The AI agent era is accelerating. At the same time, concerns are growing over the unchecked creation and activity of agents. In response, Know Your Agent (KYA) systems, which assign identity to agents and govern their behavior, are gaining attention. Why is KYA identity infrastructure needed, and which companies are building it?

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Summary

• AI agents are entering an era where they execute contracts, payments, and transactions autonomously, yet there is no shared standard to verify who the agent is. In Agent-to-Agent (A2A) settings, KYA is drawing more attention than KYC.

• KYA is not needed everywhere. Inside central platforms (Google·OpenAI·Coinbase), existing KYC is enough. KYA matters where individually deployed autonomous agents touch DEX, A2A payment, and merchant payment.

• The KYA standard race has already begun.

  • ERC-8004: Issues AgentID on top of NFT. Builds ID, reputation, and validation all on-chain

  • Visa TAP: Visa issues an identity credential to the agent and verifies via TAP’s three signatures (legitimacy·delegator·payment method)

  • Trulioo: Adopts the SSL CA model. DPA issues the DAP

  • Sumsub: Layers a KYA system on top of its own compliance system

• Regulation is already moving at the country level. The EU AI Act mandates operator identity in behavior logs of high-risk AI systems. The U.S. NIST lists agent identity management as a priority standard area. Singapore released the first national agentic AI governance framework. As the 2019 FATF Travel Rule decided which crypto exchanges survived, the presence of KYA infrastructure will determine entry into the next round of the market.

KYC: the layer that reshaped finance

• Before 1989, global finance had no shared identity standard. The gap made it hard to trace drug money and illicit funds.

• After the 1989 founding of FATF, KYC became mandatory in finance and blocked illicit funds at the entry point.

No agent identity, system slides backward

• AI agents execute contracts, payments, and trades without human involvement, but there is no way to verify who they are.

• In A2A environments, accountability becomes unclear, raising dispute risk and exposing users to laundering and other fraud patterns.

The role and response of KYA (Know Your Agent)

• KYA (Know Your Agent) is the trust layer that pre-verifies an agent’s origin, permissions, and accountability.

• Unverified agents create three simultaneous risks: unauthorized transactions, fraud, and accountability gaps.

KYA needs for every layer

• Inside central platforms, user KYC and the platform’s accountability guarantee are enough. Outside the platform, in interoperable settings, KYA becomes essential to verify the agent’s specific actions and safety.

• Inside one country (within the platform), an ID card (KYC) is enough to move freely. The moment one crosses a border (outside the platform), the environment changes, and an entry screening (KYA) of purpose and trust is required.

ERC-8004: agent identity on NFT

• ERC-8004 adds an identity layer on ERC-721. Each agent gets a minted NFT as unique ID.

• It also adds three on-chain registries (Identity·Reputation·Validation), serving as ID, reputation board, validation record.

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Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

BlackRock’s BUIDL has become an indispensable asset in the digital asset space. Its largest buyer, however, is not traditional institutions. It is DeFi.

Key Takeaways

• BUIDL’s on-chain significance is not that BlackRock issued a token. It is that Ethena, Ondo, Frax, and Spark used BUIDL as a building block for their own dollar products, turning an institutional fund into a foundational asset in the DeFi supply chain.

• Protocols chose BUIDL not for yield, but because it satisfied three conditions simultaneously: clear legal claims, on-chain composability, and existing regulatory compliance. No other asset offered all three.

• The supply chain does not stop at one layer. As BUIDL is processed into USDtb and then into ecosystem-specific dollar products, demand for the base asset grows with every new ecosystem that emerges.

• BUIDL revealed a new distribution channel for tokenized assets. The customer was not found through traditional sales channels, but through DeFi protocols, a client segment that does not exist in traditional finance. Without recognizing this channel, the next BUIDL will not happen.

1. From Institutional Product to Protocol Infrastructure

BUIDL was built for institutions: cash and U.S. Treasury exposure, qualified investors only, $5M minimum subscription.

First movers: DeFi protocols, not institutions. Not buying for yield. Three reasons:

1. Legal clarity. Issued under Rule 506(c). Investor rights defined under U.S. securities law. Protocols can explain the asset and redemption process in legal terms.

2. Lower compliance costs. Post-GENIUS Act reserve design is complex. BUIDL already meets institutional collateral standards. Compliance burden transfers, not built from scratch. Advantage grows as regulation tightens.

3. On-chain composability. Usable as protocol reserve, exchange collateral, or base layer for ecosystem dollar products.

No other asset checked all three. BUIDL became the default base asset.

2. How DeFi Protocols Use BUIDL

What matters is not simply that protocols hold BUIDL. It is the specific role BUIDL plays within each protocol’s architecture.

2.1. Ethena (USDtb): Funding Rate Buffer

Ethena‘s flagship products are USDe, a synthetic dollar, and sUSDe,

USDe yield sources:

1. Staking rewards from collateral assets

2. Funding fees from perpetual futures (delta-neutral strategy)

The second yield source, funding fees, comes from the delta-neutral strategy. USDe holds a short futures position equal in size to its collateral, offsetting price risk. When long demand dominates, long holders pay funding fees to short holders. Ethena, holding the short, collects that income directly.

The risk emerges when funding rates turn negative. In bear markets, short demand can exceed long demand, requiring short holders to pay funding fees instead. For Ethena, income becomes cost. If this persists, the insurance fund depletes and USDe’s dollar peg comes under pressure.

Ethena needed an asset capable of absorbing this stress. USDtb fills that role, with BUIDL and USDC as its core reserves. The purpose is not yield enhancement. It is a defensive buffer that keeps Ethena’s overall structure stable during periods of negative funding.

2.2. Ondo (OUSG): BUIDL as Intermediate Input

OUSG(Ondo U.S. Government Bond Fund) is a tokenized fund that brings institutional-grade U.S. Treasury exposure on-chain. Direct access to institutional money market funds such as BlackRock BUIDL or Franklin Templeton FOBXX requires millions of dollars in minimum investment and qualified investor status. OUSG lowers that barrier, serving as an on-chain intermediary that makes these assets accessible to DeFi users.

BUIDL is a core component of OUSG’s reserve composition, alongside Franklin Templeton’s FOBXX and WisdomTree’s WTGXX. OUSG repackages institutional assets that retail users cannot directly access into an on-chain intermediate product.

2.3. Frax(frxUSD): Mint and Redemption Reserve

frxUSD is a new dollar stablecoin designed by Frax Protocol, targeting a stable $1 value like USDC or USDT. What sets it apart is its reserve structure.

Existing stablecoins back their reserves with cash or Treasuries held in off-chain bank accounts. Frax replaces that with BUIDL, an on-chain tokenized Treasury. The mechanism is a direct 1:1 exchange: deposit BUIDL to mint frxUSD, return frxUSD to redeem BUIDL.

End users do not interact with this structure directly. They use frxUSD as a stablecoin in payments or DeFi. BUIDL operates in the background, supporting every mint and redemption.

2.4. Spark’s Tokenization Grand Prix(TGP) Allocation and BUIDL’s Common Thread

Spark’s Tokenization Grand Prix(TGP) allocated $500 million of its $1 billion mandate to BUIDL, with the remainder split between Superstate’s USTB and Centrifuge’s JTRSY. Rather than a single reserve asset, Spark constructed a portfolio.

Conventional asset managers blend Treasuries, money market funds, and credit instruments in the same way. What differs here is that this portfolio operates on-chain, redeployed across DeFi rails as collateral and liquidity.

Across the four cases examined, BUIDL played a different role in each: reserve asset, intermediate input, mint-and-redemption backing, and portfolio component. One pattern holds across all of them. In no case was BUIDL the end product. Protocols are buying BUIDL to fill their own systems, and that demand structure is already operating at scale.

3. BUIDL Reprocessed: The Compounding Demand Structure

As shown, protocols have each adopted BUIDL directly as a reserve asset. But the chain does not stop there. Products built on BUIDL are becoming reserves for new products, enabling an expanding layer of derivative structures.

MegaETH’s USDM is the clearest example. USDm is an ecosystem-specific stablecoin developed by MegaETH in collaboration with Ethena. Its reserve is USDtb, and USDtb’s reserve is BUIDL. As USDm demand grows within MegaETH, BUIDL demand rises with it.

Each new ecosystem that enters this structure adds customers, not competitors. Adoption speed is also a meaningful differentiator in on-chain finance. Building an equivalent derivative structure in conventional finance would require months of regulatory review, legal contracting, and custodial arrangement. On-chain, that process compresses significantly. Within a regulatory framework, there is effectively no limit on the range of eligible base assets.

In sum, BUIDL is unlocking compounding demand by anchoring an expanding on-chain structure to a safe, real-world asset base.

4. What Comes After BUIDL?

BlackRock built an institutional fund. Ethena, Ondo, Frax, and Spark adopted it as a base asset. MegaETH layered an ecosystem-specific dollar on top. All of this happened in under two years since BUIDL’s March 2024 launch.

That speed was not driven by BlackRock’s brand alone. Legal clarity, on-chain composability, and regulatory compliance: BUIDL was the only asset that offered all three at the time. That first-mover advantage was substantial, and it compounds as more DeFi protocols integrate BUIDL into their reserves.

The question for teams designing the next tokenized asset is how to enter this market. Most approach it one of two ways: assuming tokenization itself generates demand, or replicating conventional finance distribution through sales teams, broker networks, and existing channels.

BUIDL took neither path. DeFi protocols, including Ethena, Ondo, Frax, and Spark, were the first adopters. Exchanges and institutions such as Deribit, Binance, and OKX followed. BUIDL found a client segment that does not exist in conventional finance.

These clients buy the asset, build their own products on top of it, and those products become the foundation for the next protocol. They are not customers acquired through sales. They are customers drawn in through design. Without identifying this client segment, the next BUIDL will not emerge.

🐯 More from Tiger Research

Read more reports related to this research.

• DeFi’s Dopamine Hit Is Over. RWA Offers Something Real.

• RWA 2025 Driving Adoption: Tokenization & Beyond

• How Plume Captured 50% of RWA Investors Secretly

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

The DeFi market spent years stacking yield on top of yield, riding a sugar rush of artificially high returns. That era is over. Now, DeFi is plugging into real-world assets (RWA) as its actual power grid, opening a new chapter.

Key Takeaways

• Aave V3’s USDC deposit rate stands at 2.7%, below the U.S. 10-year Treasury yield of 4.3%. DeFi’s dopamine hit is fading.

• The market is not dead. Yields have fallen, but RWA and stablecoins have grown into a multi-hundred-billion-dollar market, evolving in a new direction.

• The failures of Compound, Curve, and Olympus share a common lesson. Any structure where tokens prop up other tokens collapses the moment external capital stops flowing in.

• DeFi was a power strip with no outlet. RWA connects that circuit to a real external power grid.

• The market is maturing. It is anchoring to real underlying assets (RWA) and showing signs of coordinated accountability, as seen in initiatives like DeFi United.

1. Falling Yields, Growing Market

DeFi is no longer a high-yield product.

Since 2022, the spread between DeFi and government bonds has narrowed toward zero and, in some periods, inverted. As of April 2026, Aave V3’s USDC deposit rate of approximately 2.7% sits below both the Fed funds rate (3.5%) and the 10-year U.S. Treasury yield (4.3%).

There used to be a clear reason to take on risk.

On-chain yields were incomparably higher than bank deposits. That is no longer the case. If the returns on DeFi, after absorbing all on-chain risks such as hacks and depeg events, fall below those of traditional finance, retail users have less reason to actively engage with DeFi.

Yet the market itself is growing in a different direction. DeFi yields have fallen, but RWA and stablecoin markets, converging with traditional finance, are scaling into the hundreds of billions. Institutional entry has played a major role in this shift.

However, institutions often overlook DeFi’s history and existing community, bringing in the conventions of traditional finance wholesale. Before institutional entry, DeFi was an incentive-driven market. Some protocols gained market recognition through incentive strategies and, in doing so, shifted the market paradigm. That model persists in DeFi today, and Aave, a protocol that emerged during DeFi Summer, now serves as the benchmark rate provider for DeFi protocols.

Understanding the players who have remained in the market is essential groundwork for new institutional entrants. This piece traces the protocols that drove DeFi’s defining narratives across its lifecycle, and the lessons the market drew from them.

2. DeFi’s History: From Experiment to Collapse to Reinvention

DeFi did not begin as a market built on incentive promises. The starting point was simple: “Can we lend, exchange, and use assets as collateral on a blockchain, without intermediaries?”

The early phase was closer to financial experimentation. What mattered was the fact itself: loans without banks, exchange without exchanges, liquidity created by anyone with collateral. But after 2020, the market moved quickly in a different direction. Token incentives became the primary mechanism for attracting capital. Countless protocols and ideas emerged, but only a handful survived. The market learned from each narrative and kept adjusting course.

Compound incorporated its native token ($COMP) into yield incentives to attract large-scale liquidity. But when other projects replicated the same playbook, new inflows dried up and the structural fragility was exposed.

