News of a U.S. strategic Bitcoin reserve has been circulating for nearly two years. The original BITCOIN Act, introduced in 2024, centered on active government purchases. ARMA contains no such provision. Whether the market should treat this as positive news is an open question.

Key Takeaways

• The executive order Trump signed in March 2025 was a commitment not to sell the bitcoin the federal government already holds. It was not a purchase mandate. The market had expected something more, and when the order was announced, the bitcoin price fell 5.7% immediately.

• The legislative effort that began in 2024 has retreated substantially over two years, from a bill requiring the purchase of one million BTC to a custody bill that contains no purchase obligation at all.

• The American Retirement and Monetary Advancement Act (ARMA), the bill with the strongest current prospects for passage, is not a purchase bill. It prohibits the government from selling the bitcoin it already holds for at least twenty years.

• ARMA is unlikely to have a material short-term effect on the bitcoin market. Over the longer term, however, establishing bitcoin’s legal status as a national reserve asset could reopen the debate over mandatory purchases, which would be a positive for the market.

1. Background: What the U.S. Has and Has Not Done

Throughout the 2024 presidential campaign, Trump repeatedly promised a bitcoin strategic reserve. Markets read this as a signal that the federal government would become a direct buyer.

After the election, on March 6, 2025, Trump signed an executive order designating bitcoin seized through criminal investigations and civil forfeitures as a strategic reserve and directing that it be held permanently. The order contained no instruction to acquire new bitcoin. It was a pledge not to sell what the government already owned. The price fell from roughly $92,000 to below $85,000 when the order’s contents became clear.

At the time of signing, the federal government held approximately 190,000 BTC, equal to about 0.9% of the total supply of 21 million. Every coin in that holding had been accumulated through criminal and civil proceedings. Not a single bitcoin was purchased.

The position today remains unchanged. Beyond the executive order, nothing has been codified into law.

2. Legislative History

Discussions that began in 2021 produced the first concrete bill in 2024, which was reintroduced in 2025 and then restructured as ARMA in 2026. The through-line in that progression is a pattern of accommodation to political reality: mandatory purchase volumes were maintained, then eliminated. Each revision made passage more plausible but reduced the market impact.

2.1. 2024: The Original Bill

Senator Lummis had been publicly calling for bitcoin to be incorporated into federal reserves since she entered the Senate in 2021. At the time there was no consensus within Congress for such a step, and the crypto winter of 2022 and 2023 together with the collapse of FTX made the environment more hostile still.

The mood shifted in 2024, when bitcoin crossed $100,000 and spot ETFs received regulatory approval. In July of that year, Lummis introduced the first specific legislation: a bill requiring the purchase of one million bitcoin over five years, to be held for at least twenty years, funded from Federal Reserve surplus accounts.

One million BTC represents 4.76% of total supply and exceeds Strategy’s reported holdings of approximately 840,000 BTC. The bill died automatically when that congressional session ended.

2.2. 2025: Reintroduction and Stalled Progress

In March 2025, the same month as the executive order, Lummis reintroduced the BITCOIN Act as Senate Bill 954. The core structure was unchanged: purchase 200,000 BTC annually for five years to accumulate one million, with a twenty-year holding requirement. The revised version removed certain exemptions from the disposal ban, tightening the hold obligation, and added four co-sponsors.

Market reaction was broadly positive, but the bill faced substantial headwinds on three fronts.

First, the fiscal cost. One million bitcoin at prevailing prices represents hundreds of trillions of won. Fiscal conservatives within the Republican Party argued that gold is a stable store of value whereas bitcoin is a speculative asset, and opposed any mandatory purchase structure on those grounds.

Second, dollar hegemony. Led by Representative Maxine Waters, Democratic critics argued that treating bitcoin as a reserve asset would effectively undermine the dollar’s status as the global reserve currency.

Third, the Treasury Secretary’s position. In August 2025, Secretary Bessent stated publicly that the administration would not pursue additional bitcoin purchases. The official who would be responsible for executing the law had gone on record against it.

The bill has remained in committee in the Senate Banking Committee since.

2.3. 2026: ARMA as a Legislative Compromise

In May 2026, Representative Nick Begich introduced the American Retirement and Monetary Advancement Act (ARMA). Democratic Representative Jared Golden signed on as a co-sponsor. The change of name was itself strategic: it was designed to shed the associations that had made the earlier legislation difficult to advance and to widen the coalition of supporters.

ARMA does two things. It consolidates all bitcoin currently held or seized by the federal government into a single reserve under Treasury administration, and it prohibits the sale of that bitcoin for at least twenty years. The only permissible exception to the disposal ban is the retirement of national debt.

The decisive difference from its predecessor is what ARMA does not contain. The BITCOIN Act imposed an obligation to purchase 200,000 BTC per year. ARMA removes that obligation entirely. In its place, it instructs the Treasury and the Commerce Department to study and report within 180 days on whether additional purchases could be achieved in a budget-neutral manner. A study mandate is not a purchase mandate.

ARMA is, in substance, a custody and holding bill rather than an acquisition bill. Its purpose is passage, and it is structured accordingly.

3. Near-Term Outlook: Limited Market Impact

Two bills are currently moving in parallel through Congress. The BITCOIN Act (S.954) is before the Senate Banking Committee; ARMA is in the House. Their objectives differ. The BITCOIN Act is an acquisition bill; ARMA is a custody bill.

ARMA has the higher probability of moving first. The BITCOIN Act has been held in committee for over a year, weighed down by its fiscal cost and its Republican-only sponsorship. ARMA carries Democratic support and imposes no purchase obligation, which removes the most common basis for opposition.

That said, ARMA’s passage would not itself constitute a near-term positive for the bitcoin market. If ARMA is enacted, the approximately 320,000 BTC currently held by the federal government would be legally prohibited from entering the market for at least two decades. The overhang from potential government selling would disappear. The problem is that without any purchase obligation, there is also no new demand. What markets have wanted is the government buying bitcoin directly; ARMA does not deliver that. Its practical effect is closer to elevating the March 2025 executive order to statutory status.

What matters is what could follow ARMA. Nick Begich has held bitcoin since 2013, and was one of the House co-sponsors of the BITCOIN Act in March 2025. He is on record supporting bitcoin as a strategic asset. The structure of ARMA suggests a sequenced approach rather than a single-step attempt: establish the legal framework first, then build the acquisition mandate on top of it.

