The Battle of Full-Chain Stablecoins: The Digital Dollar Game between Circle, Tether, and Frax

Currently, the largest on-chain power struggle in recent years is unfolding. This battle of the full-chain stablecoins is a contest between three forces: the current king with a massive global empire (Tether's USDT); the institutional force that leverages architecture and compliance (Circle's USDC); and the "full-chain" concept itself, representing disruptive technology.

In 2024, Tether's USDT transaction volume surpassed Visa, with a kingdom of approximately $144 billion that has a fatal weakness. Payment flow data shows that even a deeply entrenched dominance may be shaken. Each chain acts like a customs checkpoint, and the flow of dollars between chains faces fragmentation challenges.

USDT0 is a fully interchangeable token standard built by Everdawn Labs based on LayerZero, allowing traditional USDT to be locked in an Ethereum vault while minting an equivalent amount of brand new, fully interchangeable USDT0 on the target chain. This is a single, standard asset that can circulate anywhere. In just a few months since its launch in 2024, USDT0 has facilitated over $2 billion in cross-chain transfers.

Although USDC has fallen behind, it has firmly secured the second position. The Cross-Chain Transfer Protocol (CCTP) launched by Circle directly addresses the weaknesses of Tether to tackle fragmentation issues. By allowing users to burn real USDC on one chain and mint an equivalent native USDC on another chain, Circle has created a clean and high-integrity standard for value transfer.

FRAX and other alternatives are "virtually nonexistent" in the payment report data set, but they are more like alchemists in a laboratory, constantly exploring the boundaries of the digital dollar and applying pressure to the giants, forcing them to evolve. Frax USD has now been minted into frxUSD, whose power comes from the "sacred custodians" appointed by the governance organization.

The true meaning of USDT0 lies in its ability to connect two entirely different worlds: the world of street dollars and the world of corporate dollars. USDT0 connects the raw and chaotic energy of the streets with the powerful and efficient mechanisms of DeFi, making Tether's dollar truly integrated.

The arrival of full-chain technology heralds a new endgame battle. Tether's USDT0 strategy showcases a dual approach: core defense and aggressive expansion. The three battlefields remain open: the next key battlefield, the user experience of CCTP, the choice of "corporate dollars," and the impact during the awakening of the West.

The most obvious breakthrough for USDT0 lies at the intersection of convenience, regulatory friction, and cost pressure. By first delving into four real-world niche markets, USDT0 can solidify its trading volume advantage before Circle takes over.

To change the dominance of the USDC dashboard, Tether must weaken the specific barriers enjoyed by USDC. USDT can respond by funding methods, adjusting the risk committee's write-downs, relying on OFT and LegacyMesh for convenience, launching a full-chain three-pool and refunding LP fees, as well as hosting an open JSON source for each audited USDT0 vault.

The future battle for currency will unfold on more fronts. The outcome will depend on who possesses the past and present, and more importantly, who can create a true dollar by combining street dollars and corporate dollars, thus occupying the most valuable domains of the future.