Curve transformed governance voting into a contest over which pools received yield, turning yield competition into a war over protocol control. The market learned that DeFi governance, too, can become a target for monopolization of power and incentives.

OlympusDAO was the most extreme case. It used high APY to demonstrate the possibility of DeFi owning its own liquidity without relying on external capital. However, much of its yield depended on new token issuance and incoming capital rather than real cash flow. When inflows slowed, both the price of its governance token OHM and confidence in the protocol collapsed together.

The lesson the market drew from all three: “When the source of yield is the protocol’s own token, the structure does not last.” This experience changed how users, builders, and institutions view DeFi.

And into that gap, new movements began to emerge: EigenLayer, Pendle, YBS, and RWA.

2.1. Compound: The Bubble Built by Token Distribution

In June 2020, Compound began distributing its governance token, $COMP, to users. Both depositors and borrowers received token rewards. In some periods, $COMP rewards exceeded borrowing costs, creating a situation where “borrowing money actually made you money.”

It was a new paradigm. As users flooded in, Ethereum gas fees surged, and paying tens of dollars for a single transfer became routine. Depositing and borrowing were no longer simple financial acts. They became tools for farming rewards, and yield-seeking capital moved rapidly between protocols.

This period is known as DeFi Summer. Uniswap, Aave, and Yearn Finance rose in quick succession, and on-chain finance solidified as an independent market. But what Compound ultimately built was a structure that attracted capital through token-dependent incentives, and where that capital in turn pushed up token prices. The tendency of DeFi users today to react sharply to yield rates, liquidity, and reward structures was formed in this period.

2.2. Curve and veCRV: The Opening of the Curve Wars

Curve began as something close to a stablecoin exchange. But the introduction of veCRV changed its character entirely. The longer users locked up CRV, the more veCRV they received, and that veCRV carried voting power over gauge weight allocations, determining how CRV rewards were distributed across pools.

From this point, the focus of competition shifted from yields themselves to the power to move them. Those with more veCRV could direct more incentives toward their own pools. Protocols naturally began competing to accumulate veCRV, and that competition became the Curve Wars.

Initially, the structure appeared attractive to both retail users and builders. Retail users earned higher rewards the longer they locked, while builders could reduce circulating supply and direct liquidity to target pools. This is why similar models spread across the ecosystem, including Balancer’s veBAL and Frax’s veFXS.

Over time, however, that power did not remain with individual users. Meta-protocols like Convex aggregated and locked CRV on behalf of users, offering boosted rewards in exchange for accumulating veCRV voting power. The Curve Wars expanded to Convex as its new battlefield.

What veCRV ultimately demonstrated was that control over yield is a stronger incentive than yield itself. And rather than holding that power directly, users delegated it to more efficient intermediaries like Convex. Curve revealed that governance rights in DeFi can become yield-generating assets in their own right, and that such rights are prone to consolidation.

2.3. OlympusDAO: A Golden Age Built on Game Theory

Even after Curve’s veToken mechanism emerged, liquidity remained DeFi’s most persistent challenge. Externally sourced liquidity left as soon as better incentives appeared elsewhere. This was mercenary capital.

OlympusDAO, which emerged in the second half of 2021, drew attention as a proposed solution. Its core had three elements: Protocol-Owned Liquidity, where the protocol itself owns its liquidity; the (3,3) game theory framework, which holds that the best outcome emerges when all participants choose to stake; and an extreme APY that exceeded 200,000% at launch.

But the structure did not hold. OHM’s returns relied heavily on new token issuance rather than real cash flow. The bonding mechanism spawned dozens of fork projects, but OHM’s price ultimately fell more than 90%. After this, builders began asking “where does the yield actually come from” before asking “how high can the yield go.”

2.4. EigenLayer and Pendle: From Horizontal Farming to Vertical Leverage

The collapse reshaped how retail users behaved. The 2020 to 2022 playbook was simple: farm incentives first, exit first. It was common for a single user to spread funds across multiple protocols simultaneously. Farming in that era was horizontal. Capital moved between protocols chasing higher APY.

After 2022, this approach lost efficiency. Token incentives proved unsustainable, and airdrop competition intensified. Simply depositing across multiple venues yielded diminishing returns. Capital began moving toward stacking multiple layers of yield from a single asset: restaking stETH, redeploying LRTs into DeFi, and splitting yield rights to capture points and future returns.

EigenLayer and Pendle sat at the center of this shift. Starting in 2024, EigenLayer opened a restaking structure that allowed already-staked ETH and LSTs to generate additional rewards. EigenLayer’s TVL grew from under $400 million to $18.8 billion in roughly six months, a clear sign that capital was moving rapidly toward restaking over simple deposits.

Pendle split yield-bearing assets into PT and YT. PT represents a claim close to principal, while YT captures all yield, rewards, and points accrued until maturity. YT goes to zero at maturity, but until then it extracts maximum points and returns. Even without deep structural understanding, buying YT became a farming strategy that leverages both time and capital.

The strategy shifted from scattering capital across protocols to stacking multiple layers of reward from a single asset.

3. Redesigning the Revenue Model: RWA and YBS

Builders once focused on driving TVL through token incentives. As TVL grew, protocols appeared to be scaling, and token prices followed. The problem was that the liquidity never stayed for long.

TVL still matters as a metric. But the emphasis has shifted toward fee-based revenue, real asset backing, and regulatory readiness. The reason is a new variable: institutions. Institutions ask harder questions about where the yield comes from and what assets underpin it.

Products are evolving to absorb both demands at once.

3.1. RWA (Real World Asset): Institutions Enter the Market in Earnest

Since 2024, traditional financial institutions including BlackRock, Franklin Templeton, and JPMorgan have begun entering the on-chain market under the banner of RWA. The approach involves issuing off-chain assets, such as U.S. treasuries, money market funds, private credit, gold, and real estate, as tokens and distributing them on-chain.

The on-chain RWA market has grown from a few billion dollars in 2022 to tens of billions as of April 2026. Tokenized treasuries and private credit are driving that growth.

The institutional products currently leading the market are BlackRock BUIDL and Franklin Templeton BENJI. BUIDL and BENJI cover similar asset types but differ in approach. BUIDL is effectively institutional-only, while BENJI is accessible from as little as $20, making it open to U.S. retail as well.

Beyond these, Apollo, Hamilton Lane, and KKR are accelerating the tokenization of private funds and private credit in partnership with on-chain issuance platforms such as Securitize.

For institutions, the on-chain market is less a new frontier to explore than a new distribution channel. Accordingly, protocols serving institutional participants are building out the requisite KYC and AML frameworks, custody infrastructure, legal jurisdiction coverage, and risk management frameworks to match.

3.2. Yield-Bearing Stablecoins (YBS): A Dollar with Yield Built In

The segment worth watching here is YBS. Yield-bearing stablecoins (YBS) are stablecoins with yield embedded directly into the token itself. Ondo USDY, Sky sUSDS, Ethena sUSDe, and the previously mentioned BlackRock BUIDL and Franklin BENJI all fall into this category.

Simply holding these assets causes yield generated from the underlying to accumulate. The underlying assets include U.S. treasuries, funding rates, staking interest, and money market funds. The structure closely resembles a traditional finance MMF migrated on-chain.

Based on YPO data from StableWatch, Ethena sUSDe, Sky sUSDS, BlackRock BUIDL, and Sky sDAI rank among the top products by cumulative yield paid out. Figures vary depending on how each product is counted, but YBS has clearly grown beyond a niche experiment into a category where real interest is being distributed.

That said, simply porting an MMF on-chain is not a differentiator on its own. The real differentiator lies in composability. BUIDL makes up 90% of Ethena’s USDtb reserves, and USDtb is used as collateral on Aave.

In other words, what were once base products sitting in the real world as RWA instruments have become stable structural components. This is no longer a market running on a finite internal battery. It has started drawing current from outside.

4. Players Building the RWA Power Grid, Learned from Past Failures

Until now, DeFi kept daisy-chaining power strips plugged back into themselves and called it a flywheel.

Strip on top of strip, with leverage and derivatives plugged in at the end. The problem was that the current never came from outside. It was mostly token incentives that protocols generated themselves. Compound created loans backed by its own token; Curve used its own token to retain liquidity providers.

It looked as if each was supplying power to the other, but in reality it was a structure running on a shared, finite battery. When the market shook, voltage dropped from the bottom up, and the products at the furthest end began to go dark. There was a limit to the load a self-referencing power strip could bear.

RWA connects this structure to a real power grid for the first time. Cash flows generated by the real economy, such as bond interest, real estate rental income, and trade receivables, become the current running through on-chain finance. Interest rates are determined not by internal token incentives but by external market demand, interest rates, and credit risk.

Once the current begins to flow, devices for issuance, custody, collateral, lending, and settlement can be connected in sequence on top of it. Financial products that were difficult to engineer in legacy DeFi become viable on this power grid. The question is not how many more strips to plug in, but how stable a current can be drawn.

This is where the core of on-chain RWA lies. Place assets with real underlying value on-chain, and connect financial functions on top of the cash flows they generate. If legacy DeFi borrowed liquidity using token incentives as a temporary battery, today’s RWA market is trying to retain liquidity through the cash flows of the assets themselves.

The players in today’s market are each building this power grid from their own position.

• Theo decides which assets to connect on-chain. It selects the assets that will serve as the power source.

• Plume builds the infrastructure through which those assets can be issued and distributed. It lays the transmission lines and switching infrastructure through which current can flow.

• Morpho uses those distributed assets as collateral to build lending and collateral markets. It is the first financial device on the power grid that actually draws electricity.

No single player owns the entire grid. The new financial circuit called on-chain RWA is only complete when the power source, transmission network, and points of use are all connected.

4.1. Theo: A Case of Repositioning the Customer Base

Theo is a case study in starting from asset selection and rebuilding the customer base from the ground up.

Theo’s flagship product was once strategy vaults. But as the market shifted, what retail wanted and what institutions wanted began to diverge. Theo accepted that transition and redefined its customer base entirely.

The core product is thBILL. It is a basket of institutional-grade tokenized U.S. short-term treasuries sourced from regulated issuers, designed to generate stable yield as a core asset within the Theo ecosystem. The roadmap has since added thGOLD, with thUSD, a YBS issued against thGOLD as collateral, also set to launch shortly.

It is not just the product that changed. This demonstrates that a player which started with retail incentives can simultaneously be architected to speak the language of institutions.

4.2. Plume: Building the Environment Where RWA Operates

Plume is a case study in bundling the infrastructure for asset distribution with the demand sitting on top of it.

For institutions, putting assets on-chain is not enough. What is needed is end-to-end infrastructure spanning issuance, compliance, distribution, and yield productization. For on-chain users, access to institutional-grade assets like treasuries and funds requires a supporting product structure.

Nest is a yield protocol built on top of Plume’s infrastructure. It packages yield generated from institutional-grade RWAs into a format users can access by depositing stablecoins. Each vault, including nBASIS, nTBILL, and nWisdom, delivers yield backed by a different real-world asset, and vault tokens move and circulate freely within DeFi.

WisdomTree has launched 14 tokenized funds, Apollo Global has deployed a $50M credit strategy, and Invesco has migrated a $6.3B senior loan strategy onto Plume. Nest serves as the demand gateway to these institutional assets.

Beyond its own rails, Plume functions as integrated infrastructure that creates a distribution channel between institutional assets and on-chain demand.

4.3. Morpho: Adding Financial Functionality to Institutional Assets

Morpho is a case study in turning assets into collateral, loans, and liquidity.

For institutions, registering assets on-chain is only the starting point. What matters is whether those assets can be used as collateral, and whether liquidity can be extracted on that basis. Lending terms and risk parameters must be clearly defined, and execution must be viable within custody and compliance frameworks.

The leading example is Apollo ACRED. Apollo not only deployed its credit strategy on Plume, but also enabled ACRED to be used as collateral on Morpho, allowing holders to borrow stablecoins while maintaining their fund position. ACRED is a tokenized private credit fund based on Apollo’s Diversified Credit Securitize Fund, issued on-chain via Securitize.

Only when institutional assets can serve as collateral, generate loans, and produce liquidity do they become usable material for on-chain finance.

5. What Remains After the Dopamine Fades

The golden era of decentralized finance (DeFi), in retrospect, was closer to a mirage built on token incentives and leverage.

Some corners of the market remain skeptical about DeFi’s recovery potential, pointing to the string of hacking incidents.

Yet the recent Kelp DAO rsETH incident and the formation of DeFi United are telling a rather unlikely story that cuts against that view. As of April 28, 2026, Aave and DeFi United have successfully raised over $300M, surpassing the $190M originally drained in the exploit.

This shows that a trust infrastructure and a more mature model of shared accountability are beginning to take shape in the market.

What DeFi’s history has taught us is that it used to be a market where no one was accountable. Fast access to high-yield tokens was users’ sole objective, and builders designed yield mechanisms to match that demand, often walking away once their funding targets were met.