If ARMA passes and bitcoin acquires a formal legal status as a national reserve asset, the debate over mandatory purchases is likely to resume on firmer ground. The pathway to that outcome is longer than markets had initially priced in when Trump made his campaign promises, but the direction has not changed.

In short, ARMA’s passage would have limited near-term price impact. Over the longer term, it remains a constructive factor for the market, and if ARMA passes, the probability of eventual purchase legislation becomes more visible.

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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

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Binance and several other crypto exchanges have begun offering stock trading services. This report examines what it means that exchanges are expanding into conventional finance.

Key Takeaways

• The limits of the crypto trading fee model, the rise of perpetual futures DEXs led by Hyperliquid, and a more permissive regulatory environment following the Trump administration have together pushed major global crypto exchanges to reconsider their direction.

• The path those exchanges are now pursuing points toward conventional financial products such as stocks and derivatives, and toward operating structures that resemble tradFi.

• The complication is that centralized exchanges have been the primary liquidity providers sustaining the crypto ecosystem. If they step back from that role, the crypto market may not function the way it once did.

• A period of self-reliance is beginning for crypto projects. Projects that can survive without exchange support and those that cannot are about to diverge.

1. Buying Apple Stock on Binance

Since June 1, users have been able to buy stocks such as Apple (AAPL) and Alphabet (GOOGL) directly through the Binance app. The following day, Binance announced support for trading in SK Hynix, Samsung Electronics, and Hyundai Motor, three of the most actively traded stocks on the KOSPI.

Binance’s interest in stock markets dates to 2021. That April, the exchange launched tokenized stock trading covering Tesla (TSLA), Apple (AAPL), and Microsoft (MSFT), only to shut the service down entirely by July of the same year under mounting regulatory pressure. Three structural problems had made the product untenable: the legal classification of stock tokens as securities versus derivatives was unresolved; the investor prospectuses required under EU regulations were absent; and Binance itself held no direct license to operate such a service. Germany’s BaFin, the UK’s FCA, and Hong Kong’s SFC all raised objections on those grounds.

The current launch is structured differently. Binance has routed order execution through a broker-dealer licensed by the Abu Dhabi Global Market (ADGM), giving the service a clear legal classification as brokerage. The ambiguity over who issues the underlying instrument, which was a central point of contention in 2021, is largely removed.

The timing is notable. Bybit launched a TradFi perpetual futures market around the same period, adding coverage of KOSPI names including SK Hynix and Samsung Electronics as well as perpetual futures on SpaceX (SPCX). Coinbase separately announced support for SPCX futures trading.

The question is why the major crypto exchanges have begun moving in the same direction at roughly the same time, away from a crypto-only model and toward something that more closely resembles a conventional financial services app.

2. Three Pressures

Three forces have pushed exchanges away from the crypto-only model.

2.1. Falling Crypto Trading Volume

The first pressure is the decline in crypto trading volume. Exchange revenue is ultimately tied to altcoin trading volume, and that volume is determined by market sentiment.

On Binance, daily average spot trading volume fell roughly 80%, from a peak of approximately $45B in October 2025 to $7.7B today. Across other centralized exchanges combined, volume dropped around 70%, from a peak of roughly $63B to $18.8B. As trading volume declined, the fee-based revenue model began to break down. That a business model dependent on crypto trading fees cannot produce a sustainable revenue structure is something the exchanges themselves had long recognized.

2.2. Hyperliquid Absorbing On-Chain Volume

Comparing altcoin trading volume outside of Bitcoin and Ethereum against RWA asset volume including stocks and commodities on Hyperliquid makes the current situation clear.

Hyperliquid has begun drawing on-chain liquidity by supporting futures trading in stocks and commodities. As of mid-2026, 23 of the top 30 assets by perpetual futures volume on Hyperliquid were stocks and commodities, not crypto.

The premise that on-chain activity belongs exclusively to crypto no longer holds. The emergence of a decentralized exchange whose volume rivals that of centralized exchanges has put those exchanges on notice.

2.3. Regulatory Shift

The third pressure came from the change in the regulatory landscape following the start of the Trump administration. The SEC dropped its lawsuits against Coinbase and Kraken. When regulators were adversarial, applying for conventional financial licenses carried real risk. Those licenses can now serve as a mark of credibility and a point of differentiation.

With clearer boundaries around what is and is not permissible, exchanges can build on their existing strengths and pursue a new direction. All three pressures converged at roughly the same time, as interest in stocks and other derivatives has also grown. Crypto exchanges now have little choice but to move quickly, along its own path, if they intend to survive.

3. How Centralized Exchanges Are Responding

Centralized exchanges have faced the same set of pressures at the same time, but their responses have diverged.

3.1. Binance: The Everything Store

Binance’s strategy is straightforward. The goal is to become an everything store, keeping all trading activity within its own platform and preventing users from leaving.

Binance had already moved on-chain and done so successfully. Having built its exchange business first, the company launched Binance Chain in April 2019 to capture the on-chain ecosystem, then followed with Binance Alpha in the first half of 2025, taking a meaningful share of on-chain activity.

By 2026, however, on-chain liquidity had begun shifting toward stock markets. When Hyperliquid moved quickly to absorb that liquidity through stocks and commodities, the on-chain user base Binance had cultivated came under pressure. Binance’s response was not to compete with Hyperliquid on-chain directly. Instead, it focused on launching a stock trading service aimed at its existing user base of over 200 million. Retaining users it already has is a more defensible position than fighting Hyperliquid on Hyperliquid’s own ground.

The structure works as follows. Orders placed through the Binance front end are received by Nest Trading, an ADGM-licensed broker-dealer, which then routes them to Alpaca Securities. Execution, clearing, settlement, and custody are all handled by Alpaca. Binance does not hold the securities directly, a structural choice that keeps it outside the scope of direct securities regulation.

Worth noting is that Nest Trading has been identified as a Binance affiliate. Binance also holds a minority stake in Alpaca, and the revenue-sharing arrangement gives Nest Trading 50% of order flow fees and 65% of stock lending income.

Binance is building the infrastructure itself, reorienting toward a financial super-app, and working to hold its existing users before altcoin volume migrates further toward Hyperliquid and stocks.

