Author: Blue Fox Notes

Some have asked whether Ethereum might collapse if stablecoin issuers like Circle (USDC) and Tether (USDT) were to build public blockchains. I wasn't initially planning to respond to this, but several people have messaged me about it. So, I'll briefly discuss it.

In conclusion, Ethereum will not fail as a result. In fact, it will benefit overall.

In the future battle for stablecoins, the most important factor is the front-end distribution channels: Meta, MrBeast (Tom Lee's Bitmine has invested $200 million), Robinhood, Aave, Polymarket, Lighter, Uniswap, exchanges, wallets… Stablecoin issuers are not the strongest in the entire chain, and their L public chain does not naturally possess network effects.

Major players like Meta won't just support Circle's chain, but will support multiple chains; channels like MrBeast, which are expected to be deeply integrated with the Ethereum ecosystem in the future, will prioritize supporting Ethereum; Robinhood is also building its L2 network (Ethereum ecosystem) on Arbitrum, and may become an independent L2 in the future; Polymarket also plans to build an Ethereum L2...

The source of network effects lies where users are reached. As long as Ethereum L1/L2 fees are low enough and speeds are fast enough (at the same level), its security and decentralization advantages are unparalleled. Currently, Ethereum L1 is moving towards 10,000 TPS, and L2 is moving towards over one million TPS, so fees and speed will not be issues in the future.

Issuers building their own blockchains will not lead to a large-scale migration of traffic; on the contrary, it may eventually become Ethereum L2.

Arc is an L1 chain developed by Circle, supporting USDC as its native gas fee, sub-second settlement, and institutional-grade privacy/compliance. It is expected to launch later this year. Even so, USDC is still issued on multiple chains, including Ethereum and Solana, with the Ethereum ecosystem still holding the majority share. How it will develop after launch remains largely unknown. Tether's USDT also operates on multiple chains.

Each stablecoin issuer builds its own L1 chain, creating competitive pressure and making it difficult to run on each other's chains. The Ethereum ecosystem, however, is inclusive and will remain the most important chain for supporting different stablecoins.

Multi-chain issuance of stablecoins is the norm, meaning that even with the launch of ARC, it will only supplement existing systems, not replace them. Stablecoins will have their own institutional trading scenarios, but their ultimate market share will not entirely depend on the stablecoin issuer, but rather on the distribution channels and high-frequency application scenarios. For distribution channels, fees, speed, and security are all important, and Ethereum currently offers the best balance among these three. Distribution channels cannot and will not ignore Ethereum.

Currently, Ethereum dominates the stablecoin market share, and its share continues to grow.

The total market capitalization of stablecoins in February 2026 was approximately $3100-$3200 (Data from DefiLlama/TRM Labs), of which:

• Ethereum: 52-60% (~1530-1650), 40% growth by 2025 (from 115B to 153B). It has the largest share, handling more than half of stablecoin activity.

• Tron: 25-30% (~830-840), dominated by USDT, but growth is slowing (fees have risen to $0.50 per transaction).

• Solana: 4.5% (~130), USDC accounts for 77%, benefiting from low fees (<0.01 USD/transaction).

• Other: BNB Chain grew by 133% (in 2025), but its market share is small; L2 such as Arbitrum/Base account for approximately 100%, and the total Ethereum ecosystem (L1+L2) exceeds 70%.

Furthermore, by currency, USDT is around 1840 (59%), and USDC is around 750 (24%). USDC is growing faster (+6.39% in February 2026), but most of it is on Ethereum.

In terms of transaction volume, stablecoin transfers exceeded $10.5T in January 2026 (a record high), with Ethereum handling the majority of institutional/DeFi traffic (projected to exceed ~40T for the whole year), far surpassing PayPal (20T) and approaching Visa (15T). These all demonstrate network effects. Do you really think that users will naturally migrate to a stablecoin blockchain simply because it's being created?

Ethereum still boasts the largest developer ecosystem, the most thriving DeFi ecosystem, and stable operation without downtime, leading institutions to place their trading scenarios on centralized L1 chains that might otherwise experience downtime.

Ethereum's competitor has always been itself, not any other chain. As long as its fees/speed are no less than any other L1 chain, its advantages in security and decentralization will be unparalleled.

Ethereum's future, besides stablecoins, also includes asset tokenization, DeFi, and the AI agent economy. These are all major trends, and the L1 chain built by stablecoin issuers is not enough to kill Ethereum.

By the way, how is Tether, the largest stablecoin issuer, supporting the Plasma chain?

An Ethereum blockchain address holding 31,765,779 USDT has been frozen.

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