But the market is now shifting toward one where accountability must be deliberately designed into the system. It is not yet a complete financial system, but what is clear is that a movement has emerged to identify shared problems and distribute losses and responsibility.

The reason many feel the market is no longer viable is not just security issues, but also the disappearance of immediate rewards and yields, and the absence of any new narrative or catalyst.

The word “DeFi” is losing its force over time. The market is already fragmenting under more specific labels: lending, stablecoins, RWA, restaking, on-chain credit.

The word is not the point. The experiments that started from it are maturing into structures that put more assets into actual productive motion.

🐯 More from Tiger Research

Read more reports related to this research.

• RWA 2025 Driving Adoption: Tokenization & Beyond

• How Plume Captured 50% of RWA Investors Secretly

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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1. Agent-Era Payment Infrastructure Has Already Begun

Over the past year, global big tech firms, card networks, and exchanges have each announced their own agent payment standards (hereafter, “agent”). Eight standard protocols were released in 2025 alone, with partnership announcements continuing to follow.

Capturing the payment standard carries the greatest weight at moments of structural transition. In the era of offline commerce, Visa and Mastercard locked in the card payment standard and came to dominate the market. Every card transaction since has been routed through their networks.

When commerce shifted online, a new set of players emerged. PayPal built an online payment service on top of email-based remittance, and Stripe followed. The next payments market is agents. With AI now mainstream, no one disputes that the agent era is coming.

When people picture AI agent payments, two scenes typically come to mind: an agent that finds and purchases products on the user’s behalf, and agents that transact directly with one another without human involvement.

These represent the near and the more distant future, respectively. Agent-executed orders under user instruction fall under General Agentic Commerce, which is already taking shape. Direct agent-to-agent payments fall under Pay-per-call, a more distant future state.

The two categories may appear to stand in opposition, but they are simply players solving different problems. This report examines how each set of players is establishing standards across the two categories of the agent payments industry.

2. General Agentic Commerce

In General Agentic Commerce, humans delegate shopping to agents. Within a given platform, the user registers a card and sets the scope of delegation, after which the agent executes within that platform.

Take an example. The user tells the agent, “Prepare my Tokyo business trip for next week. Budget is 2 million KRW (~$1,400 USD).” That single instruction grants the agent conditional payment authority. Within the budget, the agent selects and sequentially pays for the flight, hotel, airport transfer, currency exchange, and travel insurance using the user’s card.

For this process to work, the agent must first interpret the user’s intent and find the right products, then complete payment securely. The structure breaks into two layers:

• Discovery layer: the agent finds products on a platform on behalf of the user

• Payment layer: the agent pays within the scope set by the user

Some leading players focus on a single layer, while others aim to capture both.

Alphabet Inc. (GOOG)

Core Technology

Google is moving to capture both the discovery and payment layers, anchored on two standards: UCP and AP2.

UCP (Universal Commerce Protocol) is the standard governing how agents communicate with merchants.

For an agent to handle shopping on behalf of a user, it must run through countless interactions with different services. The problem is that every service is structured differently. Each time an agent discovers a new service and initiates a transaction, a separate integration has been required. Google aims to eliminate this inefficiency through UCP.

Once a merchant configures itself to the standard, any agent can connect with that merchant in the same way thereafter.

AP2 (Agent Payments Protocol) is the authority standard that guarantees “who authorized what, and up to how much” at the moment of transition from discovery to payment.

When a person presses the payment button directly, the actor and accountability are clear. When an agent pays on the user’s behalf, the scope of authority and locus of responsibility become ambiguous. AP2 records the user’s initial instruction as a tamper-proof digital contract (Mandate). Agents can act only within the user’s instruction, and after the transaction, a traceable record remains of who authorized what and when.

In short, if UCP is the standard for discovery, AP2 is the standard that signs accountability into the transaction.

Core Business

Google’s current revenue rests on two pillars: Advertising and Cloud. As of 2025, advertising revenue stood at $262.7 billion and cloud revenue at $58 billion, accounting for the bulk of total revenue of around $400 billion.

The issue is that the landscape is shifting. As consumers begin to delegate purchases to AI agents instead of typing keywords into a search bar, the existing search advertising model is destabilized. Google’s investment in UCP and AP2 starts here. It is preparing for what comes next.

Google is evolving AI Mode into the next stage of search. What began as a Q&A layer will progressively shift into an agent that executes purchases on the user’s behalf. The moment a merchant joins UCP and lists products, those products enter the agent’s transactable range.

• Advertising: ad placement shifts from discovery to recommendation. Agents compare products against user criteria and shortlist; paid merchants surface at the top. Looks like a natural recommendation, but ads now sit at the recommendation stage. Advertisers spend less on stages that don’t convert; Google captures higher ad price per transaction.

• Payment: AP2-based Agentic Checkout completes payment with one user approval. Google Pay becomes the payment route, accruing fees per transaction. Agent transactions are faster and more frequent than human ones. Small fees compound at scale.

• Cloud: a possibility, not yet a revenue line. Merchants processing agent transactions need AI inference, data storage, and API integration. If that demand flows to Google Cloud, cloud revenue scales with the agent ecosystem.

Outlook

Google’s differentiator is its existing network.

Google led the internet era and already operates a near-complete payment infrastructure, including Google Pay and a vast merchant base. In the AI era as well, the company is at the forefront with Gemini, demonstrating sensitivity to technological change. User touchpoints through Android and Chrome are in place.

If UCP and AP2 take hold, users will conduct purchases end-to-end inside Google’s infrastructure. Merchant onboarding to Google’s infrastructure then follows naturally. Existing systems were built around humans, but UCP and AP2 are designed for agents. Merchants who fail to onboard lose competitive ground against rivals who do.

For merchants to reach buyers, onboarding to UCP and AP2 becomes the path of least resistance.

Google has done this before. In 2008, it open-sourced Android. Manufacturers joined, users grew, and Google’s own infrastructure such as Play Store and Google Pay layered on top. The result: Google became the largest beneficiary of the mobile market without manufacturing a single phone.

Once agent transactions form in earnest, Google is highly likely to walk the same path again. Buyers and merchants both move on its infrastructure, and Google captures revenue at every stage of the transaction.

OpenAI Group PBC

Core Technology

OpenAI co-developed ACP (Agentic Commerce Protocol) with Stripe and released it on September 29, 2025.

ACP is an open-source protocol that enables agents to call a merchant’s payment system and purchase products on the user’s behalf. ACP grants authority through a four-actor structure: 1) Buyer, 2) Seller, 3) Agent, 4) Payment Provider.

ACP’s central question was: “How much payment authority should an agent be given?” Handing the user’s card information to the agent would, in theory, allow the agent to pay at any merchant, in any amount, at any time. But a poorly trained agent could repeatedly purchase unnecessary items, and a hijacked session could be exploited.

ACP solves this through Delegate Payment. The user’s actual card information is never passed to the agent. Instead, the PSP (e.g., Stripe) receives the card information and issues a single-use token, and the agent handles only that token. The token carries four constraints:

• Which merchant it can be used at

• Up to what amount it can pay

• When it expires

• Which checkout session it is valid for

As a result, even if the agent malfunctions or is hijacked, the damage cannot extend beyond “this single shopping transaction.”

Core Business

OpenAI’s current revenue comes from three pillars. With approximately $20 billion in annual revenue (ARR basis) for 2025, ChatGPT subscriptions account for roughly 85% of the total. The remainder comes from API usage fees and enterprise contracts. It is a subscription model that grows linearly with user count.

The issue is that the ceiling of this structure is in sight. As long as OpenAI competes with Claude and Gemini on subscriptions, growth is tied to how many more users it can attract. ACP is an attempt to break through that ceiling. Transaction fees on top of subscription fees. Transaction count on top of user count. Growth layered on growth.

In September 2025, OpenAI launched Instant Checkout, completing payments inside ChatGPT. The structure imposed a 4% transaction fee for Shopify merchants. However, real-time inventory sync, gaps in tax processing infrastructure, and low conversion rates held it back.

Merchants pushed back, citing the difficulty of handling complex variables such as inventory status, tax processing, and price updates directly within ChatGPT. Walmart, in particular, disclosed that conversion through ChatGPT was only one-third of the rate on its own website.

OpenAI ultimately wound down Instant Checkout in March 2026, handing payment back to merchant apps and systems while restricting ChatGPT’s role to product discovery.

This is recalibration, not retreat. The acquisition of personal finance app Hiro Finance is expected to play a key role in this current adjustment. The plan is to upgrade the consumption pattern analysis, financial data management, and inventory, tax, and fraud detection infrastructure that held Instant Checkout back, then re-enter with in-house payments.

Once this ecosystem is in place, OpenAI achieves the structure it originally sought: ChatGPT holds the starting point of every transaction, opening the path to an intermediation fee model.

Outlook

Unlike Google, OpenAI must compete with a single platform: ChatGPT. The strategy is to leave payment, fulfillment, and customer relationships to merchants, while OpenAI captures Product Discovery alone.

OpenAI’s success depends on how well it satisfies both merchants and buyers. On the merchant side, cases like Walmart, where benefits and payment are deeply integrated into ChatGPT, must continue to multiply. On the consumer side, ChatGPT recommendations must convert into actual purchases. If one side falters, the other stalls. If too few merchants come in, the product selection thins; if conversion is low, merchants pull their investment.

OpenAI does not have the luxury of buying time with other assets, as Google does.

Ultimately, whether OpenAI can claim the opening scene of shopping depends on whether ChatGPT can replace the starting point of shopping the same way it replaced search. With Google running the same race through Gemini, this will be OpenAI’s most difficult fight.

Visa Inc. (V)

Core Technology

Visa is a company determined to keep its position as “the most widely used payment method,” even in the agent era. To prepare for agent payments, Visa chose a strategy of opening its existing payment network to agents.

In April 2025, Visa unveiled the Visa Intelligent Commerce portfolio. Visa Intelligent Commerce consists of four components that allow agents to pay just as humans do.

What the four components share is that Visa did not enter the protocol race directly.

Agent APIs is Visa’s own technology, activated when a Visa card is used. Intelligent Commerce Connect, however, is a strategy of accepting competing protocols as well.

Core Business

Visa’s current revenue comes from card payment fees. 2025 revenue was approximately $40 billion, with annual transaction volume of $14 trillion. Visa Intelligent Commerce does not generate separate revenue today. It is a strategic foundation for preserving the current revenue structure as the agent commerce era arrives.

The revenue paths remain unchanged.

First, payment fees. Whether an agent presses the payment button on the user’s behalf or a human does it directly, it makes no difference to Visa. As long as payment flows through the Visa network, card fees are generated. This is why Visa designed Intelligent Commerce Connect to accept competing protocols.

No matter which protocol the transaction runs on, fees still come in as long as payment is made with a Visa card.

Second, token infrastructure fees. Whenever an AI-specific token issued by Tokenization, one of the five Agent APIs, is used in a transaction, Visa handles credential conversion and authentication. When PSPs like Stripe and AI platforms use this token service, Visa collects a network usage fee. The token layer built on top of the card becomes a new fee axis in the agent era.

In the end, Visa’s strategy is not to win the protocol race but to charge fees on both winners and losers. On the buyer side, AI platforms such as OpenAI, Anthropic, and Perplexity are lined up as partners. On the seller side, e-commerce platforms like Shopify and PSPs like Stripe are in place. Whichever direction agent transactions grow, Visa sits at both ends.

Outlook

Visa’s outlook in one line: rather than competing with its own protocol, Visa moves toward becoming a payment infrastructure that embraces every protocol.

This choice matters because Visa’s position is fundamentally different from other players. Google, OpenAI, and Coinbase are playing a game in which their own protocol must win. AP2, ACP, or x402 must each become the standard for their respective ecosystems to maximize revenue. The protocol war itself is close to zero-sum.

Visa, by contrast, plays a game in which it does not matter which protocol wins, as long as payment passes through its network. The winner of the protocol war is irrelevant to Visa. It collects fees by attaching to whichever side wins, and continues to collect fees even when the market shifts to a different protocol.

The embrace strategy is not “yielding”; it is in fact the most advantageous position for Visa. This is a choice possible only because Visa already holds 4.8 billion cards and 150 million merchants, and only Visa, with these assets, could make this choice.

There is, however, one variable: stablecoins. If agent-to-agent payments bypass the Visa network entirely and settle directly on a blockchain, Visa loses the very layer from which it collects fees. Visa’s acquisition of Bridge, the launch of stablecoin cards, and its participation as a validator on the stablecoin-only chain Tempo are all responses to this risk.

For the embrace strategy to work, payment must pass through Visa’s infrastructure somewhere. Stablecoins are the only path that can threaten this premise itself.

In the end, Visa’s reason for not aiming to win the protocol war is clear. Holding the existing position of the card network alone is enough to make Visa the largest beneficiary of the agent era. The single point to watch: how quickly stablecoins begin to actually bypass the card network.

