In-depth Analysis of Stable: The New USDT Trojan Horse in the Era of Stablecoins

This report is written by Tiger Research, analyzing how Stable, focusing on USDT, promotes the large-scale adoption of stablecoins through zero gas fee P2P transfers and sub-second settlements.

Key Summary

• Stable positions itself as the "Trojan Horse" in the stablecoin market, aiming to achieve mass adoption through USDT-centric infrastructure.
• It offers fee-free USDT transfers, sub-second settlement, and a simplified interface to address key barriers such as high costs, slow transaction speeds, and complex user operations.
• The expected plan is to attract users through free, seamless transfer services, and then expand into payment, decentralized finance (DeFi) services, and institutional collaboration.

1. Stablecoin: The "Trojan Horse" entering the market

Stablecoins have quietly entered the cryptocurrency market, like a 'Trojan Horse'.

Stablecoins have now developed into a dominant force within the ecosystem. Initially, they were primarily viewed as tools to reduce volatility. Over time, stablecoins have evolved into a core component of market infrastructure.

The USDT-dominated stablecoin market has a circulating supply of over 150 billion USD, with more than 350 million users, and the trading volume even surpasses that of Visa. The circulating supply exceeds 150 billion USD, with user numbers exceeding 350 million.

Their development reflects the bridging role between traditional finance and digital finance. In centralized exchanges, they are the main medium for converting fiat currency into cryptocurrency. In the decentralized finance (DeFi) space, they serve as benchmark assets for providing liquidity and lending. For cross-border remittances, they offer a faster and more economical option than traditional banks.

The shift in market behavior is notable. Early cryptocurrency trading relied on direct token-to-token trades, such as BTC/ETH or BNB/ETH, with value referenced in Bitcoin. Today, trading pairs like BTC/USDT and ETH/USDT dominate. The yields in decentralized finance (DeFi) are often priced in USDT. In some regions of Southeast Asia and Latin America, USDT is increasingly used for direct payments, replacing physical US dollars.

The market once relied on the volatile valuation of tokens, but now stablecoins have become the universal unit of account.

They were initially introduced due to demand and have now become the central axis of the cryptocurrency ecosystem.

2. Shadows of Growth: Limitations of Emerging Infrastructure

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

1. Unpredictable high transaction fees

Stablecoins operate across multiple blockchain networks, but when the network becomes congested, transaction fees can spike dramatically, making small transactions impractical. In some cases, sending 10 USD may incur a fee of 20 USD. This undermines the core use of stablecoins as a medium for everyday payments.

2. Settlement time is slow

On Ethereum, the confirmation of stablecoin transactions may take several minutes or even longer, depending on network conditions. For use cases such as online checkout or physical retail, real-time settlement is crucial, and such delays are unacceptable.

3. Complex User Experience

Managing Gas fees, wallets, and private keys still poses a high entry barrier for ordinary users. For consumers accustomed to simple payment interfaces like Paypal, the current usage of stablecoins remains overly complicated.

These infrastructure limitations represent significant obstacles to the next phase of stablecoin adoption. Ironically, within the cryptocurrency ecosystem, stablecoins have long been the de facto benchmark asset, yet the daily usage rate remains low for ordinary users.

Stablecoins have fulfilled their initial role as "Trojan Horses", bringing stability to turbulent markets and occupying a central position in the ecosystem.

The next challenge is to break through the cryptocurrency space and enter the traditional financial market and mainstream consumer payment sector. To achieve this goal, it is necessary to fundamentally address the current technical limitations, which requires a new "Trojan Horse" strategy.

3. Stable: The new 'Trojan Horse'

Creating a new "Trojan Horse" for the market does not require inventing another stablecoin. A stablecoin is merely a tool pegged to the US dollar. The next "Trojan Horse" is the specialized infrastructure built for existing stablecoins, especially those that already dominate the market.

This is where Stable comes into play.** Unlike general-purpose blockchains, Stable is a blockchain specifically designed for USDT.** It does not support both USDT and other tokens simultaneously, but serves as a high-speed network dedicated to USDT transactions.

The mission of Stable has three aspects:

• Cancel the fees for P2P USDT transfers: Completely waive the fees for P2P USDT transfers, solving the inefficiency issue in the existing network where even a transfer of 10 USD may incur excessive fees.
• Achieve sub-second settlement: All transactions are settled within one second, eliminating the common waiting times found in physical and online retail payments.
• Simplify User Experience: Hide fee calculations and wallet management to achieve intuitive operations without technical burdens.

The key is that these improvements are interrelated. Eliminating fees simplifies the user experience, while faster transaction processing enhances practicality in real-world commerce. Together, these factors lay the foundation for stablecoins to expand from the cryptocurrency ecosystem into the mainstream payment market.

The vision of Stable is not just to become another Blockchain, but to be the core infrastructure supporting the USDT ecosystem with a market value of 160 billion USD.

