Below are guest posts and opinions from John Devados, co-founder of the Interwork Alliance.
The Stablecoin market is converging in two power centres. The stable building of brands issued by companies already trusted by consumers, and the basic layer of “FinTech L1S” is purpose-built or strictly controlled by regulated fintech. Everything else orbits these to maximize profits, defensiveness, and distribution while still comfortable fit within policy boundaries.
Brand stable wins first in distribution. Payment is a scale game. You can drop your dollar tokens into an existing wallet with millions of KYC’D users, and when connected to a merchant network and supported by a compliance team, you can gain liquidity faster than encryption alternatives. The cost of getting a new trading user approaches zero if the stable is another balanced type of app that is already open daily.
Second, branded stables monetize on a large scale. They sit in a large, low-cost adhesive balance and invest reserves in high-quality short-term assets. That float is a durable revenue stream and is more reliable than volatile transaction fees. At the top, issuers can stack their payout revenue. The combination of float revenue and payment economics makes the brand stable a self-sleek growth engine.
Third, the moat is an adjustment. The household name issuer already maintains licenses, banking relationships, audits and sanctions controls. They know how to answer the proctoral exam and submit suspicious activity reports. This gives policy risk a competitive advantage. As Stablecoin laws and regulations mature from preliminary structure to repayment rights, compliance becomes like a wall that excludes capitalized participants.
The policy is the formation of product design. The brand’s stable is probably multi-chain, but expect to be centrally controlled, using blacklisting and freeze features, transparent proofs, a backup structure for bankruptcy candidates, and an explicit redemption window. The messaging standard that carries travel rules data and screening hooks will become standard. These are not proxy. They become the regulatory table stakes, and winners will ride this trend.
If the brand stable is money, the Fintech L1 is the rail. Fintechs has learned that renting block space from a general purpose chain will expose you to fee volatility, MEV extraction, governance whiplash, and uneven compliance. Owning the base layer burns the policy into a protocol: whitelisted validators, built-in identity, enforceable travel rules messages, and deterministic compliance actions. It also offers predictable pricing, fast finality, and path upgrades tailored to regulated use cases.
Control of the basic layer re-binds economics. FinTech L1S captures transaction fees, Shape or Internalize MEVs, and direct sequencer revenue. These revenues can be subsidized for fees near zero, and still reward validators and partners. Incentive adjustment: Builders and regulated nodes are paid to add throughput rather than extracting rent. Distribution takes care of the rest: payroll, transfer, get, or touch wallets, Fintech can stabilize natives as unit of accounts and default the chain – new wallet, instant on/off ramp –
What won’t win? Stables with low algorithms or cooperation – falsely vulnerable to policy and stress vulnerable. Crypto-type stables may likely last, but capital strength limits mainstream use. General public L1 is still associated with open finance, but without embedded compliance and ownership distribution, payment shares are capped. The CBDC moves slowly. The trade-off between privacy and design is approaching. Expect it to coexist with wholesale settlement infrastructure, not retail rails, as public funds (ironically, stables with policymakers will effectively become “retail CBDCs” in these jurisdictions).
Compete with UX, credits and vertical software. New entrants are unable to compete with distribution and cannot take on compliance head-on. If you can’t become a stable brand or FinTech L1, integrate with them. It offers cross-border apps that utilize programmable escrow, work capital credit, payroll and immediate settlements. For regulators, they harmonize preliminary, disclosure, and reimbursement standards, drive interoperability at the messaging layer, and support market experiments with published models and accountable sets of nodes.
Incumbent banks around the world face choices: become essential service providers, such as custodians, reserve managers, tokenized deposit issues, validator nodes, and more, or monitor deposits to fintech monetization models. Prizes are the management of repeat float revenue and modernized payment rails.
The through line is simple. The resilience and compliance of the profit fund will build a moat, while distribution will determine the winner.
Endgame is a collection of brand name money that is on the basic layer owned by FinTech.