Mastercard Incorporated (MA)

Core Technology

Mastercard plays the same game as Visa. It is a company aiming to keep the card network’s position even in the agent era. Mastercard chose a strategy of opening its existing payment network, operating across more than 210 countries worldwide, to agents, but built the architecture so that merchants could easily onboard onto its system.

In April 2025, Mastercard launched Mastercard Agent Pay, followed by developer tools in September and the Agent Pay Acceptance Framework in October, steadily building out its agent payment system.

What the components share is that Mastercard is not trying to dominate the market with its own protocol. The strategy is to ensure Mastercard intervenes at the moment of payment and authentication, regardless of which direction the market moves. It is the same “payment-layer neutrality” strategy as Visa, but Mastercard concentrates on merchant acceptance.

Mastercard’s true battleground is making agent payments work without any action from the merchant. Normally, when a merchant adopts a new payment method, code must be embedded in its website. Mastercard removed this burden.

Through partnership with Cloudflare, Mastercard built a structure that automatically distinguishes “Is this traffic a trusted agent or a malicious bot?” at the front of the merchant’s website, letting only trusted agents through to the merchant. The merchant can accept agent transactions without touching a single line of its own code.

A separate path is also reserved for merchants seeking deeper integration. Those wishing to put their own systems in direct dialogue with agents can connect through major agent protocols such as MCP, A2A, and ACP. The merchant ends up with two choices: do nothing and accept default traffic, or connect a protocol and build a tailored experience. Either path runs through Mastercard.

Core Business

Mastercard’s revenue structure is simple. A fee is generated every time a payment runs through the Mastercard network. As of fiscal year 2025, revenue stood at approximately $32.8 billion with transaction volume of 175.5 billion. Whether an agent or a human pays, the same fee accrues as long as the transaction passes through the Mastercard network.

The issue is that agent payments could bypass the card network entirely. If settlement occurs directly on-chain via stablecoins, there is no place for Mastercard. Agent Pay is the strategy designed to plug that gap.

Mastercard’s chosen approach is to lower the merchant threshold. Adopting a new payment method usually requires a merchant to embed new code in its system. Mastercard removed that burden. Through partnership with Cloudflare, Mastercard built a layer at the front of the merchant site that automatically filters trusted agent traffic.

Merchants accept agent payments without any extra work. The more merchants connected to the network, the more transactions flow through Mastercard.

The revenue path remains unchanged. Every time an agent completes payment through the Mastercard network, a fee is generated. The structure is identical to a person swiping a card. The difference is that agents pay faster and more frequently than humans. As the number of transactions grows, the pace at which fees accumulate accelerates.

For Mastercard, the rise in agent transactions is a natural extension of fee revenue. This is not opening a new business; it is carrying the existing structure forward into the agent era.

Outlook

Mastercard’s outlook in one line: like Visa, it does not pick the winner of the protocol war but instead aims to dominate the way merchants accept agents.

The core of this strategy is enabling merchants to accept agent payments without touching a single line of code. Through partnership with Cloudflare, Mastercard has effectively eliminated the merchant entry barrier.

Visa is moving in the same direction, but Visa is currently dealing with the stablecoin variable at the same time. With the Bridge acquisition and Tempo validator participation, the front line has widened. Mastercard, on the other hand, is still positioned to focus all of its energy on the merchant acceptance layer. Having only one front to defend is, at this point, an advantage.

The question is how long this concentration remains effective. If agent-to-agent payments begin to settle directly on-chain via stablecoins, the volume running through existing payment networks could decline. Visa has already begun to respond to this risk; Mastercard has yet to make a public move.

Stripe, Inc.

Core Technology

Stripe is the company that, over the past 15 years, became the payment standard for internet commerce through developer-friendly APIs. To hold that same position in the agent era, Stripe chose a strategy of laying new agent-ready payment rails directly on top of its existing infrastructure.

To this end, in September 2025 Stripe co-released ACP as an open standard with OpenAI and, in the same line, announced its own payment primitive, SPT (Shared Payment Token).

Stripe’s agent payment stack is composed of four parts.

What the four components share is that only ACP is an open standard; the rest are all Stripe’s own technology. If ACP is the common language for “how agents and merchants talk to each other,” SPT is Stripe’s proprietary payment token, responsible for how the actual money flows within that conversation.

The SPT flow is as follows:

1. The user says “buy this” in ChatGPT

2. Stripe issues a single-use payment token (SPT)

3. The agent passes that token to the merchant

4. The merchant verifies the token and completes the payment

The card number is never handed directly to the agent. Stripe issues a single-use token (SPT) that can only be used for this transaction, and the agent only passes that token to the merchant, which lowers the risk of card data theft. On top of that, merchants already using Stripe can enable SPT payments with one line of code.

In other words, this is the fastest path for merchants already on Stripe, but merchants on a different PSP need a separate integration.

Core Business

Stripe’s differentiator is that it designed SPT not as a simple payment token but as the hub through which agent payments enter the Stripe ecosystem. The moment a merchant adopts SPT to accept agent payments, the Stripe products attached behind it follow as a bundle. Open one door, and four are connected.

Here is how it works. The moment a merchant adopts SPT to accept agent payments, Stripe’s adjacent services follow as a bundle.

• Payment fees: Every agent transaction through SPT carries the same fee structure as before. Agents pay far faster and more frequently than humans. As transaction volume grows, the pace at which per-transaction fees accumulate accelerates. The payment method changes; the fee structure does not.

Visa and Mastercard collect a fee once when payment passes through their network, and that is the end. Stripe uses payment as the entry point to bind merchants to its full financial service stack.

From the merchant’s perspective, plugging in a single agent payment ends up tying the merchant to the entire Stripe ecosystem.

Outlook

Stripe’s outlook in one line: a full-coverage strategy that simultaneously occupies every layer of agent payments.

Stripe has staked positions across every layer of agent payments: the protocol layer (ACP), the payment token layer (SPT), and stablecoins (Tempo). While Visa and Mastercard treat stablecoins as a defensive challenge, Stripe has secured the card-bypass route as an offensive asset.

But the core question is one. Can Stripe move beyond the card network?

Stripe’s revenue structure today still runs on top of the Visa and Mastercard networks. SPT, payment fees, and merchant bundling all operate on the premise of the card network. The structure changes when stablecoins genuinely replace the card network, but no one knows when that point arrives.

It is true that Stripe is now betting in both directions. Yet if Visa and Mastercard run the highway, Stripe is the most successful logistics company on top of it. Being the number-one logistics company is a different game from owning the highway itself.

First, the OpenAI relationship. ACP is co-developed, but ChatGPT instant payment is effectively a Stripe monopoly. If OpenAI builds its own payment rails or aligns with another PSP once enough traffic accumulates, Stripe loses its largest AI channel. The relationship is mutually necessary for now, but no alliance is permanent.

Second, the openness of ACP. Because ACP is an open standard, competing PSPs such as Adyen and Worldpay can produce compatible tokens. Today, Stripe’s market share leads merchants to choose SPT naturally; the moment a competitor releases a token of equivalent quality, the protocol-proposer premium dilutes quickly.

3. Pay-per-call

While Agentic Commerce, examined above, is a market in which humans decide on payment, Pay-per-call is a market in which the agent itself becomes the payer. As long as funds are available in the account, the agent settles autonomously. This is the structure that activates whenever an agent calls another agent’s API, data, or compute.

Take an example. An agent is asked to write a market analysis report.

1. The user asks the agent to write a market analysis report

2. The agent queries the OpenAI API and receives a response

3. To validate the data, it requests information from the Dune and Nansen APIs

4. The completed report is sent to another agent for review

A single report involves dozens of payments. Unlike Agentic Commerce, however, the amounts settle down to fractions of a cent. In traditional payment systems, fees alone make this structure loss-generating with each transaction. This is why Pay-per-call relies on stablecoins, where fees are minimal.

Pay-per-call currently has three infrastructure standards:

• Protocol layer: how agents express payment intent through messages

• Settlement layer: which chain settles the payment, and in which asset

• Trust layer: who verifies who paid for what, and with what authority

Coinbase Global, Inc. (COIN)

Core Technology

Coinbase is the company that built x402, a standard allowing agents to pay without going through the card network.

In May 2025, Coinbase released the x402 protocol, activating the previously dormant HTTP 402 (Payment Required) status code in practice. In the same year, Coinbase established the x402 Foundation jointly with Cloudflare, expanding x402 into a general-purpose payment layer.

x402 is an open payment protocol composed of five elements.

The operating principle of x402 is simple. When an agent calls an API, the server returns an HTTP 402 response containing price, recipient address, asset, and network information. The agent signs the payment with its own wallet, includes it in the header, and re-requests. The server verifies and settles the payment through the Facilitator, then responds with the resource.

Process

1. The agent requests a resource from the server

2. The server returns HTTP 402 with payment terms

3. The agent signs the payment authorization with its own wallet and re-requests, carrying the signature in the X-PAYMENT header

4. The server passes the payload to the Facilitator (verification and settlement service), which broadcasts it on-chain

5. After settlement is confirmed, the server returns a 200 response with the resource

The core difference between x402 and existing payment systems is that payment itself functions as authentication. Agents can autonomously discover, pay for, and use new APIs without human intervention.

The V2 update expands x402 from a single-call payment protocol into a general-purpose layer that accommodates multiple authentication, session, and chain types.

The most meaningful change is wallet-based sessions. V1 required payment for every call; V2 introduces session-based payments (Sign-In-With-X) that remain reusable for a set period after a single payment. This change allows workloads that were too slow and too expensive to settle per call, such as LLM calls and multi-call agents, to run on x402 for the first time.

Core Business

Coinbase’s current revenue comes from exchange fees. 2025 annual revenue stood at approximately $7.2 billion, the bulk of it from cryptocurrency trading fees. x402 is unrelated to this revenue structure today. Yet this is precisely why Coinbase open-sourced x402: release the standard for free, then earn revenue on the infrastructure that runs it.

The strategy mirrors Google’s: open-source Android, then capture revenue through Play Store and Google Pay.

The market x402 targets is fundamentally different from Visa, Mastercard, and Stripe. Card payments carry fees of $0.30 plus 2.9% per transaction. Micropayments such as a $0.01 API call, a $0.005 image classification, or $0.50 for one minute of GPU time cannot exist on top of card networks.

The market x402 opens lies in a domain where agents pay other agents, or pay API providers, in units and frequencies where humans cannot press a payment button.

When this distant-future market opens, two revenue streams flow to Coinbase.

Base transaction fees: x402’s default settlement layer is Base, Coinbase’s own Layer 2 chain. Every x402 payment generates a transaction on Base, and Coinbase captures sequencer revenue. As x402 transaction volume grows, Base’s transaction fees and locked assets grow with it. The standard is laid down for free, but the chain on which the standard runs is operated by Coinbase.

CDP infrastructure fees: For every x402 payment, an intermediary (Facilitator) is required to verify “is this payment real?” and actually move the funds. The default Facilitator is operated by Coinbase as part of the Coinbase Developer Platform (CDP). Once developers begin using x402, they naturally pull in adjacent CDP tools: wallet creation, gas sponsoring, and data analytics.

That said, since x402 V2, third-party Facilitators can also be used. The lock-in power of the Facilitator itself is therefore weaker than expected. Coinbase’s real play lies elsewhere. The blockchain optimized for x402 to run cheapest and fastest is Base, built by Coinbase, and even the official whitepaper openly states that x402 works best on Base.

To put it simply: Stripe binds the moment of payment to its system. Coinbase, by contrast, builds the highway through which payments travel and lets travelers on that road naturally stop by Coinbase’s rest areas (CDP tools).

Outlook

Coinbase’s outlook in one line: not a game of beating competitors, but a game of how quickly a market that does not yet exist opens.

This frame matters because x402 does not compete in the same domain as the card network. Credit cards charge $0.30 plus 2.9% per transaction. Micropayments such as a $0.01 API call, $0.005 per image classification, or $0.50 for one minute of GPU cannot exist on top of card networks in the first place.

Even if Visa and Mastercard accept agent payments, that is the domain of agents executing what humans previously did when shopping. The market x402 opens lies one layer below: a domain where agents pay other agents, or pay service providers, in units and frequencies where humans cannot press a payment button.

The issue is that the agent-to-agent transaction market is still small today. For agents to autonomously buy data, buy compute, and buy other agents’ work as part of routine workflow, several conditions must align: LLM inference must become sufficiently cheap, agent frameworks must take hold in production, and data and API providers must support x402.

Whether the market explodes in six months, in two years, or in five, no one knows. Coinbase’s bet succeeds only on a market dependency it does not control. The question is whether Coinbase can hold its position as the company that laid down agent payment infrastructure first, and whether it can endure long enough for the market to open.

Stripe (MPP)

Core Technology

.Stripe is the only payment player to embed its own standard in both Agentic Commerce and Pay-per-call. While ACP and SPT, examined earlier, were card-rail payments through which humans delegate shopping to agents, MPP (Machine Payments Protocol) is a separate protocol designed for the Pay-per-call domain, where agents autonomously pay for other agents’ APIs, data, and compute.

