Author: LanHu Notes
Some have suggested that if stablecoin issuers like Circle (USDC) and Tether (USDT) build public chains, could it cause Ethereum to fade away? I originally had no intention of addressing this. However, several friends have privately messaged me asking about it. So, let's briefly discuss it.
First, the conclusion: Ethereum will not fade because of this. Overall, it will even benefit.
In the future stablecoin war, the most important aspects are the front-end distribution channels—Meta, MrBeast (Tom Lee's Bitmine has invested $2 billion), Robinhood, Aave, Polymarket, Lighter, Uniswap, exchanges, wallets... Stablecoin issuers are not the strongest in the entire chain, and the L1 chains they build do not naturally have network effects.
Major players like Meta will not only support Circle's chain but will support multiple chains; channels like MrBeast, which are expected to deeply integrate with the Ethereum ecosystem, will prioritize supporting Ethereum; Robinhood is also building its L2 network based on Arbitrum (Ethereum ecosystem), and it might become an independent L2 in the future; Polymarket also plans to build an Ethereum L2...
The places that reach users are the source of network effect power. 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 advancing towards over a million TPS. In the future, fees and speed will not be issues.
Issuers building their own chains will not lead to large-scale migration of traffic; instead, they might eventually gradually become Ethereum L2s.
Arc is an L1 chain developed by Circle, supporting USDC as the native gas fee, sub-second settlement, and institutional-grade privacy/compliance, expected to launch later this year. Even so, USDC is still issued on multiple chains, including Ethereum, Solana, etc., with the Ethereum ecosystem still holding the majority share. As for how it will develop after launch, there are still many unknowns. Tether's USDT also operates on multiple chains.
If each stablecoin issuer builds an L1 chain, there will be competitive pressure among them, making it difficult to operate on each other's chains. The Ethereum ecosystem is inclusive and will still be the most important chain for hosting different stablecoins.
Multi-chain issuance of stablecoins is the norm. This means that even if ARC launches, it will only be a supplement to the existing ecosystem, not a replacement. It will have its own institutional trading scenarios, but the market share it ultimately captures does not entirely depend on the stablecoin issuer but on the distribution channels and high-frequency application scenarios of the stablecoin. For distribution channels, fees, speed, and security are all important, and currently, Ethereum has the best balance of these three. Distribution channels will not and cannot ignore Ethereum.
Looking at the current market share of stablecoins, Ethereum dominates, and its share is still growing.
In February 2026, the total stablecoin market capitalization was about $3.1-3.2 trillion (DefiLlama/TRM Labs data), of which:
• Ethereum: 52-60% (~$1.53-1.65 trillion), grew 40% in 2025 (from $1.15 trillion to $1.53 trillion). It is the largest share, handling over half of stablecoin activity.
• Tron: 25-30% (~$830-840 billion), dominated by USDT, but growth is slowing (fees increased to $0.50 per transaction).
• Solana: 4.5% (~$130 billion), USDC accounts for 77%, benefiting from low fees (<$0.01 per transaction).
• Others: BNB Chain grew 133% (2025), but its share is small; Arbitrum/Base and other L2s account for ~$100 billion. The total Ethereum ecosystem (L1 + L2) exceeds 70%.
Additionally, by currency, USDT ~$1.84 trillion (59%), USDC ~$750 billion (24%). USDC is growing faster (+6.39% in February 2026), but mostly on Ethereum.
In terms of transaction volume, stablecoin transfers exceeded $10.5 trillion in January 2026 (a historical high). Ethereum handles most institutional/DeFi traffic (annual forecast over ~$40 trillion), far exceeding PayPal ($20 trillion) and approaching Visa ($15 trillion). These all have network effects. Do you think users will naturally migrate just because a stablecoin chain is born?
Ethereum still has the largest developer ecosystem, the most vibrant DeFi ecosystem, and stable operation without downtime. Would institutions place their trading scenarios on a centralized L1 chain that might experience downtime?
Ethereum's competitors have always been itself, not any other chain. As long as its fees and speed are not inferior to any other L1 chain, its security and decentralization advantages will be incomparable.
Ethereum's future, besides stablecoins, includes asset tokenization, DeFi, and the AI agent economy. These are all major trends. The L1 chains built by stablecoin issuers are not enough to make Ethereum fade away.
By the way, how is Plasma chain, supported by the largest stablecoin issuer Tether, doing now?