3.2. Bybit: A Two-Track Approach

Bybit launched in 2018 as a derivatives exchange and grew rapidly on the back of up to 100x leverage and low fees. It is now running two tracks simultaneously: porting centralized exchange liquidity onto the blockchain, and listing conventional asset derivatives directly on the centralized exchange.

The on-chain track came first. In June 2025, Bybit listed Backed‘s xStocks on its spot market, marking its first step into tokenized stock partnerships. That November, a three-way collaboration with Mantle and Backed produced a formal launch of xStocks on the Mantle blockchain, covering major US stocks including Nvidia (NVDA) and Apple (AAPL).

In May 2026, Bybit activated Atomic RFQ on Fluxion, a DEX within the Mantle ecosystem, upgrading the structure to direct issuer execution. Atomic RFQ works by requesting quotes directly from the issuer rather than routing through an AMM, achieving on-chain the execution quality that institutional participants expect in conventional finance.

Bybit has also moved on the centralized side. Facing pressures similar to those on Binance, it launched TradFi perpetual futures in April 2026 and has added new listings weekly. Major US stocks including Tesla (TSLA), Nvidia (NVDA), and Apple (AAPL), along with gold, silver, and crude oil, are now available for 24-hour trading settled in USDT. On June 4, Samsung Electronics, SK Hynix, and Hyundai Motor perpetual futures went live, and SpaceX pre-IPO trading is also supported.

Both tracks are ultimately aimed at building infrastructure for more precise trading of conventional assets across on-chain and off-chain venues. Where Bybit differs from Binance is in its effort to maintain an active on-chain presence through Fluxion and Mantle rather than concentrating entirely on the centralized platform.

3.3. Coinbase: The Most Trusted US Exchange

Coinbase listed on Nasdaq in 2021 and was added to the S&P 500 in May 2025. Backed by Wall Street, it is currently the centralized exchange that carries the most institutional credibility.

Coinbase has also maintained an on-chain presence. The Ethereum L2 Base, launched in 2023, climbed quickly to hold close to half of total L2 TVL by 2025. By 2026, however, growth had stalled and Base no longer appeared to be a core priority for the company.

Where Coinbase has committed most seriously is institutional clients. In August 2025, it completed the $2.9 billion acquisition of Deribit, capturing roughly 85% of the global crypto options market. It then launched a CFTC-licensed futures commission merchant (FCM) service and introduced cross-margin trading that consolidates spot, futures, and perpetual futures positions into a single collateral pool, broadening its institutional client base. Institutional lending balances from hedge funds and asset managers reached a quarterly record that year.

In December 2025, Coinbase opened commission-free stock and ETF trading within its existing app. Where Binance layered a separate brokerage infrastructure and took an indirect approach, Coinbase offers direct trading on the strength of its accumulated regulatory standing. On June 4, it announced support for SpaceX pre-IPO trading.

As Hyperliquid has built liquidity outside the regulatory perimeter by launching a broad range of products, Coinbase’s early entry into stock trading leaves it better placed to respond.

3.4. Kraken: A Federal Crypto Bank

Founded in 2011, Kraken is one of the longest-standing exchanges in the crypto industry. Its strategy is to consolidate licenses, build infrastructure directly, and become a federally regulated institutional crypto custody bank.

Regulatory infrastructure has been the first priority. In March 2025, Kraken acquired NinjaTrader for $1.5 billion, gaining a CFTC FCM license and a retail trader base of two million users. In April 2026, it acquired Bitnomial for $550 million, the only crypto-native platform to have obtained all three CFTC licenses, DCM, DCO, and FCM, over a period of ten years. In March 2026, Kraken secured a Federal Reserve master account, and in May it filed an application with the OCC for a national trust company charter.

On-chain has not been neglected. Kraken launched its own L2, Ink, in December 2024, followed by lending protocol Tydro and perpetual DEX Nado on top of it. DeFi Earn launched in January 2026 and Bitcoin Vault in May. These products are built around assets that can be clearly explained to institutional clients. Altcoins have not been a priority in Kraken’s on-chain strategy either.

While other exchanges have moved into stock trading to retain users, Kraken has chosen a different path, aiming to become the only crypto-native bank that institutional clients can trust.

The strategies of the centralized exchanges covered here differ in their specifics. What they share is that altcoins do not feature prominently in any of their forward plans.

4. What Happens to Crypto?

Centralized exchanges have been the liquidity backbone of the crypto ecosystem. They listed tokens and generated trading volume, and that support is what kept most crypto projects alive.

The underlying problem is that almost no crypto project has demonstrated real value through actual revenue. Token prices have been sustained not by protocol fundamentals but by exchange listings and early liquidity support mechanisms such as launchpools. For that structure to hold, exchanges and traders need to maintain sustained interest in crypto. Retail volume is shrinking, and without it, exchange listings and marketing support will follow. That structure cannot hold indefinitely.

The market itself has shifted toward tokens from projects that can demonstrate value through real product revenue, rather than depending on exchange support. Hyperliquid’s HYPE is the clearest illustration. It is one of the best-performing crypto assets at present, despite being the very actor that has drawn on-chain liquidity away from crypto and toward stock markets. This points to a weakening of the mutually beneficial relationship that previously existed between centralized exchanges and crypto projects.

The position of the exchanges reinforces this reading. Retail trading volume and user count are the foundations of any exchange business. Concentrating on crypto trading volume alone now risks eroding that foundation, because the market no longer finds newly listed crypto assets as compelling as it once did. Exchanges have little choice but to protect the infrastructure and user base they have built while finding other revenue sources to pursue.

That is what has driven the pivot toward stock derivatives, yield products, and custody. In redirecting their efforts, the exchanges have effectively left altcoins to fend for themselves.

In previous downturns, centralized exchanges weathered the bear market alongside crypto. Now they are looking for ways to grow without it. That is why this downturn is likely to be harder for crypto than previous ones.

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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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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.

Crypto is in a downturn, yet the tokenized stock market keeps growing. It splits into fully collateralized spot and perpetual futures, with perps drawing the most attention and a range of strategies emerging.

Key Takeaways

• While equities set record highs, crypto saw both market cap and volume fall. As the two diverged, the tokenized stock market grew by building perpetual futures open interest.

• The market splits into fully collateralized spot and perpetual futures. Perps draw attention because they trade stocks unavailable on home exchanges, 24 hours a day, with leverage on top.

