When stablecoins first appeared in the blockchain space, they carried the promise of creating truly global money. The vision was straightforward: commerce would become frictionless, allowing people to use USD and other currencies on peer-to-peer networks with minimal fees, rapid settlement, and virtually no barriers.
That vision hasn’t materialized as expected. While stablecoins have gained significant traction, the current ecosystem resembles a complicated web of unscalable networks, vulnerable bridges, and countless tokens that nobody can properly monitor. Rather than accelerating transactions, this complexity is creating bottlenecks.
Instead of achieving one universal currency for global use, we now have the dollar scattered across numerous ledgers, which fragments liquidity, creates security risks, and brings back the exact friction that stablecoins were designed to eliminate.
From Promise to Chaos
Stablecoins emerged to address a specific issue: digital currencies like Bitcoin and Ethereum experience significant volatility because of their fixed supply mechanisms.
What began with BitUSD and Tether has evolved into a disorganized marketplace featuring USDC, USDT, DAI, FDUSD, crvUSD, and numerous other dollar-pegged tokens. These assets operate across Ethereum, Solana, Tron, Base, Binance Chain, and many other networks.
The original goal of establishing one unified, global, stable monetary system has transformed into monetary fragmentation. This situation raises an obvious question: why not simply stick with traditional USD?
Current Ecosystem Challenges
The most significant issue with stablecoins being distributed across multiple ledgers is the fragmentation of liquidity. Each blockchain maintains its own pools, markets, and arbitrage mechanisms. This setup increases costs, restricts DeFi potential, and undermines the smooth experience that digital cash should provide.
Because these blockchains have inherent limitations in transaction processing capabilities, different stablecoins must utilize bridges and layer-two solutions. Security incidents like the Ronin bridge hack demonstrate why these connection points create substantial vulnerabilities.
Another major challenge is that multiple chains and tokens have created regulatory confusion. What’s permissible and transparent in one jurisdiction might not apply elsewhere. While some stablecoins like USDC undergo full audits and maintain proper backing, others avoid providing proof. Additionally, algorithmic versions like DAI and crvUSD operate differently. Following the disruption caused by Do Kwon’s UST in 2021, the recently enacted GENIUS Act in the United States has prohibited algorithmic stablecoins, though they remain legal in other regions.
These factors—regulatory uncertainty, bridge dependencies, rollup requirements, and fragmentation from expanding options across dozens of chains—result in poor user experiences. The process could be significantly simpler with a handful of interoperable stablecoins running on one scalable ledger.
Stablecoins: Payments Without Intermediaries
The internet made information free and global. So why is it still so hard — and expensive — to move money?
The early internet promised a future where anyone could publish, build, or transact without permission. Protocols like email…
— Chris Dixon (@cdixon) April 9, 2025
“Imagine every WhatsApp message had to be wrapped, bridged, or translated before delivery. That’s stablecoins today,” noted Gavin Lucas from CoinGeek.com.
When discussing the broad concept of Web3, industry leaders often point to “interoperability” as the solution. They promote Chainlink, bridges, and shared APIs as answers to problems created by multiple ledgers.
However, interoperability differs fundamentally from unity. Just as the internet required TCP/IP protocols, global money needs a shared foundation. Compatible interfaces aren’t sufficient when a single unified ledger represents a viable alternative.
The complex network of solutions proposed by industry figures amounts to postponing the inevitable. Similar to how competing networks from the early internet disappeared as TCP/IP became dominant, most blockchains and their associated tokens will likely face the same fate.
This fragmentation isn’t merely a theoretical concern for blockchain enthusiasts—it produces tangible consequences. It hampers DeFi development, causes transaction failures, makes institutions wary of the technology, and leaves users questioning the underlying hype.
Advocates for unity aren’t suggesting a single stablecoin issuer should dominate the market. Instead, they envision all issuers operating on one unified, scalable ledger. This approach would preserve competition and allow markets to determine which issuers they prefer and trust.
There’s no justification for maintaining dozens of separate ledgers or the bridges connecting them. The original Bitcoin protocol, now called BSV, can handle one million transactions per second with fees of $0.0001 per transaction. Using token protocols like 1Sat Ordinals and STAS, stablecoins can be issued directly on a legally compliant, scalable blockchain.
Consider what would happen if all value and liquidity from different blockchains consolidated onto one platform. The result would be enhanced liquidity pools, seamless token exchanges, DeFi dominance, and stablecoins suitable for every application type, from gaming to cybersecurity tools to Web3 applications.
Stablecoins cannot succeed long-term without scalable infrastructure. Eventually, everything must migrate to one chain, and currently only one option can deliver the required scalability.
The vision of global electronic cash remains achievable, but not while continuing to build isolated systems.
While this author questions whether on-chain fiat represents genuine innovation, he acknowledges its role as a necessary bridge between inflatable fiat currencies and hard money like Bitcoin. Whether we like it or not, most users prefer currencies that don’t fluctuate in real-time, making stablecoins an essential stepping stone for mass adoption.
What’s needed now is a shared framework on a single base layer—a structure built on a foundation capable of scaling. Until that happens, stablecoins will remain a fragmented concept, and the path to widespread adoption will continue moving slower than it should.
Market Implications
The fragmentation issues outlined in this analysis reflect ongoing structural challenges that could continue limiting stablecoin adoption and efficiency. These infrastructure concerns may maintain the current status quo rather than drive immediate market movements.
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