Stablecoins and Fintech’s Next Era

The Open-Source Financial Revolution

With a market cap exceeding $220 billion, stablecoins have firmly cemented themselves as the new pillar of the digital economy.

But stablecoins represent more than just the evolution of money. They’re fundamentally the linchpin of an open-source financial system that delivers unprecedented accessibility and programmability. Unlike their fintech predecessors, stablecoins don’t merely streamline existing rails; they create a global platform where developers, businesses, and users can build, iterate, and transact with internet-scale potential from day one. A single-built API can now connect a startup in São Paulo to a merchant in Singapore, a remittance sender in Los Angeles to a recipient in Lagos—all with near-zero fees and instant settlement. And with inherent programmability, stablecoins are redefining financial systems for the internet age.

Cost is Not Everything

Anyone who has used stablecoins to transfer money across borders in a fraction of the time and at a fraction of the cost of legacy payment rails will undoubtedly understand the benefits. With that being said, the unit economics are not orders of magnitude improvements over traditional rails. Running stablecoin infrastructure at scale is not inherently cheap, and will offset some of the benefits they offer in terms of speed and cost. Overhead liabilities inevitably come into play. Transferring USDC on Solana may cost a fraction of a penny, but compliance, risk management, and abstraction layers dampen the economics. Increasing costs will eventually have to be added back in.

Payment Architecture Comparison (source: SevenX)

Lower fees alone also won’t drive mass adoption. Despite being 60-80% cheaper and having dramatically better UX, a major fintech platform like PayPal currently handles less than 1% of global payments volume and ~12% of total cross-border transaction flows (based on 2023 metrics). Cost is important, but not everything, and traditional fintech has shown that. Cost and speed are often overstated as the primary advantage to stablecoins, but their true promise extends beyond these metrics.

Open-Source Innovation

The true unlock with stablecoins lies in their composability. Smart contracts transform digital money into a programmable asset, enabling everything from conditional payments and collateralized lending to tokenized yields and real-world asset (RWA) trading. This is where stablecoins diverge from fintech’s past: they don’t just move money faster and cheaper — they empower a global developer community to reimagine what money can do. 

Unlike traditional payment systems tethered to proprietary networks or regional boundaries, stablecoins harness the decentralized architecture of blockchain networks to deliver capabilities that are global, programmable, and scalable from inception. Two unique properties underpin their potential:

1). Internet Scale Distribution

Stablecoins have a unique ability to enable instant, borderless access to financial services via public blockchains. Unlike legacy systems such as SWIFT or SEPA, which rely on a web of intermediaries and bilateral agreements, stablecoins operate on open networks where any developer or business can integrate with a single API. A transaction as simple as transferring USDC from a wallet in Bogotá to one in Berlin costs fractions of a penny and settles in seconds—capabilities that traditional rails, even modern ones like Zelle or Apple Pay, struggle to replicate beyond their domestic or proprietary ecosystems.

This internet-scale distribution mirrors the early internet’s TCP/IP protocols, which democratized information flow by providing a universal standard. Stablecoins achieve a similar feat for value transfer. As of March 2025, over 30 million wallet addresses hold stablecoins, forming a sprawling, permissionless network that spans continents. 

The implications are profound. Where fintechs like PayPal took years to negotiate partnerships and achieve ~1% of global payments volume, stablecoins provide day-one access to a global liquidity network. This distribution advantage is not just technical—it’s a market expansion tool, enabling startups to tap into underserved regions without the overhead of building proprietary rails.

2). Programmability and Composability

Stablecoins are inherently programmable. Builders can leverage their smart contracts and flexible architecture to build innovative financial services on top of multi-billion dollar ecosystems. This capability sets stablecoins apart from even the most advanced fiat systems, which remain rigid in their functionality.

With stablecoins, developers can unlock entirely new uses cases and products. For example, Ethena uses USDe (a synthetic stablecoin) to offer institutional-grade funding rate arbitrage yields to retail users worldwide. This year it amassed over $5.5 billion in total value locked (TVL) by offering innovative yield capture, the likes which were previously confined to institutions and funds with multi-million dollar minimums. The programmability feature of stablecoins democratizes financial access, turning a niche strategy into a mass-market product.

Composability amplifies this further. On open blockchains, stablecoin-based applications can (increasingly) interoperate seamlessly, stacking components together. A lending protocol like Aave can accept USDC as collateral, while a yield aggregator like Yearn optimizes returns, and a payment app like Rain converts it to local fiat—all within the same ecosystem. This contrasts sharply with closed systems where integration is strictly limited to the walled gardens of legacy players. The result is a developer-driven innovation cycle harnessing valuable contributions from diverse participants.