• When the regular session is closed, the price perps set becomes a leading indicator of the next day’s spot open, predicting not just direction but also the size of the move.

• Two retail openings, a delta neutral trade that collects the spot to perp premium as funding, and cross-exchange arbitrage on price gaps.

• The same structure extends to businesses such as market makers, regional oracles, tokenized issuance, and basis hedge funds. Small in scale, but as institutions enter, opportunity exists on both the investment and business sides.

1.Equity Markets Now Pulling In Crypto Liquidity

In Q1 2026, total crypto market cap fell 20.4% and centralized exchange spot volume dropped 39.1%. Bitcoin has been declining since its October 2025 record high.

Equities went the other way. The S&P 500 cleared its annual target, and the KOSPI rode a semiconductor rally to double this year. As total crypto market cap fell sharply, most national equity markets set record highs. The two paths have never split this clearly.

2. Collateral Splits the Market, Capital Flows to Perps

The tokenized stock market splits in two by collateral structure.

Fully collateralized spot deposits real shares 1 to 1, then issues a token. The investor holds the share itself or a legal claim on it. Issuance details differ by platform, but an underlying asset always exists.

Perpetual futures work differently. No real shares are held. The trader posts margin and opens a contract that tracks the price, so there is no claimable underlying. Margin is mostly stablecoins, and a growing number of platforms now accept other assets such as ETH.

Perps draw attention because they keep spot’s advantage, 24-hour access to stocks unavailable on home exchanges, and add far greater leverage. Some fully collateralized spot products on Kraken xStocks offer up to 3x margin, while perps reach up to 20x depending on the product. With no underlying to custody and price tracked only through an oracle feed, listings are fast and the range of tradable tickers is wide.

Against traditional markets it is still small. US equity markets turn over about 1.1 trillion dollars a day. Stock perp open interest, the total of contracts currently live, sits at 2.25 billion dollars. The metrics differ, so a direct comparison is hard, but the market is clearly early stage.

The direction is clear. OI rises each quarter, and regulators are starting to treat it as a market. The SEC has cited perps as an innovative financial product, and the CFTC is publicly reviewing US institutionalization. It began outside regulation, but is moving inside the system faster.

3. The 24-Hour Market vs the Real Market

Tiger Research tracks this shift, offering a tool that compares Korean stock prices on overseas perpetual markets against KRX spot in real time. It aggregates prices from the perp exchanges that support Samsung Electronics, SK Hynix, and Hyundai Motor using a volume-weighted average, set side by side with each name’s domestic spot price.

The data so far shows three patterns.

3.1. Overnight Perp Moves Predict the Next Open

Korea’s market stops at night. US markets move, Nvidia reports, FX swings, but Korea sees no trading until the next morning. Perps trade through it.

This raises a question. With spot closed, what price do perps reference?

The answer is that they do not follow one. While the session is open, perps pull spot prices from institutional data. When it closes, perp participants’ own trades set the price directly. Rather than copying a closed spot market, they discover a new price that reflects overnight news and macro variables.

The data bears this out. On days perps rose after the close, the next session opened higher 82% of the time for Samsung Electronics and 95% for SK Hynix. When perps fell, the next session opened lower 96% for Samsung Electronics and 78% for SK Hynix. Directional match runs around 85% for both, with correlation of 0.85 to 0.89.

Magnitude tracks too. A 3% overnight gain in perps led to an open roughly 3% higher. The regression coefficient of perp change against the actual opening gap is 0.93 for Samsung Electronics and 1.00 for SK Hynix, all but signaling how far the move will run.

Weekends are sharper. From Friday close to Monday open, the perp-implied direction matched the actual Monday open 93% of the time for Samsung Electronics and 87% for SK Hynix, because perps absorb two days of global variables first.

Reading the overnight perp price gives an early read on where the morning open will land.

3.2. Delta Neutral Trade on the Spot-Perp Premium

Perps have no expiry. To keep the price from drifting too far from its reference, longs and shorts exchange a fee at set intervals, called the funding rate.

For example, when a perp trades above its reference, the gaining longs pay the losing shorts. The larger the premium, the larger the payment. When one side gains more than the reference, it is charged accordingly. As traders move to avoid that cost, the price converges back to the reference.

In the data, Korean stock perps traded above spot, with an intraday average premium of 0.15% for Samsung Electronics and 0.23% for SK Hynix. Selling the perp means collecting that premium as funding each cycle.

The strategy follows. Buy KRX spot intraday and sell an equal amount of the perp at the same time. If the stock rises, spot gains and the perp loses. If it falls, the reverse. The two offset, so the outcome is near zero whichever way the stock moves. In return, funding comes in from the short perp. The position earns from the premium alone, with no bet on direction. Removing directional risk this way is the delta neutral trade.

The premium does not last. The perp to spot gap closed halfway in about 40 minutes on average. It suits high-volatility phases where premiums widen, and it requires constant monitoring.

3.3. Arbitrage on Cross-Exchange Price Gaps

At the same moment, for the same name, perp prices differ across exchanges. In June 2026 data, Binance’s Samsung Electronics perp traded 0.93% higher on average than Hyperliquid’s. SK Hynix showed a 1.03% gap, widening to as much as 2.3%.

Perp positions cannot move between exchanges. Instead, a trader opens opposite positions on both at once. Short on the higher-priced exchange, long on the lower, and the directional P&L offsets. As the two prices converge, the original gap remains as profit. On the higher side, the short also collects funding, adding return.

Later-entrant exchanges tend to hold higher prices because less arbitrage capital flows in. These gaps recur in the early phase as more exchanges launch. They widen further at night and on weekends, when spot is closed and each exchange discovers price on its own.

4. Market Shifts and Emerging Opportunities

One catch in this market is fragmentation, which is both a risk and an opportunity. As the same name scatters across Korea’s existing exchanges and Hyperliquid, Binance, and Lighter, liquidity splits. With price spread across venues, it is harder to agree on which is real, and differing prices create room for confusion and manipulation. Stack leverage on thin liquidity and liquidations can cascade. An opportunity, and a risk.

The openings above were for retail. The same structure also opens business opportunities.

