest rates while keeping the face value unchanged.

Long-term investors participating in the FXB auction will exchange existing FRAX for a larger share at maturity, outlining a native on-chain yield curve that is unaffected by external credit risk. On Fraxtal, every transaction is clearly visible, the renamed FRAX token fuels gas, and controls the entire laboratory through veFRAX locking.

All of this occurs on the Fraxtal L2 chain, where the commodity token FRAX (formerly known as FXS) serves as gas fees and provides an anchor for the governance of the broader ecosystem through the veFRAX locking mechanism.

Even so, each type of anchored asset will incur its "Soros".

Who will play the role of Soros? Any platform with substantial funds and on-chain leverage. Certain institutions, certain organizations, or similar entities fit this model.

They can borrow a large amount of frxUSD or traditional FRAX, sell it below the pegged price, then short it layer by layer, and subsequently redeem it through the custodial treasury that still holds reserves.

Profits come from the difference between the tokens purchased at a discounted price in the market and the full amount of US dollars released upon redemption. If the oracle is delayed or the bridge is congested, the difference will widen. Accumulating veFRAX during calm market periods may accelerate system pressure.

This may be somewhat of an oversimplification, but pessimists might say that it’s like building a highly convex bond market on a fragile curve.

Time will prove everything, and experiments like this often produce incredible long-term positive effects.

After all, this is cryptocurrency... before people actually use it, currency is just an empty shell. What turns hollow code into everyday currency?

The Story of Two Dollars: The Unity of Street Dollars and Corporate Dollars

The true significance of USDT0 lies in its ability to connect two vastly different worlds: the world of street dollars and the world of corporate dollars. Nathan's proposed "Value Realization Layer" framework helps to better understand this division, as he believes that users of stablecoins can be divided into two categories: "those who need stablecoins and those who do not need stablecoins."

Street Dollar ( is the way of survival for USDT.

Bolivia's free designer Ana uses it to combat an annual inflation rate of over 100%. David, a small business owner in Lagos, uses it to pay Chinese suppliers, circumventing the central bank's strict foreign exchange controls.

For them, USDT is a practical tool. As Nathan explained, for users in these emerging markets, "the permissionless nature of stablecoins is a transformative unlock." It gives them access to stable currency, which was previously unimaginable. This is the economic model of Tron, and the "Stablecoin Payment" report shows that over 52 million addresses hold USDT balances of less than $1,000.

As someone has stated, the digital dollar will fill the market void left by the incompetence and corruption of fiscal policy. Permissionless truly means permissionless.

Trust gives value; true, sustained adoption is earned.

Enterprise Dollar ) is an opportunity of USDT. It is the dollar used in the high-tech financial cloud of Ethereum and its L2. It is a programmable dollar that can be used as loan collateral, generate yields in complex liquidity pools, and also serves as a tool for high-frequency arbitrage. For Western users, Nathan believes: "Programmability is the main catalyst for innovation in Western stablecoins."

Before the emergence of USDT0, these two worlds were independent of each other. This created a serious problem, which someone also emphasized.

He refers to the challenge of achieving "monetary unification," meaning that all forms of currency should be interchangeable at equivalent values. The Tron USDT locked in the street dollar world is not the same as the Ethereum USDT in the DeFi dollar world.

USDT0 attempts to solve this problem.

USDT is a reserve, USDT0 is a channel.

Ana can transfer the street dollars she earned into the Arbitrum savings protocol through a simple transaction to earn a 5% return. Davi