It aims to address the structural limitations of the existing stablecoin infrastructure, including unpredictable fees, slow settlement speeds, and complex user interfaces. This approach moves away from the fragmented model of each chain independently supporting USDT, shifting towards a unified environment optimized specifically for USDT operations.

4. How Stable Architecture Works

In order to realize the core vision of Stable, multiple technical elements must be coordinated. Stable is currently still in the testnet phase, and the team is preparing for the official launch. Its expected architecture clearly demonstrates the operating structure of the system.

4.1 No fee USDT0 transfer: EIP-7702 and account abstraction

The stable network operates with two types of tokens.

USDT0 represents the USDT introduced from external networks via cross-chain bridges. gasUSDT is a network fee payment token, pegged to USDT0 at a 1:1 value, and is used solely for transaction fees. Both can be exchanged at a 1:1 ratio for actual USDT.

To achieve fee-free P2P transfers, Stable leverages EIP-7702 and account abstraction technology. Its key advantage is that users only need to hold USDT0 to conduct all transactions.

In the current blockchain system, there are two independent types of accounts:

• Externally Owned Account (EOA): Standard wallet (e.g., MetaMask), controlled by a private key, capable of signing transactions but with limited functionality.
• Contract Account (CA): A smart contract that can execute complex logic but cannot independently initiate transactions.

Account abstraction combines these account types, enabling standard wallets to have the functionality of smart contracts. This allows users to specify actions such as "paying fees with USDT" or "requesting a fee waiver".

The first standard to address this issue is ERC-4337. It requires the creation of a new smart wallet and the transfer of funds from the existing wallet, a process that is prone to user errors.

• Previous Method: Create a new smart wallet → Transfer funds from existing wallet → Use new address
• EIP-7702: Retain existing wallet → Add smart contract functionality → Retain the same address

EIP-7702 eliminates the migration step by enabling smart features on existing wallet addresses without the need to transfer funds. Users can continue to use their existing MetaMask wallet and add smart features.

In Stable, all wallets natively support EIP-7702, enabling smart wallet functionality without additional setup. This includes features such as transaction fee sponsorship available directly in existing wallets.

Example:

1. Ryan sent 100 USDT0 to Jay via MetaMask.
2. Wallets supporting EIP-7702 request a fee waiver.
3. The fees are to be borne by the payer.
4. Ryan's balance decreased by 100 USDT0, while Jay received the full amount.

No handling fees are required, and Ryan does not need to hold or calculate fees, similar to remitting through PayPal. This eliminates the need to hold handling fees separately or manually calculate costs.

4.2. Sub-second Transaction Finality

Stable uses the StableBFT consensus algorithm to generate a Block approximately every 0.7 seconds and finalizes transactions after a single confirmation. This eliminates the common "pending" phase in many Blockchain transactions, providing an experience similar to instant approval at payment terminals.

To further improve speed, Stable is developing Block-STM parallel processing technology, which can execute independent transactions simultaneously, accounting for approximately 60% to 80% of network activity. This approach is similar to setting up multiple cash registers in a store to reduce waiting times.

In the long run, the Stable plan will upgrade to a consensus mechanism based on Autobahn DAG. This structure allows multiple blocks to be proposed simultaneously and separates data dissemination from sorting, thus reducing bottlenecks. Internal test records show a transaction processing capacity of up to 200,000 transactions per second, although this is still in the pre-production stage.

4.3. Simplified User Experience

Stable eliminates the need to calculate transaction fees and manage separate fee tokens while maintaining compatibility with the existing Ethereum. This allows users to continue using familiar tools such as MetaMask and Etherscan without additional learning costs.

In addition to simple compatibility, these tools also have features optimized for USDT, running more smoothly: MetaMask supports USDT0 transfers without transaction fees, while Etherscan displays USDT transaction records in a more intuitive format.

This is like upgrading to a new smartphone while keeping all existing applications. Users retain a familiar environment but gain enhanced functionality.

In addition, USDT from other networks can be seamlessly imported through the existing LayerZero cross-chain bridge. USDT0 adopts LayerZero's OFT (Omnichain Fungible Token) standard, eliminating the complexity of traditional bridging. In the traditional model, each network maintains a separate version of USDT, leading to fragmented liquidity.

With the OFT standard, the functionality of a single USDT0 is completely the same across all networks. Whether bridged from Ethereum or Arbitrum, the final generated token is the same USDT0, thus eliminating liquidity fragmentation and simplifying asset transfer.

The planned development project includes the stable domain name system (Stable Name System), which will replace complex wallet addresses with human-readable names, further enhancing usability. Similar to email addresses, users can send funds to identifiers like "ryan.stable" or "jay.stable." Although still in the planning stage, implementation and popularization may take some time. Technically, the system is expected to adopt a structure similar to the Ethereum Name Service (ENS) and add features optimized for USDT transactions.