• Market makers: the same name trades 0.15% to 0.75% apart across exchanges, and the gap widens at night. In an early market with little arbitrage capital, spreads stay wide. With thin liquidity and several exchanges managing fragmented liquidity, market making demand should keep growing.

• Regional oracles: perps discover price while spot is closed, and accuracy hinges on the oracle. A specialized oracle that feeds accurate prices for Asian-timezone assets such as Korea, Japan, and Taiwan is still an open space.

• Tokenized issuance: listed Korean names today are limited to Samsung Electronics, SK Hynix, and Hyundai Motor. The market needs an intermediary to list and manage KOSPI 200 names and major Asian companies.

• Basis hedge funds: perps convert the premium over spot into funding cash every hour. A dedicated fund collecting basis and funding gaps across exchanges turns capital faster than a conventional basis trade, though the market is still too small to absorb it.

The perp market is small against traditional markets, but it matters. It discovers price first, stays open 24 hours, and is institutionalizing fast. Opportunity remains on both the investment and business sides.

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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.

Partnerships and equity acquisitions among Korean institutions are accelerating simultaneously in the crypto market. Yet the landscape remains difficult to read at a glance. Announced partnerships are abundant, but actual commercial deployments remain rare. This report examines why the conversion rate is low, and why institutions continue to move forward regardless.

Key Takeaways

• Korean institutional crypto activity has moved beyond MOUs into concrete business operations and exchange equity acquisitions.

• Competition is intensifying beneath the surface as institutions race to claim critical financial infrastructure, including STO standard-setting, stablecoin payment rails, and custody markets.

• Domestic infrastructure builders are emerging as a core pillar of institutional business, constructing Korea-native rails aligned with Bank of Korea CBDC frameworks and local regulatory requirements, reducing dependence on foreign technology.

• The playbook for overseas Web3 foundations entering Korea has shifted entirely, moving from retail community building to partnerships with large corporates and financial institutions, as traditional finance accelerates its takeover of the market.

1. The MOU Arms Race

The relationship map above, compiled by Tiger Research, maps the connections across Korea’s institutional crypto landscape. Yet the structure is not easy to read at a glance. It is difficult to distinguish which lines represent active business operations and which are simply MOUs, and the boundary between central hubs and peripheral players remains blurred.

What is notable is that this complexity itself accurately reflects the current state of Korea’s institutional crypto market. As Tiger Research’s dataset of 150 institutions and 196 partnerships confirms, no single hub has yet achieved dominant control over the market.

Domestic institutions are simultaneously building their positions across the market before regulations are fully finalized. Competition is currently organized around three fronts: stablecoins, STOs (security token offerings), and custody (crypto asset storage).

Also notable is a sustained wave of financial institutions acquiring equity stakes in exchanges, a move interpreted as a confidence-driven push to secure footholds ahead of full regulatory clarity.

2. The Exchange Equity Scramble

Within less than ten days of Hana Bank announcing its acquisition of a 6.55% stake in Dunamu, the operator of Upbit, for approximately KRW 1 trillion (approx. USD 720 million), Hanwha Investment Securities approved the acquisition of an additional 3.90%. On May 28 of the same month, Samsung Securities, Samsung SDS, and Samsung Card jointly announced a combined 4.0% acquisition. Mirae Asset Consulting had already signed a contract in February to acquire 92.06% of Korbit, and reports emerged that Korea Investment Securities and global exchange OKX are in discussions over a joint acquisition of Coinone.

The competition reflects a revaluation of crypto exchanges, which are now seen not merely as trading fee platforms but as critical customer touchpoints through which stablecoins, custody services, security tokens, and RWA products can be distributed.

Banks and securities firms gain a pathway to indirectly obtain licenses such as VASP registration while simultaneously securing an exchange’s user base and liquidity. The current equity scramble is ultimately a contest over who will control the front-end of digital asset finance.

3. Korea’s Crypto Market by Sector

A sector-by-sector look at the relationship map reveals an uneven landscape. Custody has the most operational activity, with a number of players already running live services after clearing regulatory hurdles. RWA and STO, by contrast, remain largely stuck at the contract or MOU stage, waiting for enabling legislation to take effect. Stablecoins face a similar stall, with no clear standard-setter yet in a position to claim market leadership.

Because the nature of the barrier differs by sector, so does the strategy for breaking through. Some players are consolidating domestic coalitions while waiting for regulation to open. Others are turning to overseas markets where regulation has moved faster, carving out alternative paths. The sections below examine the specific barriers and player strategies in each sector.

3.1. RWA/STO: Legislation Passed, Commercialization Infrastructure Is the Bottleneck

The domestic STO market is divided into two camps: the KOSCOM-led consortium and the Shinhan Investment Securities-led fractional investment alliance. Mirae Asset Securities has taken a separate path, leveraging overseas operations rather than waiting on domestic infrastructure.

KOSCOM, a core financial network operator in which Korea Exchange holds a 76.6% stake, is pursuing a neutral infrastructure model consistent with its founding mandate to provide shared infrastructure for securities firms. Rather than signing exclusive agreements with individual issuers, it is integrating 11 securities firms onto its platform, aiming to set issuance and distribution technology standards and secure interfaces compatible with Korea Securities Depository aggregate custody management requirements.

Shinhan Investment Securities has moved quickly to build its own STO ecosystem. Starting with a proof-of-concept with Lambda 256 in 2022, it launched the joint platform PULSE in 2024 and formalized a multi-platform account integration service in 2025. In 2025 alone, it participated as account manager in 10 investment contract security issuances, and secured a controlling stake in OTC exchange NXT, establishing an end-to-end pipeline from issuance to distribution within its own ecosystem.

Mirae Asset Securities bypassed domestic infrastructure development entirely and moved overseas. It issued a digital bond in Hong Kong, obtained a digital asset retail license from the Hong Kong Securities and Futures Commission (SFC), and plans to launch an MTS in June targeting retail investors in the market. In the United States, it is the only Korean securities firm to join the DTCC-led tokenization working group, which includes JP Morgan, Goldman Sachs, and BlackRock, participating in global standard-setting discussions. The strategy positions Mirae Asset to hold advantages in regulatory alignment and negotiating leverage when domestic STO infrastructure eventually connects to global standards.

3.2. Stablecoins: Legislation, Not Technology, Is the Bottleneck

The stablecoin market features a more diverse set of participants than other sectors. Card companies, exchanges, fintechs, and infrastructure firms are each entering through different routes, drawing on their respective strengths.