It was released as an open standard on March 18, 2026, in tandem with the mainnet launch of Tempo, jointly developed by Stripe and Paradigm.

Like x402, MPP is an open payment protocol built on top of the HTTP 402 pattern. It differs from x402 on two decisive points.

First, payment-method neutrality. While x402 is structured around stablecoin payments, MPP handles stablecoins and cards or other fiat through the same protocol. Visa extended MPP for card payments, and Stripe supports cards and wallets through its own platform. Different payment methods sit on top of a single protocol like plug-ins.

Second, Sessions support. When an agent opens a session, on-chain escrow is posted once. Vouchers are exchanged off-chain during the session, and a final voucher settles once at the session’s close.

The two modes stand in sharp contrast in the process visualization. A one-time payment (Charge) follows a flow similar to x402, completed in a single on-chain transaction. A continuous payment (Session) records on-chain only twice, at the initial deposit and the final settlement, while the N calls in between are all handled off-chain through vouchers.

This difference is what makes MPP’s throughput target (1M+ transactions per second) possible.

It mirrors gas station payment. One card authorization at the start of fueling, one final charge at the end. Regardless of the fuel volume flowing in between, the transaction count is two. With this structure, MPP targets a scale of 1M+ transactions per second.

Core Business

Stripe sees the agent payment market in two layers. The layer where humans hand shopping to agents is already covered by ACP and SPT. MPP targets the layer below: the domain where agents autonomously pay for other agents’ APIs, data, and compute. It targets the same Pay-per-call market as x402, but its design differs.

While x402 supports stablecoins only, MPP supports cards, stablecoins, and Bitcoin Lightning, building out a diverse set of payment methods. The Tempo initial design partner list reveals the character of this market. Anthropic, OpenAI, Deutsche Bank, and Visa are in. MPP’s own protocol extensions are implemented by Visa (cards), Stripe (cards, wallets), and Lightspark (Lightning).

The reason: AI model calls are what agents will pay for most often. Whether an agent is doing research or writing code, it will continuously invoke OpenAI or Anthropic services. The fact that the companies receiving that money are in from the design phase means the path for transaction volume to accumulate is already laid down.

In this structure, two revenue streams flow to Stripe.

Payment processing fees: When card payments occur on top of MPP, the actual processing is handled by Stripe’s existing system. The protocol stays open as a standard for anyone to use, while the point at which money actually changes hands is pulled into Stripe’s own infrastructure. As agent payments grow, transaction volume passing through Stripe grows with it.

Tempo ecosystem revenue: MPP’s default settlement layer is Tempo. Tempo is a payment-only blockchain built by Stripe with Paradigm, and Stripe participates directly as a validator. As MPP transaction volume grows, Tempo’s transaction fees are distributed to validators, and Stripe holds one of those seats. Open the protocol; secure a validator seat on the chain where the protocol settles, and capture a share of the fees by design.

In the end, Stripe replicated the design from Agentic Commerce in the Pay-per-call domain. ACP and SPT sat on top of card rails; MPP and Tempo sit on top of stablecoin rails. Open the protocol, close the infrastructure. Whichever rail the payment runs on, it ends up passing through Stripe.

Outlook

Stripe’s MPP outlook in one line: the protocol that pulled Visa into a strategy reversal.

Visa was building an independent ecosystem with its own Trusted Agent Protocol and Intelligent Commerce. The approach was, “use our standard.” With the launch of MPP, however, Visa joined as a card-rail extension partner. Cuy Sheffield (Head of Crypto at Visa) commented that Visa “sees MPP as another way of clearly defining how agents and merchants communicate.”

This single sentence signals that Visa shifted from confronting crypto-native standards to embedding card rails within them.

The agent payment market is bifurcating. Regulated human commerce flows on card rails; agent-to-agent transactions (API calls, compute purchases, micropayments) flow on stablecoins. While x402 captured the crypto-native standard for the latter, MPP took the bridge position, integrating both rails into a single protocol. Stripe built a structure in which it operates that bridge.

There are, however, two variables.

First, standard competition with x402. Coinbase’s x402 has already accumulated more than 100 million payments and secured neutral governance through transfer to the Linux Foundation. Stripe also joined the x402 Foundation as a partner, a two-track strategy, but whether the two protocols coexist long-term or converge to one remains uncertain.

Second, Tempo’s adoption pace. MPP’s reference settlement layer is Tempo, but how much agent payment traffic Tempo will actually attract is not yet validated. The trust capital from validators such as Visa and the Standard Chartered subsidiary is significant, but whether developers and service providers will actually choose Tempo is a separate question.

Circle Internet Group, Inc. (CRCL)

Core Technology

Circle is a company that began with the identity of USDC issuer and has since expanded across stablecoin infrastructure as a whole. In the agent payment era, USDC is no longer simply a payment method. Circle has chosen a full-stack strategy of vertically integrating payment primitives, wallets, and the settlement chain into its own stack.

In September 2025, Circle released Developer-Controlled Wallets and an x402 integration sample. In October 2025, the Arc public testnet went live, followed by the Nanopayments testnet launch in March 2026. Circle’s Pay-per-call stack consists of three components.

The core of Nanopayments is off-chain aggregation and batch settlement. Numerous micropayments are bundled off-chain, then settled on-chain in a single batch, reducing per-transaction gas to effectively zero. Circle absorbs the gas cost at the batch step.

Arc is an L1 designed exclusively for stablecoin finance. The most distinctive design choice is using USDC as native gas. Core specifications include sub-second finality based on the Malachite consensus engine, a built-in FX engine, opt-in privacy, and EVM compatibility.

Developer-Controlled Wallets allow developers to create and manage agent wallets through a single API. As an MPC-based system, it operates without exposing private keys, and handles USDC across multiple chains, including Base, Ethereum, and Arc, as a single unified balance.

When the three technologies are bundled, agents receive a complete payment experience entirely within Circle’s stack: USDC issuance (USDC) → payment rail (Nanopayments) → settlement chain (Arc) → wallet management (Wallets).

OpenMind’s autonomous robot dog, which pays USDC through Nanopayments to charge itself, is the first reference case demonstrating that this stack actually works.

Circle’s revenue structure is simple. 2025 total revenue and reserve income reached $2.7 billion, with more than 95% coming from interest income (Reserve Income) generated on USDC reserves. Wherever USDC is used, reserve interest accrues to Circle. One caveat is worth noting: Circle has agreements with major distribution partners, including Coinbase, that share a fixed portion of this interest. Even so, the broader picture holds: as long as USDC is used as a payment method, Circle’s revenue pool itself grows.

Stripe does not issue the stablecoins running on Tempo, even though it built the chain. The same applies to Coinbase. Whoever wins the chain race, when stablecoin payments grow, Circle’s reserves grow.

This structure compounds as agent payments expand. Each time an agent calls an API, buys data, or purchases compute, USDC circulation grows. As USDC circulation grows, reserves scale with it, and interest income accumulates alongside.

On top of this, Circle is opening a second revenue path through Arc. Once Arc transitions to mainnet, every chain transaction generates gas fees, and the key point is that these fees are paid in USDC. As USDC demand grows, new USDC is issued in proportion, and reserves expand alongside the issuance, lifting interest income with them. While Tempo is structured to use USDC as an external asset, Arc is structured to adopt its own asset as gas, converting chain activity directly into USDC demand.

In the end, Circle’s game operates at a different layer from its competitors. While Stripe and Coinbase try to capture the agent payment flow through chains and protocols, Circle holds the asset that gets used inside that flow.

Outlook

Circle’s outlook in one line: the game of the only full-stack player holding asset issuance rights.

Where Circle decisively differs from competing settlement infrastructure (Tempo, Base) is its monopoly on USDC issuance. Stripe does not issue the stablecoins running on Tempo, even though it built the chain. The USDC running on Tempo is also issued by Circle. Coinbase faces the same situation with Base.

Whichever chain wins the race, when stablecoin payments grow, Circle’s reserves grow. This means a structural advantage at the asset layer.

This advantage carries two variables.

First, USDC market share. The stablecoin market is a two-horse race between USDT and USDC. Tether, PayPal, and bank-issued stablecoins are entering the field. Whether USDC settles in as the default in the agent payment domain, or whether competing stablecoins divide the market, is the first variable.

Second, Arc’s adoption pace. Circle’s move down to the chain layer with Arc is a major bet. But the stablecoin-only chain market is already crowded. Tempo has secured institutional trust capital from Visa and Standard Chartered, and Base has the lead on transaction volume. The question is how much of USDC issuance, Circle’s unique asset, Circle can pull into the Arc ecosystem. The vertical integration only carries weight if USDC usage on Arc grows.

If stablecoin payments become the default in the agent era, Circle is structurally the largest beneficiary. But Circle is also the one that must build that premise itself.

Ethereum Foundation (ETH)

Core Technology

Ethereum has chosen to provide the trust layer for the agent economy as an open standard. While other players process agent payments inside their own fee structures, Ethereum is building a foundation protocol that records who an agent is, what reputation it holds, and whether the result of its work has been verified, in a standardized form on-chain.

The Ethereum Foundation officially submitted ERC-8004 (Trustless Agents) on August 13, 2025, and it was deployed to mainnet on January 29, 2026.

ERC-8004 is designed as a trust extension to the protocol. The list of co-authors signals the character of the standard. Marco De Rossi (MetaMask), Davide Crapis (Ethereum Foundation), Jordan Ellis (Google), and Erik Reppel (Coinbase) participated as co-authors, a lineup that brings AI infrastructure, a crypto exchange, a wallet, and the Foundation to the same table.

ERC-8004 is composed of three on-chain registries.

When the three registries combine, an agent’s identity → transaction history → verification results all accumulate on-chain. Until now, an agent’s reputation known to Platform A could not be carried over to Platform B. On top of ERC-8004, reputation becomes the agent’s own portable asset.

The trust model is selected in proportion to task risk. For low-risk tasks (e.g., ordering pizza), reputation lookup alone is sufficient. For high-risk tasks (e.g., medical diagnosis), the model requires stake-secured re-execution or even TEE attestation. The same standard applies, but the verification rigor varies depending on the nature of the task, a flexible design.

The important point is that payment itself is not part of ERC-8004. Payment layers such as x402 or ERC-20 transfers attach separately, and payment evidence is appended as feedback to the Reputation Registry. Ethereum, instead of building a payment protocol, provides the common layer of trust and reputation that sits on top of payments.

The flow of an ERC-8004-based agent transaction is as follows:

1. The agent developer registers the agent with the Identity Registry. An ERC-721 NFT is issued, and the NFT points to a registration file (also known as the agent card) that contains capabilities, endpoint, and payment address

2. Another agent or user searches for the agent in the Registry. Lookup is possible from any EVM chain

3. After task execution, result feedback is recorded in the Reputation Registry. Feedback source is verified through EIP-191 or ERC-1271 signature validation

4. For high-risk tasks, an independent validator in the Validation Registry verifies the result through re-execution, zkML proof, or TEE, and records it on-chain

5. If a dispute arises, on-chain pointers and hashes cannot be deleted, preserving audit trail integrity

Core Business

ERC-8004 is not a specific company’s revenue structure but an open standard shared by the Ethereum ecosystem as a whole. Instead, the broader the standard’s adoption, the more the entire Ethereum ecosystem benefits. The layer Ethereum operates on is fundamentally different from other payment standard players.

Visa and Mastercard collect fees when payments cross their networks. Stripe and Coinbase open protocols and capture revenue at the infrastructure layer.

Ethereum provides the trust layer that those payment layers must commonly reference. Who an agent is, what reputation it holds, and whether the result of its work has been verified are all recorded on-chain in a standardized form. Whoever wins the payment protocol race, the trust evidence for those transactions runs through ERC-8004.

What the Ethereum ecosystem gains in this structure is one thing. As agents register in the Identity Registry and accumulate reputation, that metadata operates with the highest compatibility in EVM environments. The intent is also stated directly by core players: MetaMask has said that “agent workflow’s home base will be Ethereum and Linea L2.”

The standard originated on Ethereum and runs most naturally on EVM-compatible chains. Non-EVM chains are being extended at the SDK level (MetaMask itself runs a multi-chain SDK), but the fact that the standard’s default environment is EVM does not change.

The broader the standard’s use, the more entrenched the EVM ecosystem’s default-position becomes. In the end, the position the Ethereum Foundation and MetaMask aim for through ERC-8004 is not the game of collecting fees at the payment layer. It is the game of becoming the trust infrastructure that payment layers must commonly reference. The wider the standard spreads, the stronger the entire EVM ecosystem becomes.

Outlook

Ethereum’s outlook in one line: a strategy of dominating the trust layer rather than payment.

The meaning of this choice is clear. Ethereum did not enter the payment protocol race. x402, MPP, and Delegate Payment all deal with the act of payment itself. Ethereum chose to standardize what builds on top of payment: who transacted, and what the outcome was.

In Pay-per-call, the agent-to-agent transaction market, whichever payment protocol wins, the evidence of those transactions is likely to be recorded in the ERC-8004 environment. As long as the standard is widely adopted, whoever wins the payment layer, the Ethereum ecosystem benefits.