4.4. Additional Technical Components

The network is also developing StableDB, a dedicated database architecture that separates state submission from state storage.

In most Blockchains, new blocks must be fully written to disk before the next block can be processed, and slow disk writes can cause processing delays. StableDB eliminates this bottleneck by first confirming execution results in memory and then writing them to disk in parallel.

This structure is enhanced by memory-mapped file input/output (mmap), which directly links files stored on disk to the operating system's memory space. This allows frequently accessed data to be read and written as if it were in memory, thereby bypassing slower disk access and significantly improving processing speed. Its effect is similar to a busy restaurant where staff quickly jot down orders and later input them into the point-of-sale system, allowing the kitchen to start preparing immediately.

For enterprise clients, the Stable plan is launching the "Guaranteed Blockspace" feature, which is a dedicated transaction capacity that ensures stable throughput regardless of network congestion, similar to a bus lane on a highway. In addition, a confidential transfer feature is also under development to hide transaction amounts while still meeting anti-money laundering (AML) and KYC compliance requirements. Looking ahead, the current execution engine written in Go will be replaced by a C++ version called StableVM++. This upgrade will enable lower-level memory control and performance optimization, aiming to increase execution speed by up to six times.

5. Expansion scenarios of the stablecoin ecosystem

Stable positions itself as the new Trojan horse.

Fee-free USDT transfers, sub-second settlement, and a simplified user experience are entry-level incentives. This loss-leader strategy is designed to drive mass adoption. Once a user base is established, revenue can be generated through a range of ancillary services.

From this foundation, there appear to be three main paths for expansion.

5.1. Scenario One: Expansion of Institutional Services and Cooperation

Stable can expand its ecosystem through the development of institutional services and partnerships. A key factor is to provide high-quality services such as "guaranteed block space" to ensure low costs and high reliability.

This strategy is very effective in cross-border Settlement for businesses. Using stablecoins instead of traditional international transfer methods can significantly reduce time and costs. However, during peak periods such as the end of the month, processing speed becomes critical. Dedicated Block space can ensure that processing speed remains consistent, and businesses are willing to pay extra for this reliability.

The same logic applies to fintech collaboration. Remittance companies like Limitless and Wise can provide better services to customers by integrating Stable's infrastructure. In turn, Stable can charge fees based on transaction volume.

Cryptocurrency exchanges are no different. By using Stable for USDT deposits and withdrawals, the exchange has gained a reliable partner. While individual users can use the service for free, its true business goal is high-volume institutional traders.

5.2. Scenario Two: Rapid Growth of On-Chain Service Ecosystem

Free transfers and high-speed transmission will greatly enhance the usage rate of on-chain services. Nowadays on Ethereum, even a $10 DeFi transaction incurs high fees. However, on Stable, small-scale DeFi activities have become economically viable.

Users can provide liquidity of 100 USD or stake at a very low cost, which will expand the user base of DeFi. Stable will charge smart contract execution fees from these activities, and as the trading volume increases, its overall scale will also expand.

A more significant change is the emergence of new on-chain services. Real-time micro-payments will make direct transactions such as blockchain-based content subscriptions, in-game item purchases, and tipping possible. It has become feasible to tip YouTube creators $1 or pay $0.10 for a single news article.

Once such a micro-payment ecosystem is formed, the number of transactions will grow exponentially. The fee for a single transaction may be small, but the overall transaction volume will reach a quite considerable level.

5.3. Scenario Three: 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 limit the application of stablecoins.

If stablecoins can solve these problems, offline commerce may change rapidly. Paying 2 USD for a cup of coffee in a café in Vietnam, or using USDT to buy daily necessities in convenience stores in the Philippines, could become the norm.

This will fundamentally change Stable's business model, transforming it from a blockchain network into a global payment infrastructure provider. It will be able to offer payment terminals to merchants, provide digital wallets to consumers, and charge fees from both aspects.

By charging a minimum fee for each USDT transaction through the Stable Network, it can establish a stable income base while trading growth increases.

The delay in the promotion of central bank digital currencies (CBDC) has also created opportunities. If private stablecoins are more convenient and accessible than government-issued digital currencies, users will naturally choose the former.

6. The Real Strategy of Stable

The strategy of Stable is clear: to attract users through free USDT transfers and a convenient user experience. As the ecosystem grows, build business models around the diverse services that emerge.

A single transaction may not bring huge income, but the rapid growth of trading volume can form a considerable overall scale. This is similar to Amazon's early strategy of acquiring customers by selling books at nearly cost price, and then obtaining substantial profits through cloud services and advertising.

Free transfers are just bait. The real goal is to become the central hub of the USDT ecosystem, allowing all transactions to go through Stable. Once the network effect is established, it will be difficult for users to switch to other platforms.

Ultimately, Stable has secured a solid market position. This is where the true strength of the new "Trojan Horse" lies.

Original link