The largest camp is the Kakao Group. Kakao, KakaoBank, and Kakao Pay have formed a joint task force to build a “super wallet” spanning stablecoins, crypto, and local currencies. Their key asset is the infrastructure accumulated through operating the Kaia public chain since the Ground X era. Kaia has already deployed Tether (USDT) on its network and is conducting live payment tests.

Shinhan Card is focused on migrating its existing payment network onto blockchain rails. Shinhan Card signed an MOU with Solana in April, though the technical groundwork preceded the agreement. The company had already completed an initial proof-of-concept in collaboration with Solana, Visa, Mastercard, and Fireblocks, and is now running advanced tests across six areas including wallets and smart contracts.

The exchange camp is routing around KRW stablecoin delays via dollar stablecoins. Dunamu is developing a KRW stablecoin business with Naver Financial, built on its proprietary blockchain GIWA. Bithumb, facing delays in KRW stablecoin regulation, has chosen to secure a dollar stablecoin distribution network first through partnerships with Circle and WLF. A joint KRW stablecoin initiative with Toss is also under discussion, though progress remains slow.

All camps are active, but all face the same regulatory wall. The Bank of Korea is pushing a 51% rule requiring that only bank-majority consortiums be permitted to issue stablecoins, while fintech firms are pushing back for access, delaying government-ruling party consultations. Once issuance guidelines are released, the camp that has secured the most comprehensive public-facing touchpoints is expected to take market leadership.

3.3. Custody: More Institutional Capital Needed

The custody market is structurally simpler than other sectors. Four major custodians have each secured domestic and international financial and technology partners to establish their market positions.

KODA was co-founded by KB Kookmin Bank, Hashed, and Haechi Labs, combining traditional financial capital with crypto-native VC. Hanwha Investment Securities, IBK Capital, and Kyobo Securities have since joined as investors, and a dedicated custody insurance agreement with Samsung Fire & Marine further reinforces its stability.

KDAC is a traditional finance-led custodian with Shinhan Bank and NH NongHyup Bank as major shareholders. NH NongHyup Bank was originally an investor in a separate custodian, Kardo, and became a KDAC shareholder following a merger. Post-merger, KDAC counts two of Korea’s five major banks among its shareholders.

BDACS has taken a distinct approach centered on technology and partnership development. Expanding custody and payment infrastructure through a partnership with Woori Bank and international digital asset infrastructure firms including Galaxy and GK8, it has also signed an MOU with Circle to issue the KRW stablecoin KRW1 on Circle’s Arc blockchain, and is the sole VASP and a key custody partner in the KRX-led KDX consortium. Currently conducting a PoC for KRW1, BDACS is positioning itself as a custodian targeting both custody and payment infrastructure simultaneously.

BitGo Korea entered the domestic market on the strength of its global parent’s technology. BitGo’s headquarters custodies over USD 70 billion in assets and processes approximately 20% of all Bitcoin on-chain transactions globally. Domestically, Hana Financial Group and SK Telecom each hold stakes, making it a custodian backed by both financial and telecommunications capital.

Various institutions have entered the market through their respective custodian relationships. However, all major custodians are reported to have posted net losses last year, suggesting they have built ahead of the institutional capital flows needed to sustain operations.

Taken together, the infrastructure buildout across STO, stablecoins, and custody reveals a clear common limitation: domestic institutions have constructed their business frameworks, but the underlying technology infrastructure remains largely dependent on overseas solutions.

4. The Infrastructure Builders

Dependence on overseas solutions carries a structural cost: as the market grows, a significant share of revenues will flow abroad in the form of technology licensing fees. Domestic infrastructure also becomes exposed to the risk of disruption should overseas partners change their policies or raise costs.

The more fundamental problem is that areas requiring alignment with Korea-specific regulatory environments, such as KRW stablecoin issuance, STO distribution rules, and domestic corporate account integration, cannot simply apply global solutions off the shelf. This is precisely why domestic technology firms capable of directly designing and controlling the underlying rails in accordance with Korean regulatory frameworks will be essential once relevant legislation is finalized and capital begins to move in earnest.

Domestic companies that have identified this technical gap and are building Korea-specific financial infrastructure are already in motion. The leading technology providers are as follows.

4.1. LG CNS

Among traditional IT service firms, LG CNS has taken the most visible position. Since launching its proprietary blockchain platform ‘Monachain’ in 2018, it has built operational expertise by supplying services to over 220 local governments through the Korea Minting and Security Printing Corporation’s local currency platform.

This permissioned blockchain experience translated into CBDC and STO contract wins. As the lead contractor for the Bank of Korea’s CBDC project ‘Hangang’, LG CNS is developing a government subsidy disbursement system utilizing deposit tokens. Through this process, it has built the capability to architect systems that run institutional CBDC and private digital currency on a single network, effectively transplanting the security standards and procedures of traditional finance onto a blockchain.

Development of KOSCOM’s joint STO issuance platform and Mirae Asset Securities’ STO platform follows the same logic. Rather than issuing assets directly, LG CNS is targeting three axes: building issuance and distribution platforms for banks, providing SaaS to payment operators including card companies, PGs, and simple payment services, and developing digital asset payment platforms for securities firms. It appears to be the most credible candidate to capture the infrastructure contract market once regulatory frameworks are finalized.

4.2. DSRV

Among blockchain infrastructure firms, DSRV stands out for directly enabling financial institutions’ entry into onchain infrastructure. A validator and infrastructure company with operations across more than 70 blockchain networks, DSRV manages over KRW 4 trillion (approx. USD 2.9 billion) in assets, ranks first in Ethereum staking domestically, and sits in the global top 10.

The key development is its expansion beyond node operation into full-stack institutional onchain infrastructure. Through DSRV Portal, financial institutions can access wallet, payment, tokenization, custody, and staking functions via API and dashboard interfaces. Without building their own node and security infrastructure, financial firms can attach user wallets, institutional wallets, recurring payments, token issuance, burning, transfer and lockup, custody, and staking capabilities.

Trust mechanisms are also in place. DSRV leads with VASP, ISMS, and SOC 1 Type 1 certifications, directly addressing the regulatory, security, and operational control requirements that financial institutions demand. In practice, this means an external infrastructure provider takes on the wallet security, internal controls, and operational risk that financial firms find most burdensome when deploying onchain services.