There are, however, two variables.

First, the limits of EVM compatibility. ERC-8004 is built on EVM chains. EVM-family chains such as Base, Arc, Tempo, Linea, and BNB Chain can use it directly, but non-EVM camps such as Solana and Bitcoin Lightning require separate adapters. If non-EVM chains build their own identity and reputation standards, the agent economy risks splitting between EVM and non-EVM. The fact that Solana already accounts for 24% of x402 transactions suggests this fragmentation is already happening.

Second, the actual depth of ERC-8004 adoption. The fact that the standard is live on mainnet does not automatically mean agents will actually register in the Identity Registry and accumulate feedback in the Reputation Registry. The question is whether major facilitators and agent platforms move beyond the early prototype level (ChaosChain) and accept ERC-8004 as the default.

Even if the Pay-per-call era arrives, if users gravitate toward wallet-embedded features for the sake of convenience, ERC-8004 may settle into a standard whose practical influence stays limited.

Kite AI (KITE)

Core Technology

Kite AI is a payment infrastructure designed from the ground up for AI agents. Where Visa, Mastercard, and Stripe transplant existing card networks or PSP infrastructure into agent environments, Kite starts from the opposite direction. It assumes an environment in which agents settle autonomously and bundles chain, identity, session, and reputation into a single stack.

Four elements sit at the core: an EVM-compatible L1 chain (stablecoin-native settlement), Kite Passport (agent identity and delegation management), Programmable Trust Layer (cryptographic spending rules), and an SLA enforcement layer. What structurally distinguishes Kite from other players is that these are not separate products; they operate as one stack.

Protocol compatibility is also in place. Kite supports MCP (Anthropic), A2A and AP2 (Google), x402 (Coinbase), MPP (Stripe and Tempo), and OAuth 2.1. The design is not “choose Kite or your existing stack”; it is “add Kite to your existing stack.”

Kite’s core technology consists of three pieces.

Kite’s core differentiator is its three-layer identity architecture. Rather than applying human key management directly to agents, the design separates authority into three tiers.

The payment flow has five steps:

1. User installs Kite Passport, registers passkey (fingerprint, Face ID)

2. Agent creates Session with budget, duration, permitted actions

3. User approves with passkey; agent executes autonomously within limits

4. Each transaction carries a three-layer signature (user root authority, agent delegation token, session signature). All three must pass to finalize

5. On violation, SLA Oracle submits on-chain attestation; smart contract auto-enforces refunds and penalties

Merchants can participate through two paths: x402 or MPP. x402 returns payment terms via HTTP 402 responses and settles on-chain. MPP, built on Stripe and Tempo, supports both stablecoins and fiat. Either path enables payment from a Kite Passport agent.

Core Business

Kite’s approach starts from a different point than other players. Visa and Mastercard transplant existing card networks into agent environments. Stripe layers an agent layer on top of existing PSP infrastructure. Kite was designed exclusively for agents from the start. It bundles chain, identity, session, and reputation into a single stack and aims to turn the layer where agents exist into infrastructure itself.

The structure here is unique. Fees flowing in as stablecoins are swapped on the open market for Kite tokens and then distributed. The more transactions grow, the more buy-side pressure on the token grows. This is not simple fee revenue; it is a design that converts transaction volume into token value.

Kite’s position in one line: a strategy of being compatible with external payment standards while directly owning the layer on which those standards execute. Kite is also building its own identity and verification standards, including Kite Passport and Agent SLA, but the core value lies in placing the chain through which everything flows under Kite’s own infrastructure.

If standards like Google’s AP2 sit at the upper payment authority layer, Kite aims to claim the lower layer where that authority is actually enforced on-chain. In practice, Kite is designed to be compatible with existing standards such as A2A, MCP, OAuth 2.1, and AP2.

That said, the company is currently at the testnet and early partnership stage. PayPal and Coinbase Ventures backing Kite at the same time signals recognition of the potential, but investment and actual adoption are different questions.

Outlook

Kite’s position is the most ambitious, and at the same time the most uncertain.

The premise of redesigning agent payment infrastructure from scratch is right. Unlike Visa, Mastercard, and Stripe, which operate on top of existing card networks, Kite does not assume the card network. The design, which bundles stablecoin-native settlement, cryptographic identity verification, and auto-enforcing SLAs into a single stack, structurally differentiates Kite.

This means full specialization in Pay-per-call, the agent-to-agent transaction domain.

The challenge is execution. Kite is currently at the testnet and early partnership stage. Ethereum holds standard leadership through ERC-8004, while Stripe, Coinbase, and Google already have existing infrastructure and developer ecosystems in place. Securing share with a proprietary L1 in this environment is a different game.

PayPal and Coinbase Ventures investing at the same time signals that both camps recognize the potential, but investment and adoption are different things. If Pay-per-call adoption actually rises, Kite could build an overwhelming ecosystem. But how long that takes, no one knows.

4. Agentic Commerce first; Pay-per-call follows

Agentic Commerce is ultimately a model that will succeed. The question is not “will this market open?” but “who will capture it?”

The reason is that Agentic Commerce is not an entirely new structure. Within the existing system, users, card issuers, and merchants each need only a single update. This is less about technical superiority and more about how quickly the market onboards.

In practice, the stakeholders have already aligned. Walmart, Etsy, and Shopify, among other e-commerce merchants, have joined as Google and OpenAI partners, and payment networks and enterprise companies have followed.

Pay-per-call is a different story. The possibility that this market will open cannot be denied, but whether demand exists right now is uncertain. The core reason lies in the current API payment structure. API providers such as OpenAI, Anthropic, and AWS already operate on monthly subscription or usage-based postpaid billing.

When an agent calls an API, if the platform auto-links the card and bills monthly, the result is functionally identical to existing SaaS billing structures.

From the corporate finance team’s perspective, there is no incentive to change a structure that is predictable and familiar. This is why the demand that Pay-per-call protocols such as x402 or MPP genuinely require has not yet been validated.

For Pay-per-call to become a meaningful market, conditions must align. Agents must autonomously procure external resources from an unspecified set of providers, without prior contracts, and those transactions must occur at dozens per second, with per-transaction values below $0.001.

Only when speeds and unit prices that the existing subscription structure cannot handle emerge does the proposition “Pay-per-call is better than credit cards” hold.

In the end, this market’s expansion follows a sequence. Agentic Commerce grows first; only after trust and autonomy in agents have accumulated through that process does demand for the Pay-per-call market get validated.

The winners of Agentic Commerce are already competing. The winners of Pay-per-call will be decided at the moment the market opens.

🐯 More from Tiger Research

Read more reports related to this research.

• AI Agent Payment Infrastructure: The Direction of Crypto and Big Tech

• x402: Coinbase and the Beginning of the AI Agent Era

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

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Key Takeaways

• As of April 2026, Web3 hacks are occurring in rapid succession, with 12 incidents reported in April alone.

• Social engineering’s share has grown every year, reaching 74.7% of total hack losses in Q1 2026. People are an easier attack vector than code.

• Since 2020, the average recovery rate for stolen funds has stayed below 10%. Unlike traditional finance, Web3 allows direct on-chain theft, so funds exit the moment a breach occurs.

• Bybit sustained a $1.5B hack but continued operations without investor losses, backed by exchange coordination and reserve funds. DeFi projects have no such option once assets leave the protocol.

• Repeated hacks and sub-10% recovery rates are the decisive barrier keeping institutions out. Web3 needs structure and accountable operations, not philosophy.

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1. Hacks Keep Happening

Hyperbridge, a bridge protocol connecting Polkadot and Ethereum, was exploited.

A flaw in the proof verification logic allowed the attacker to pass a forged cross-chain message, leading to the unauthorized minting of roughly 1 billion bridged DOT on Ethereum. Confirmed user losses stand at $2.5M across Ethereum, Arbitrum, Base, and BNB Chain.

Before the Polkadot bridge hack, DeFi protocol Drift Protocol suffered a $295.7M breach. A North Korea-linked group spent six months building trust with team members before seizing governance privileges, a highly refined social engineering operation. Tether later proposed a $127.5M support package, but the total aid of $147.5M fell short of covering the full $295.7M loss.

The hacks have continued since. Including smaller incidents after Drift, April alone saw 12 cases. As breaches pile up in an industry built on programmable finance, both investors and institutions are growing uneasy.

2. The Hacks Target People

The Drift Protocol hack originated from the compromise of a team member’s computer. The target was not a smart contract flaw or a system vulnerability, but a person.

The larger problem is that social engineering is taking up a growing share of Web3 hacks.

Social engineering accounted for 28.7% of total hack losses in 2021, rising to 64.3% in 2025 and 74.7% in Q1 2026. Attacks targeting people continue to expand, while code-level exploits have declined in relative share over the same period.

Given the open-source nature of blockchain, one might expect code-level exploits to dominate. In reality, social engineering has become the more prevalent attack vector. The reason is simple: compromising a person with existing privileges is easier than finding a flaw in the code.

Traditional industries show the same pattern. In 2025, 70% of corporate hacks involved social engineering. The playbook has carried over directly into Web3.

Web3, however, differs in one critical respect. In traditional finance, a successful breach rarely leads to outright theft. Account freezes, transfer reversals, and institutional intervention all apply. In Web3, protocol funds can be drained directly on-chain, and once a transaction is confirmed, there is no way to undo it.

That is what makes Web3 such an attractive target.

3. Falling Recovery Rates, Irreversible Losses

DeFi protocol hacks cause multi-billion-dollar losses each year, yet the share of stolen funds actually returned continues to fall. With state-backed operators like North Korea’s Lazarus Group and increasingly sophisticated laundering through mixers and cross-chain bridges, recovery has grown steadily harder.

If stolen funds could be returned, a minimum standard of safety would at least be preserved. But DeFi recovery rates remain stuck at low levels.

Average annual recovery has sat below 10% since 2020. The one outlier was the 2021 Poly Network hack of $611M, where the attacker voluntarily returned the full amount and pushed that year’s figure sharply higher. Excluding that event, every year has shown low recovery.

4. The Survivors Are Players With Agency

Not every Web3 player collapses after a hack. Unlike DeFi projects, which tend to fall apart after a single breach, some have managed to weather the damage.

In 2025, Bybit survived a $1.5B hack. Cross-exchange coordination and reserve funds sufficient to cover the loss made the difference. Not all stolen funds were recovered, but the exchange continued operating without investor losses, which is the key point. Exchanges broadly maintain separate SAFU funds to prepare for breaches and other contingencies.

DeFi projects have no such option. The moment a transaction goes through, protocol assets are gone, leaving no room to respond. The most realistic path to recovery is negotiation with the attacker, but attackers have little incentive to engage. With state-sponsored groups like Lazarus, negotiation is off the table entirely.

Traditional finance brings institutions in after a breach. Account freezes, investigations, insurance, and legal claims follow in sequence. Web3 has no authority capable of reversing a transaction. Projects have occasionally requested chain-level intervention to freeze assets, but a freeze is not the same as a return.

The core constraint remains. When something goes wrong in Web3, it cannot be undone.

5. Convincing Institutions in the Institutional Era

We live in the institutional era. Whether one accepts it or not, institutions are driving the market’s direction, and that current is not reversing.

If hacks continue and projects keep collapsing, there will be nothing to offer institutions. Institutional interest in blockchain and DeFi is already high. Operational efficiency in asset management, new yield structures, and a 24/7 market all make the space attractive.

But the case disappears if projects keep getting hacked and breaking down. No matter how compelling the efficiency gains or yield structures, the underlying assets must be safe. Recovery rates below 10% remain one of the largest reasons institutions stay on the sidelines.

Once institutional capital enters, the market scales beyond current comparisons. What unlocks that door is not technical superiority, but a trustworthy response framework. Whether the industry can defend decentralization while convincing institutions will determine whether Web3 advances to its next stage.

What Web3 needs now is not philosophy, but structure built for failure and operations built on accountability.

🐯 More from Tiger Research

Read more reports related to this research.

• Nesa: Why Everyday AI Needs Privacy

• x402: Coinbase and the Beginning of the AI Agent Era

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

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Summary

Stablecoin issuance is one of the most profitable businesses in crypto. Yet with USDT and USDC holding over 85% of the market, competing on the same reserve-interest model is not realistic for new entrants. This report analyzes four issuers that have each carved out a distinct position within this structure.

Tether leads with roughly 62% market share. On top of its core reserve-yield model, it is rebuilding trust and diversifying revenue through a Big Four audit and $20B in new business investment.

StraitsX treats payment fees, not reserve interest, as its primary revenue source. Integrations with Alipay+, GrabPay, and Visa demonstrate real-world utility, and monthly transfer volume 2.5x its market cap validates the model. Securing an MAS Major Payment Institution license ahead of competitors turns regulation into a moat.

M0 does not issue stablecoins directly. Instead, it provides shared infrastructure that enables other companies to launch their own. MetaMask and Exodus already operate stablecoins on the platform, and the model strengthens through network effects as issuers and builders accumulate.