Onchain Payment Networks

As stablecoins cement their role as the backbone of an Internet Financial System (IFS), they will give rise to a new breed of payment networks that transcend the limitations of traditional models. Built on a pure take-rate model (extracting a flat fee per transaction), these legacy systems rely on centralized control, closed-loop merchant agreements, and delayed settlement (T+1 , T+2), leaving room for disruption.

The programmable nature of stablecoin networks paves the way for innovative payment schemes that outperform these traditional rails in both efficiency and flexibility. These schemes thrive on-chain because smart contracts enforce transparency and finality, eliminating the trust gaps that plague bilateral FX deals or correspondent banking. For example:

• Payment for Order Flow (PFOF): Borrowed from equity markets, PFOF in the stablecoin context could see liquidity providers or market makers pay merchants for routing transactions through their nodes, optimizing for speed or FX rates. For example, a payment network on Ethereum could incentivize a node in Singapore to handle a USD-to-SGD conversion at a wholesale rate, sharing the spread savings with the merchant. The merchant benefits from lower costs and instant settlement, while the node profits from the remaining spread and scales its liquidity. This flips Visa’s model—where merchants pay the network—into one where the network competes for merchant volume, driving costs toward zero.

• Pay-Now-Settle-Later (PNSL): PSNL leverages stablecoins’ instant transferability to decouple payment from settlement. A consumer could pay a merchant in USDT instantly, while the network batches FX conversions (e.g., USDT to EUR) and settles with banks daily at optimal rates, reducing volatility risk and freeing up working capital. This mirrors how gig economy platforms like Uber monetize “time-to-money” (drivers access funds via instant Cash-Out, while Uber settles fiat later), but extends it globally. Companies like Arf are testing such models, offering merchants upfront liquidity while settling fiat obligations later.

Plug-and-Play Infrastructure

Much of the power of stablecoin-centric networks lies in their accessibility. Any entity—be it a fintech like Rain, a bank like BTG Pactual, or a startup—can become a node by integrating banking and compliance infrastructure. This “plug-and-play” design leverages existing fiat endpoints (e.g., Circle’s partnerships with local banks) while layering on blockchain efficiency. Nodes handle KYC/AML, fiat on/off-ramps, or FX liquidity, earning token incentives proportional to their contribution. 

This contrasts sharply with Mastercard’s closed ecosystem (where only authorized issuers participate) or SWIFT’s bank-only network. Onchain networks democratize entry, sharing costs and rewards across a decentralized collective. The result is a self-reinforcing cycle: more nodes deepen liquidity, attracting more users, which in turn scales the network’s utility—a dynamic akin to the internet’s exponential growth.

Market Evolution

The stablecoin market has evolved from a niche experiment into a $220 billion ecosystem settling trillions annually. Initially focused on issuance, the market has shifted towards building more complex, full-stack infrastructure where issuers, fintechs, and startups compete to create comprehensive services around stablecoins.

The Issuance Era

The stablecoin market’s first wave was defined by issuance. Pioneers like Tether (USDT) and Circle (USDC) dominated this phase, capturing value through "float"—the interest earned on fiat reserves backing their tokens. Their model is straightforward: mint tokens against dollar deposits, burn them upon redemption, and profit from reserve yields. These two issuer giants hold the overwhelming majority of market share (~96%), having leveraged early-mover advantages to create seemingly bulletproof business models with entrenched network effects.

Current Stablecoin Supply (source: Artemis)

The issuance era prioritized scale and trust. Issuers built network effects through targeted partnerships and by integrating with exchanges and protocols, where stablecoins became the lingua franca for trading/lending/settlement. These early market winners continue to thrive on their captured value and the float they earn, but as adoption grew demand expanded to include services that leverage stablecoins beyond just issuance.

Full-Stack Evolution

The stablecoin market is now pivoting to a full-stack ecosystem, where infrastructure providers orchestrate payments, compliance, and liquidity around issued tokens. This shift is now working to address the orchestration problem — while stablecoins move instantly onchain, integrating them seamlessly with fiat systems, regulatory frameworks, and real-world uses cases requires more sophisticated solutions. Many companies exemplify this evolution, building platforms that deliver end-to-end solutions.

• Iron: A stablecoin infrastructure provider focused on enterprise-grade payments and treasury management. It offers APIs that connect stablecoin flows to traditional banking rails, enabling businesses to settle cross-border transactions and global payments in real-time.