Its partnerships are oriented toward payment rail construction. With SBI Ripple Asia, DSRV is jointly developing Korea-Japan regulation-compatible remittance infrastructure. With Circle, it is developing an institutional USDC issuance, redemption, and settlement framework that bypasses exchanges. With BC Card, it has signed a stablecoin payment infrastructure agreement connecting traditional card payment networks to blockchain.

DSRV recently closed a KRW 30 billion (approx. USD 21.7 million) Series B round, accelerating its technology development.

4.3. Altus(Prev. B-Harvest)

Altus (formerly B-Harvest) operates at the integration layer between financial institutions’ legacy systems and blockchain environments. Founded in 2018, the firm has contributed to Cosmos SDK-based EVM chain development and is an organization of 40+ engineers and researchers who have directly built multiple production networks including Canto, Stable, and Ault.

Altus handled protocol engineering and core architecture for Ault Blockchain, an institutional L1 focused on RWA, trading, and payments. In 2025, it contributed to EVM integration, performance improvements, and security audits for Babylon, the Bitcoin staking L1, supporting its production readiness.

Its financial institution solutions originate from the same layer. Altus builds from scratch to financial industry requirements: on/off-chain orchestration layers bridging legacy systems to blockchain execution environments, RWA tokenization, permissioned exchanges, stablecoin payment and settlement, and institutional wallet and custody infrastructure.

Current internal R&D runs in parallel: Canton Network architecture supporting selective data disclosure between institutions, and Commonware Stack, a modular blockchain framework targeting 1M TPS.

The three firms start from different positions with different strengths. LG CNS leads with financial IT credibility, DSRV with blockchain validator infrastructure, and Altus with protocol-level custom design capability. Yet all share the same destination: securing the core operating systems before institutional capital flows in at scale. The determining factor is how much credible build experience each can accumulate before the market fully opens.

5. Retail Out, Institutions In

The recent surge in partnership announcements should not be read as ordinary business development. These are positioning moves: institutions are staking out favorable arrangements before regulation is finalized, then using those arrangements to shape what the regulatory framework ultimately looks like. The current partnership race is less about market capture and more about regulatory design.

Korea’s crypto market has restructured significantly in just six months. Custody camps have formed, STO consortiums have taken shape, and major financial holding companies have moved to acquire exchange equity. Meanwhile, retail trading volume has declined sharply. Combined trading volume across Korea’s five major exchanges fell approximately 48% year-on-year. The market’s center of gravity is shifting rapidly from retail to institutional.

This shift has also changed how overseas crypto foundations approach Korea. Just as Solana was adopted as Shinhan Card’s partner and Avalanche as Mirae Asset’s, foundations entering the domestic market have shifted their primary focus from exchange trading volume to partnerships with financial institutions and large corporates. The community meetup model that once drove retail liquidity is no longer effective.

The results of this market restructuring are expected to become visible at KBW 2026, taking place in Seoul this September, an event that consistently reflects prevailing market conditions. A look at the confirmed speaker lineup already shows traditional finance figures in the majority. Where last year’s overseas foundations competed through token-incentivized community side events, this year’s focus is expected to shift toward substantive business discussions.

Tiger Research is the research partner of KBW 2026.

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Circle has released its Q1 2026 earnings report. Reserve interest income from USDC still accounts for over 90% of revenue. To move beyond this concentration, Circle is developing initiatives including the Ark Network. What does the next phase look like?

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Summary

With Q1 2026 results as the inflection point, Circle is accelerating its paradigm shift from a simple stablecoin issuer to an integrated infrastructure operator for the digital asset industry. Its forward business strategy rests on three core pillars.

1. Maximize USDC margin and circulation: Reserve interest income accrues on both external and proprietary platforms. Higher USDC use on Circle’s own channel (CPN) drove RLDC margin to a record 41.4% this quarter. To expand issuance, Circle has partnered with the DEX Hyperliquid.

2. Launch the proprietary L1 ‘Arc’ to diversify gas and fee revenue: 94% of Circle’s revenue currently comes from USDC reserve interest. Once Arc expands Circle’s platform and generates platform fee revenue, the over-reliance on reserve interest can be structurally resolved.

3. Capture AI payments via Agent Stack: Circle is staking out the standard for autonomous micro-payments between AI agents. Full commercialization is targeted for 2028, aligned with infrastructure rollout and GENIUS Act effectiveness.

In sum, Circle is putting aggressive USDC issuance expansion through anchor platforms like Hyperliquid at the front, while vertically integrating its financial stack across its own L1 (Arc), payments network (CPN), and AI nano-payments (Agent Stack). The key point is that USDC circulation growth and diversified infrastructure now pull each other forward.

Through this, Circle is expanding from a simple interest-revenue business into a platform business driven by traffic and transaction fees.

Q1 2026 Recap. Margins on the Mend

1. Top-line growth and margin gains. On-platform mix strengthens earnings quality

Q1 2026 revenue reached $694M (YoY +20%), with adjusted EBITDA of $151M (YoY +24%) and an adjusted EBITDA margin of 53%, an improvement in profitability. Currently, 94% of Circle’s total revenue depends on reserve interest income.

The 31bp QoQ drop in reserve yield (from 3.81% to 3.50%) was therefore a critical revenue headwind. Yet RLDC margin rose for the third consecutive quarter to a record 41.4%. Even with rate-dependent revenue, which accounts for the bulk of the top line, taking a direct hit, Circle succeeded in improving its underlying earnings quality.

The key driver of margin improvement is rising USDC usage on Circle’s own platforms. On-platform share jumped from 6% to 17.2% in Q1 (YoY +1,149bps), while off-platform share narrowed to 55%.

This reflects successful institutional onboarding to Circle Payments Network (CPN), Circle’s proprietary payments network. Member financial institutions grew to 136 in a single quarter (+36% QoQ), and annualized total payment volume (TPV) expanded to roughly $8.3B (QoQ +17%).

The staged rollout of CPN’s payment product lineup underpins this trend.