KRWQ, operating without a domestic regulatory framework, moved first to capture offshore demand from the KRW NDF market already functioning outside regulation. Once regulation is established, it plans to enter the domestic market leveraging pre-built offshore liquidity, then replicate the model across major Asian NDF currencies.

The stablecoin issuance market is not converging on a single business model. It is diverging, with fundamentally different revenue strategies coexisting depending on each issuer’s scale and positioning.

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Stablecoin Issuance Market

Stablecoin issuance is one of the most profitable businesses in crypto, attracting a growing number of institutional players.

Tether was the first to dominate the space, securing a commanding position as the primary liquidity provider in early trading markets. Circle followed, leading with regulatory compliance and expanding its reach into traditional finance through a NYSE listing in June 2025.

This institutional momentum pushed total stablecoin market cap to approximately $300B and prompted major jurisdictions to formalize regulatory frameworks. The U.S. signed the GENIUS Act in July 2025, establishing the first federal framework for payment stablecoins. The EU enforced MiCA, and Hong Kong enacted its Stablecoin Ordinance, marking the start of full-scale global regulatory competition.

This growth trajectory is expected to accelerate further. Tiger Research analysis shows net annual supply expansion nearly doubled from $55B in 2024 to $101B in 2025. If major jurisdictions finalize relevant legislation and institutional demand enters in earnest, the market is projected to exceed $600B by 2030, even under a conservative 15% annual growth scenario.

The core revenue model is reserve management, not issuance itself. When a user deposits $1, the issuer mints 1 USDT or USDC and deploys the dollar into low-risk assets such as U.S. Treasuries or money market funds. As supply grows, so does the reserve base and the interest income it generates.

This model is inherently a scale game. Generating meaningful revenue from reserve interest requires tens of billions in circulation. Today, USDT (~62%) and USDC (~25%) together hold over 85% of the market, leaving the remaining 15% divided among dozens of smaller issuers. Competing on reserve interest alone is not viable for latecomers.

New entrants are responding by designing alternative revenue models or redefining the business entirely. Some target payment fees and real-economy integrations as their primary revenue source. Others provide issuance infrastructure rather than issuing directly, earning network fees. Some have chosen to absorb offshore demand first in under-regulated currency zones, with a plan to enter domestic markets once frameworks are in place.

The stablecoin issuance market is not converging on a single model. It is diverging, with fundamentally different revenue strategies coexisting depending on each issuer’s scale and positioning. The sections below examine how these models operate in practice, based on interviews with key players.

Tether: The Market Standard for Stablecoins

Tether is the company that first issued USDT, a dollar-pegged stablecoin, in 2014. It holds approximately 62% of the stablecoin market today and effectively serves as the industry’s pioneer.

Tether’s decade-long hold on market leadership is not simply about being first. What built today’s Tether was a series of deliberate structural shifts: a full overhaul of its reserve composition, moving away from commercial paper toward U.S. Treasuries; the establishment of a quarterly external attestation framework; and a transition to a diversified business model that reinvests stablecoin profits into AI, energy, education, and communications.

Business Model

Tether’s revenue structure spans multiple streams, but reserve management sits at its core.

Each time Tether issues USDT, it receives an equivalent amount in dollars and invests it in safe assets, including U.S. Treasuries, reverse repos, and money market funds. As issuance grows, so does the pool under management, and interest income accumulates accordingly. A portion of reserves is also held in gold and Bitcoin; price appreciation in either asset generates additional mark-to-market gains. Based on publicly available information, reserve management income appears to account for the substantial majority of total profit.

Secondary revenue streams include protocol integration fees and transaction fees. Tether also maintains a separate strategic investment portfolio across AI, energy, and communications, distinct from USDT reserves.

Regulatory Engagement

Since Q1 2025, Tether has held a stablecoin issuer license under El Salvador’s Digital Asset Law, operating under the oversight of the National Commission on Digital Assets (CNAD). However, this structure has been cited as a limitation on transparency. S&P has referenced it as a basis for assigning USDT a low transparency score.

Tether is addressing this by approaching the U.S. market separately. Under the GENIUS Act framework, it launched USAT as a distinct product line tailored to the U.S. regulatory environment, while USDT continues as its global general-purpose offering. The two markets are structurally separated and pursued simultaneously.

Tether is also responding to the transparency debate. While quarterly reserve attestation reports verified by BDO have been the baseline, Tether formally engaged a Big Four accounting firm in March 2026 for a full audit of USDT reserves.

Unlike attestations, which confirm reserve composition at a single point in time, a full audit covers assets, liabilities, and internal control systems at a higher level of scrutiny. Markets took note. As Tether’s regulatory standing improved, Circle’s share price fell approximately 20%, a signal that resolving what had been Tether’s primary competitive weakness is reshaping the competitive landscape.

Growth Strategy

Tether’s growth strategy centers on RWA expansion, Technological innovations, and new business development.

Its flagship RWA product is Tether Gold (XAUT), a token backed 1:1 by physical gold held in Swiss vaults. It accounts for more than half of the total market capitalization of gold-backed stablecoins, with the underlying asset base continuing to expand.

New business expansion is proceeding at the same pace. Tether’s proprietary investment portfolio, diversified across AI, energy, media, and communications, exceeds $20B. Entirely separate from USDT reserves, it functions as a surplus-capital growth engine, reinvesting profits generated from stablecoin issuance into long-term growth drivers.

Key Takeaways

Tether’s case contains structural lessons that any company evaluating the stablecoin business must address.

1. Stablecoin issuance is a scale business. Every dollar of USDT issued is invested in U.S. Treasuries. As issuance grows, Treasury holdings grow, and so does interest income. Understanding this direct link between issuance volume and AUM is the starting point for any business model analysis.

2. Regulatory compliance is a prerequisite, not an option. Even Tether is moving within the regulatory perimeter. Regardless of how unclear the current framework may be, business structures must be designed from the outset with regulatory integration in mind. Stablecoins are, by nature, an industry that operates within regulation.

StraitsX: ASEAN’s Real-Economy Stablecoin Issuer

StraitsX is a Singapore-based stablecoin issuer. Its core offerings are XSGD (SGD-pegged) and XUSD (USD-pegged), with expansion into major ASEAN currencies including the Indonesian rupiah (XIDR).

The case for attention goes beyond digital asset issuance: StraitsX is building payment infrastructure directly connected to ASEAN’s real economy. Per on-chain data platform rwa.xyz, XSGD’s monthly transfer volume (~$39.9M) is approximately 2.5x its market cap (~$15.8M).

Compared to dominant global stablecoins such as USDT and USDC, StraitsX’s absolute asset size and turnover remain smaller. But the use case is fundamentally different. Where major stablecoins primarily serve investment trading on crypto exchanges, StraitsX tokens are used in everyday real commerce. The data confirms that issued coins are not sitting idle in investor wallets but circulating continuously in the market.

Ultimately, the reason StraitsX is recognized as a specialized payment infrastructure for the ASEAN region lies not just in on-chain metrics but in the robust B2B payment network integrations behind them.

Business Model

StraitsX’s revenue model is centered on payment fees. Reserve interest income is constrained by external variables such as circulating supply and interest rates, while payment fees are tied to transaction volume and therefore scale with business growth.

• Reserve Interest Income: Reserves corresponding to XSGD and XUSD in circulation are held in trust accounts at DBS, Standard Chartered, and CIMB. Per MAS regulations, interest accrues to the company, not token holders. Based on combined circulation of approximately $65M, estimated annual yield is $2.6M–$3.25M.

• Payment Processing Fees: Generated each time stablecoins are used for payment or settlement. Key channels include on-ramp/off-ramp (DVA), QR payment networks (Alipay+ and GrabPay integrations), and card issuance (Visa BIN sponsorship). Volume-linked, not rate-linked.

• OTC and FX Swap Spreads: FX spreads earned on stablecoin-to-stablecoin swaps, buy/sell transactions, and large OTC trades.

Payment fees in particular are generated through StraitsX’s external network integrations. Major mobile payment platforms such as Alipay+ and GrabPay, as well as global exchanges including Binance and Bybit, have adopted StraitsX’s system for fund settlement, covering use cases.

As a notable data point, StraitsX internal data indicates that Visa card-linked stablecoin payment volume grew 40x over the past year, with 83x growth in cards issued in the same period.

Regulatory Positioning

The crypto industry broadly views strict regulation as a constraint on business expansion. StraitsX takes the opposite approach, using the Monetary Authority of Singapore’s (MAS) regulatory framework as a competitive defense.

The foundation of this strategy is StraitsX’s Major Payment Institution (MPI) license from MAS. Through this license, StraitsX is authorized to operate 6 of the 7 major payment services regulated by MAS. This enables the company to legally conduct cross-border remittance, foreign exchange, merchant payments, and account issuance within a single legal entity, well beyond simple coin issuance. XSGD and XUSD are stablecoins recognized as substantively compliant with the MAS Single-Currency Stablecoin (SCS) regulatory framework.

For institutional capital to enter the blockchain ecosystem at scale, bank-grade KYC and AML systems are a prerequisite. Most crypto firms operating outside the regulatory perimeter cannot meet this standard.

StraitsX is co-developing a next-generation cryptography-based identity verification system with regulators. The strategy is to pre-emptively meet the compliance standards that will be required when institutional funds flow in, positioning StraitsX to capture that capital exclusively.

Growth Strategy

Having established a self-sustaining revenue model, the next objective is entry into new settlement markets.

The primary long-term growth driver is real-world asset (RWA) settlement. Demand is expected to grow for tokenized cash as the settlement leg finalizing on-chain transactions in traditional assets such as equities and bonds. StraitsX plans to capture institutional settlement demand by providing cross-chain interoperability across multiple blockchain environments.

Key Takeaways

The primary long-term growth driver is RWA settlement. As traditional assets such as equities and bonds move on-chain, demand for tokenized cash as a settlement medium will grow alongside them. StraitsX plans to capture institutional settlement demand early by offering cross-chain compatibility across multiple blockchain environments.

1. Velocity matters more than volume. Non-dollar issuers cannot grow through issuance scale alone. Securing real use cases and integrating into B2B settlement networks must come first. The key metric is turnover rate, not market cap.

2. Regulatory compliance is a competitive moat. StraitsX secured MAS licensing preemptively, converting regulatory burden into a structural barrier to entry. Stablecoins operate at the intersection of crypto and traditional finance, making them an inherently regulated industry. How quickly an issuer achieves regulatory alignment, and how closely it engages with regulators, will be a decisive competitive variable.

M0: Shared infrastructure for stablecoin builders and issuers

M0 provides shared infrastructure that allows businesses to launch stablecoins and financial institutions to issue them.

Rather than issuing stablecoins directly, M0 provides infrastructure which enables multiple builders to launch their own stablecoins on a common technical foundation.

The structure addresses two core problems.

1. The stablecoin market is fragmented, with each issuer operating an independent stablecoin issuance stack, making cross-coin compatibility structurally difficult.

2. Without M0, stablecoin builders face a “cold-start” problem: they must build liquidity, partnerships, and network effects for their own stablecoin from zero on launch day.

M0 resolves both through a shared layer. Every stablecoin on the platform is built on common standards and technology, instantly shares existing liquidity and is redeemable 1:1 with all other stablecoins from the outset.

Current stablecoins built on M0 infrastructure include MetaMask’s mUSD, Exodus XO Cash, KAST’s USDK, Noble’s USDN, Usual’s UsualM - with many more currently in development. Issuers powered by M0 issuance stack include Bridge (a Stripe company), MoonPay and 1Money.

Business Model

• Issuer: A regulated institution that holds reserves as collateral to mint stablecoins using the M0 infrastructure, paying the platform a designated rate from a portion of interest earned on reserves.

• Builder: An entity that owns a specific use case and uses M0 to launch and control its own stablecoin - capturing the economics, customizing how money behaves directly into its product.

MetaMask’s mUSD illustrates how the two roles work in practice.

MetaMask leveraged M0 technology to design and construct its own stablecoin under the mUSD brand, and applied desired behavior and product layer on top. Bridge holds the regulatory licenses, manages U.S. Treasuries as collateral, and fulfils the platform obligations, ultimately minting and burning mUSD as demanded.

The two roles are fully separated. Bridge doesn’t own the end use case or product. MetaMask never touches the collateral. Yet the stablecoin that reaches the end user carries immediate 1:1 convertibility with every other M0-powered stablecoin on the network, with liquidity shared from day one rather than built from scratch.

The revenue flow begins with Treasury interest on Issuer-held collateral. Issuers collect this interest while separately paying the Minter rate (3.33% as of March 2026) to the platform on outstanding issuance.

M0’s current circulating supply stands at approximately $276M. As more issuers and builders adopt the platform, this figure is expected to grow.

Regulatory Engagement

M0 positions itself as a technology platform and structurally separates compliance obligations among Issuers.