• BVNK: Positions itself as a global stablecoin payments orchestrator, integrating multiple blockchain networks and fiat endpoints into one comprehensive payment solution for enterprise clients. BVNK’s Layer1 solution provides self-hosted payments infrastructure, empowering businesses to manage multiple-currency wallets and execute trades while retaining control over their data.

BVNK Payment Orchestration (source: BVNK)

There are many other players building valuable solutions to make stablecoins more mainstream and accessible, whether at the infrastructure level or application level. These players illustrate a broader trend: the market has increasingly moved beyond issuing stablecoins to building services that monetize transaction flows and developer tools. Improved regulatory clarity (e.g. MiCA) accelerates this shift by legitimizing stablecoins as payment instruments, encouraging banks and fintechs to join the fray. The result is a competitive landscape where new infrastructure and applications—not just issuance—drive value.

Fintech Reimagined: Incumbents vs. Newcomers

As stablecoin adoption grows, a tug-of-war emerges between incumbents and newcomers, each vying to dominate in the open-source revolution. Traditional fintech giants and payment networks, sensing disruption, are increasingly integrating stablecoins into their stacks, while crypto-native startups continue to push the boundaries of innovative service options.

Major Fintech Players

As it stands, fintech giants find themselves in a unique position. These players wield an unparalleled advantage in distribution, a moat built over decades of customer acquisition, merchant relationships, and regulatory compliance. Visa processes $12 trillion annually across a network accepted by millions of merchants globally—a footprint no crypto-native startup can replicate overnight. PayPal, with 430 million active accounts, spans 200 markets and handles over $1.6 trillion in payment volume yearly, embedding itself in e-commerce and gig economy workflows. Stripe, valued at $91 billion, powers online payments for over a million businesses, from Shopify to Amazon, with APIs that abstract complexity for developers. And now all of these (and others) are running blockchain-powered products.

Fintech Strategies and Products

The critical truth is that distribution—not technology—remains the primary challenge for new entrants aiming to capitalize on stablecoin adoption. Most high lifetime-value (LTV) customers—businesses and consumers in developed markets—already have access to banking and financial services through entrenched players. For these users, switching to crypto-native stablecoin alternatives requires a compelling reason to do so. This is why fintech giants, with their vast distribution networks, brand trust, and operational scale, are uniquely positioned to bridge this gap, co-opting stablecoins into their ecosystems rather than being displaced by them.

New Opportunities

This isn’t to say that newcomers can’t and won’t succeed. Many startups have already gained tremendous traction by targeting specific pain points or niches where incumbents lag. But scaling these wins into broad-market dominance demands more distribution muscle, a strength that many fintech giants already possess. Emerging fintech platforms must be focused in their targeting and leverage stablecoins’ open-source infrastructure to address unmet needs with agility and innovation.

For example, stablecoins’ programmability offers startups a sandbox to build products currently unattainable by traditional fintechs. Newcomers can thrive by crafting solutions (e.g. smart escrow accounts with Acctual; conditional payment logic with FelixPago; access to new financial products onchain) that leverage blockchain’s flexibility and capability beyond rigid legacy systems.

Another strategy that has proved powerful thus far is tapping underserved markets and niches. The next winners likely won’t win (at least at first) by chasing crowded markets, but by targeting non-consensus niches with massive growth potential. DolarApp, Belo, and Littio succeed in LatAm by offering dollar-denominated accounts to shield users from currency devaluation—a ~$50 billion pain point ignored by most US-centric giants. Afriex, servicing US-to-Africa remittances, grew substantially in 2024 by focusing on corridors like Nigeria, where $45 billion in annual flows face 9% fees. These startups exploit gaps where incumbents’ scale becomes a liability, often being too broad to address hyper-local needs. Newcomers can prosper by identifying similarly overlooked segments, turning niche targets into scalable beachheads.

Startups can also outpace incumbent fintechs by leveraging open-source infrastructure for excellence, shipping products 10x faster (and much cheaper). Open-source blockchain networks like Solana and Ethereum share the costs of storage, movement, and compliance across a global network—unlike Visa’s proprietary stack. Newcomers can thrive by iterating rapidly, embedding compliance (e.g. KYC via idOS), and delivering robust solutions without the overhead of legacy tech.

The Road Ahead

The open-source stablecoin revolution unfolds not as a sudden upheaval but as a gradual shift, much like the internet’s rise from niche protocol to global utility. Stablecoins aren’t a mere disruption of payments; they create the opportunity to reengineer commerce, capital markets, and beyond.

Fintech giants may steer the mainstream, their distribution power unmatched, yet startups’ agility ensures the ecosystem remains dynamic and promising. The question isn’t if this open-source financial shift will unfold, but how swiftly—and who will lead it.