M0’s Stablecoin Core embeds the compliance functions required by issuers at the technology layer, including allow-listing, pausing, and freezing. However, the actual operation of these functions, along with licensing, AML, KYC and any other regulatory obligations, remains the direct responsibility of each Issuer. M0 provides the technical tools; it does not substitute for regulatory responsibility.

For this division of responsibility to function in practice, Issuers s must be compliant with the regulations of each market they operate in.

M0 identifies the United States as the market where stablecoin regulation is moving fastest. The enactment of the GENIUS Act in July 2025 established a federal stablecoin regulatory framework, which has since visibly accelerated enterprise adoption demand. As leading jurisdictions put clear frameworks in place, stablecoin demand expands, and M0’s opportunity to establish its infrastructure as a market standard grows accordingly.

Growth Strategy

M0’s current top priority is the expansion of total M0-powered stablecoins in circulation on the platform. Because spread-based revenue scales with circulation volume, growing the network of builders and issuers is the most critical metric at this stage. In public interviews, CEO Luca Prosperi has stated that network expansion is the top priority for the next two to five years.

The Builder base is already diversifying across wallets, gaming, fintech, and payments, with participants including MetaMask, Exodus, Noble, Usual andKast. With enterprise adoption demand accelerating in the wake of the GENIUS Act, this is the right moment to expand the Issuernetwork. How many Issuers and Builders M0 can bring onto the platform during this window will determine its long-term market position.

Key Takeaways

M0’s case illustrates a competitive shift in the stablecoin market: the contest is moving from “which stablecoin achieves the highest circulation” toward “who controls the Issuer and Builder network and infrastructure standard first.”

1. Fast integration creates network effects. Building on M0’s infrastructure provides automatic compatibility with all stablecoin features across the platform, eliminating the need for repeated, per-stablecoin integration work.

2. Infrastructure value scales with the market. Not every company has the capacity to issue stablecoins independently. The value of shared infrastructure that handles licensing, technology, and liquidity management grows as more issuers join. This is why M0’s structural advantage strengthens alongside market growth.

As long as the stablecoin market does not consolidate around a handful of dominant players, the value of common infrastructure connecting multiple issuers and builders will continue to rise. The key question going forward is whether M0’s shared standard can establish itself as the industry’s foundational infrastructure layer.

KRWQ: Bringing the Korean Won On-Chain

KRWQ is a Korean won (KRW)-pegged stablecoin launched in October 2025 by IQ in partnership with Frax. Notably, South Korea has no domestic regulatory framework for won-denominated stablecoins.

KRWQ’s target market is not domestic but offshore. The won is a currency legally traded only within Korea, yet substantial offshore demand already exists from investors seeking to hedge or speculate on KRW exchange rate movements.

A foreign investor holding Samsung Electronics shares, for example, is fully exposed to KRW fluctuations. A stronger dollar means losses; a weaker dollar means gains. Even investors who want to eliminate this risk cannot directly hedge won exposure from outside Korea. This gave rise to the NDF (Non-Deliverable Forward): a contract settled in dollars for the difference between a contracted rate and the actual rate, with no direct exchange of won. Built on this structure, the KRW NDF market has grown into one of the highest-volume markets in the global NDF landscape.

KRWQ’s strategy is to capture this offshore demand first, then enter the domestic market once Korean regulation is in place. Offshore before onshore, with only the sequence reversed.

Business Model

The existing NDF market is an OTC market structured around bilateral bank negotiations, making pricing opaque and transaction costs high. Korean government restrictions on offshore won trading limit the pool of eligible participants and suppress liquidity. Settlement requires waiting until contract expiry, which creates inherent counterparty risk.

KRWQ aims to address these limitations through perpetual futures. NDFs and perpetual futures are structurally the same product.

• No direct exchange of won

• Settlement in dollars based on price differential

• Used to hedge or take directional positions on KRW exchange rate risk

The only difference is maturity. NDFs have fixed expiry; perpetuals have no maturity, operate on-chain 24 hours a day, and deliver the same function at lower cost. Recently KRWQ has launched an NDF market through EDXM International.

Regulatory Engagement

KRWQ adopts a two-track strategy: build the market offshore first, then enter onshore once domestic regulation is in place.

KRWQ was designed with anticipatory reference to stablecoin legislation currently under deliberation in the Korean National Assembly, with the goal of becoming the first regulatory-compliant KRW stablecoin. The domestic legislative landscape, however, remains complex. Regulatory uncertainty is a near-term barrier to market entry, but for KRWQ it also buys time to build an offshore liquidity lead ahead of competitors.

At the final stage, KRWQ plans to partner with domestic regulated banking institutions to enable direct KRW deposit and withdrawal for issuance and redemption.

Growth Strategy

KRWQ’s growth strategy consists of three phases.

1. Offshore capture (current): Build KRWQ-based perpetual futures trading infrastructure targeting offshore institutions and DeFi protocols.

2. Onshore transition: Once domestic legislation is enacted, enter the Korean market using already-established offshore liquidity and infrastructure as a foundation.

3. Replication across Asian currencies: Beyond KRW, INR (Indian rupee), TWD (Taiwan dollar), and IDR (Indonesian rupiah) are all major Asian NDF currencies. These currencies share the same structural characteristics as the won: capital controls paired with active offshore NDF markets.

Key Takeaways

1. Regulatory absence can be an opportunity, not a waiting period. In Asia’s stablecoin market, regulation is typically treated as a prerequisite for entry, and most players wait indefinitely for legislation to materialize. KRWQ took a different view: market structures already functioning offshore exist regardless of domestic regulation.Offshore liquidity becomes the lever for domestic entry.

2. The KRW NDF market was already operating outside domestic regulatory jurisdiction. KRWQ moved to absorb that demand first. When regulation arrives, it will enter the domestic market equipped with offshore liquidity and infrastructure already in place. The strategy was not to wait, but to start where revenue was already being generated.

Where Do Latecomers Still Have a Chance?

The stablecoin market is heavily concentrated, with USDT and USDC holding over 85% of total supply. Competing on the same reserve-interest model is not a realistic path for new entrants. Yet the cases examined in this report show that there is more than one route into the market.

The core principle for latecomers is to avoid playing the same game as Tether and Circle. Winning a reserve scale competition is not possible, but distinct positions can be secured along different axes: payment networks, issuance infrastructure, and offshore markets. As the stablecoin market expands, so does the variety of competitive forms. The industry is not repeating a single model; it is diverging into a market where different strategies coexist.

That said, the players covered in this report are no longer challengers. They have become leaders in their respective domains. Drawing lessons from their approaches is valuable, but replication alone is not sufficient. The next generation of entrants must define and solve problems beyond the positions these players have already claimed.

Ultimately, the companies that survive in the stablecoin issuance market will not simply be those with differentiated entry strategies. They will be the ones that execute those strategies and solve the next layer of problems as they scale. The market has moved past the question of who finds a new model, and into the question of who actually makes it work.

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Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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Key Takeaways

• Crypto firms across exchanges, security, payments, and research are simultaneously rolling out AI services

• Unlike past cycles, proven revenue-generating companies like Coinbase and Binance are leading. AI has shifted from narrative to operational necessity

• Adoption motives differ by sector: exchanges aim to prevent user churn; security firms fill audit blind spots; payment infrastructure targets the emerging agent economy

• Having a feature and actually using it are different problems. AI FOMO and competitive pressure are accelerating adoption beyond demonstrated need

• Real demand and competitive anxiety are both at play. Distinguishing value-creating adoption from label-only adoption is the key question

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1. Crypto Firms Are Now Offering AI Services

AI is the most closely watched sector in global markets today. General-purpose tools like ChatGPT and Claude have entered daily life, and platforms like OpenClaw have lowered the barrier to building agents.

The crypto industry was late to this wave, but is now integrating AI across every vertical.

What AI services are these firms offering, and why are they entering this market?

2. How Crypto Firms Are Adopting AI

2.1. Research

Crypto research has a structural problem: on-chain data, social sentiment, and key metrics are scattered across platforms, and verification is difficult. General-purpose AI frequently returns inaccurate answers for crypto queries.

Projects like Surf address this by offering crypto-specific AI research tools that consolidate dispersed data sources. Among all AI use cases in crypto, research has the lowest entry barrier for general users, requiring no coding or trading expertise.

2.2. Trading

Exchanges are leading AI adoption in trading.

Approaches vary. some expose proprietary trading data directly to users; others let users issue natural-language commands to AI agents that handle analysis through execution in a single step.

Exchanges have offered APIs for years. The difference now is an added layer: interfaces like MCP and AI Skills enable non-developers to access exchange functions through AI agents. Tools once limited to developers are now accessible via natural language.

This aligns with a broader community shift. Non-developer users are increasingly building automated trading strategies through AI agents, with no code required. They describe a strategy, and the agent builds and runs the algorithm.

For exchanges, this is both an opportunity and a threat. As AI-powered users grow, loyalty to any single exchange weakens because agents can execute trades anywhere. Exchanges adopt AI for a simple reason: to attract users quickly and keep them active on the platform.

Trading involves real asset management, demanding higher judgment and accountability than research. But as entry barriers fall, this domain is also opening to general users.

2.3. Security / Audit

Smart contract auditing has traditionally relied on manual line-by-line code review, a process that is slow, costly, and inconsistent across auditors. AI is now integrated into the workflow: AI scans the code first, then human auditors perform a targeted deep review. This increases both speed and coverage without replacing auditors.

CertiK is a leading example. The firm previously faced criticism when audited projects were later exploited. However, those incidents occurred outside the audit scope. An audit examines code at a fixed point in time; it does not include ongoing monitoring.

CertiK addressed this gap with AI. It added real-time post-audit monitoring and delivers it via a public dashboard. Because the expanded coverage is AI-driven rather than labor-intensive, it benefits both CertiK and the projects it audits.

In security, AI adoption is not about disrupting existing services. It extends the scope of human work: improving precision at audit time and filling post-audit blind spots. For blockchain security firms, AI is not a new business line but a tool to address existing weaknesses.

2.4. Payment Infrastructure

AI agents need payment rails to participate in economic activity: paying for APIs, purchasing data, and buying services from other agents. The most natural payment method for agents is an on-chain wallet paired with stablecoins.

Two models are emerging. The first is a universal protocol that embeds payments into HTTP requests, enabling automatic on-chain settlement the moment an agent accesses a paid API. The second is agent-specific payment plugins, where agents execute payments only within permissions and limits pre-set by humans.

Payment infrastructure is the area most closely tied to stablecoins. However, because the paying entity is an AI agent rather than a human, fully operational models do not yet exist.

Circle, the USDC issuer, is also gaining attention. The company published a proposal to connect its Gateway payment infrastructure with the x402 protocol and invited developers and researchers to review and contribute.

This is not yet a mature market. But markets have already started pricing in this trajectory. One key driver behind Circle’s stock price appreciation has been the AI agent payment narrative. Payment infrastructure will take longer to materialize than the sectors above, but it has established itself as one of the most prominent macro themes in the current market.

3. Why Crypto Firms Are Entering AI Now

When ChatGPT launched in November 2022, neither AI nor crypto was ready. AI models were impressive but could not reliably execute tasks. Crypto was reeling from the FTX collapse and a full-blown trust crisis.

AI has advanced dramatically since then. Within the past year, all major models became significantly more capable and practically useful. Crypto, by contrast, merely “used” AI during the same period: AI-branded memecoins, non-functional AI agents, and marketing-driven claims. Decentralized AI infrastructure projects continued to emerge, but when compared honestly against equivalent AI-native services, their quality fell clearly short.

The gap is now widening further. In the AI industry, infrastructure such as MCP (enabling agents to call external tools directly) and OpenClaw (enabling no-code agent building) has made the agent era tangible. Crypto firms are only now starting to move.

What is different this time is who is moving. It is not new startups branding themselves with AI. It is companies with proven revenue models: Coinbase, Binance, and Bitget. These firms have no reason to launch AI services as a marketing exercise. What drives them is not today’s revenue but the fear of falling behind: FOMO.

The intensity of that urgency is visible in Coinbase CEO Brian Armstrong’s actions. He issued a company-wide mandate for all engineers to onboard AI coding tools within one week and fired employees who did not comply.

But a clear-eyed view is also warranted. Take trading automation as an example. Agents can check prices and propose strategies, but how many users will actually trust an agent with their money for live trades? And is x402 being applied in the real world yet?

Ultimately, crypto’s AI adoption is not about chasing a trend. With the AI era now visible, firms are moving to avoid losing their position. Having a feature and actually using it remain different problems. But who is moving matters?

Think of the AI industry as a swimming pool filling with water. Those who jumped in before only pretended they could swim. The ones jumping in now are former national-team surfers. No one knows how high the water will rise or whether the pool will become an ocean. But crypto will not drown at the center of it.

🐯 More from Tiger Research

Read more reports related to this research.

• AI Agent Payment Infrastructure: The Direction of Crypto and Big Tech

• x402: Coinbase and the Beginning of the AI Agent Era

• CEXs Entering DeFi: Why Is Bybit Planning to Launch ByReal?

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.