1. Fiat Payments (Q2 2025 launch): cross-border payments handling payouts and pay-ins in local currencies across 50+ countries

2. Stablecoin Payments (Q3 2025 launch): direct payment and settlement in regulated stablecoins (USDC, EURC) across 180+ countries

3. Managed Payments (Q2 2026, April launch): Circle delivers licensing, custody, compliance, and USDC liquidity through a single integrated API. Partners only handle fiat and do not need to take on digital asset custody, operations, or regulatory response

This matters for long-term earnings quality because revenue attribution differs entirely by deposit location. Balances on external platforms like Coinbase require sharing reserve interest, while balances on Circle’s own platforms such as Circle Mint and CPN accrue fully to Circle.

In other words, a higher on-platform mix reduces partner distribution costs and lifts RLDC margin. For any given top line, Circle’s effective earnings power strengthens.

That said, CPN’s own usage-fee revenue has not yet ramped. As CFO Jeremy Fox-Geen noted on the prior earnings call, the current phase prioritizes network growth over monetization. CPN today functions less as a direct fee channel and more as a conduit pulling funds into Circle’s own platform. As a stepping-stone defending against external distribution costs, the Q1 results show that this strategy is working.

2. Net income decline hidden behind the growth

However, unlike the top-line growth and margin gains, the bottom line shows a clear divergence that warrants attention. Q1 net income came in at approximately $55M, down 15% YoY.

Drivers are post-IPO stock-based compensation flowing through and a sharp rise in pre-launch Arc infrastructure and R&D spend. Adjusted figures, stripped of one-time and non-cash items, remain strong. Net income trajectory still warrants attention.

Circle Moves Into Full Vertical Integration

1. USDC. Strengthen the core, expand issuance

Reserve income in Q1 2026 was $653M, accounting for 94% of total revenue. With Circle’s core business so concentrated in reserve income, top-line growth requires USDC issuance expansion.

USDC circulation currently sits around $77B. The core question for Circle’s structural growth is how far this circulation ceiling can be pushed. USDT’s earlier surge was anchored in Binance trading-pair preemption.

Circle plans to extend this preemption playbook to the DEX Hyperliquid. Coinbase’s recent acquisition of Hyperliquid’s native stablecoin USDH is a representative case. Rather than deploying USDH as the platform’s native pair, Hyperliquid sold it and registered USDC as the official pair.

Hyperliquid’s deposit growth flows directly into USDC issuance. Hyperliquid TVL doubled from $2B in Q1 2025 to $4B in Q1 2026, and peaked at $6B. Because Hyperliquid uses USDC as its base deposit asset, platform growth translates directly into new USDC issuance. The forward circulation scenario built on this is as follows.

Under this scenario, growth from Hyperliquid alone could lift total USDC circulation from $77B today to $84B in three years. A single platform would account for more than 10% of total circulation, becoming a massive issuance channel.

Conceding 90% of reserve interest income to the platform does leave Circle with reduced near-term profitability. But as the cost of securing irreplaceable volume of roughly KRW 15T (~$11B) in daily turnover and a 17% share of the DEX derivatives market, this is close to an acceptable trade-off.

If Hyperliquid-based derivatives products follow, the virtuous-cycle structure strengthens further. For a Circle that prioritizes circulation expansion over near-term margin, Hyperliquid is a strategic stronghold worth preempting even by splitting margin.

2. Arc. How Circle Exits Rate Dependency

As noted above, Circle’s revenue is heavily concentrated in reserve interest income, leaving the business structurally exposed to a rate-cutting environment. Arc is still in the testnet phase and generates no visible revenue yet. With its recent ~$222M institutional funding round, Arc has emerged as the core infrastructure designed to sever this rate dependency at the root.

Arc’s primary target is the global cross-border payments market. According to the World Bank report (RPW Issue 54), the global average remittance cost is 6.36% and the bank remittance cost reaches 14.99%. The drivers of this high-cost structure include SWIFT’s multi-tier intermediation, opaque FX spreads, and weekend settlement delays.

In addressing the inefficiencies of legacy financial rails, Circle aims to generate platform business revenue on top of Arc. The infrastructure fee revenue that lowers rate dependency is built on two core pillars.

1. Circle Payments Network (CPN): onboards global institutions and corporates to Arc for cross-border payments and settlement, capturing processing fees on traffic. Q1 institutional inflow seeds full Arc mainnet transaction revenue.

2. On-chain FX engine (StableFX): supports on-chain stablecoin conversion, replacing the high intermediation spreads of traditional FX. On execution, smart contracts collect predefined fees from each trading currency.

StableFX runs on an RFQ model, not SWIFT’s fixed-cost structure. Market makers competitively bid in real time and quote the tightest wholesale spread. Large transfers settle 24/7 with no SWIFT fixed fees and no slippage.

More CPN traffic and StableFX volume on Arc means more direct infrastructure and fee revenue. The non-rate revenue structure completes.

This shift is already being validated through the testnet and participating enterprises. Per Arcscan, the public testnet has logged roughly 430M cumulative transactions and 3.26M transactions in the last 24 hours since opening. Over 100 global institutions are participating, including BlackRock, HSBC, Visa, and AWS.

Beyond traditional finance, Polymarket, a blockchain-based prediction market, has also joined the ecosystem.

This goes beyond piloting features and platforms. Arc is pulling in real enterprises and driving real transaction traffic. If Arc operates as intended, Circle can expand from a USDC reserve-interest revenue structure to infrastructure operating revenue. Arc is the first step in unwinding a revenue structure tied to interest rates.

According to the roadmap, Arc mainnet launch is set for this summer. Meaningful Arc revenue is expected to come after mainnet launch.

3. Agent Stack: Blueprint for autonomous AI payments

An ‘agentic economy’, in which AI agents make decisions and transact on behalf of users rather than humans, is approaching. Global big tech firms including Google and OpenAI have already begun actively rolling out such autonomous systems.

The bottleneck is payment infrastructure. The fees generated when AI agents call APIs are priced at micro levels (sub-cent units) that legacy payment systems cannot process. Routing such micro-payments through credit card networks produces a fee structure where the cost outweighs the principal, so every transaction generates a net loss. Agent payments cannot structurally fit existing card rails.

Circle targeted this gap and launched the ‘Circle Agent Stack’, which uses USDC as the settlement asset and provides the tooling to build the surrounding environment.

1. Agent Wallets: AI autonomously holds and sends USDC within human-set rules (e.g., spend limits)

2. Agent Marketplace: storefront where AIs source API services and settle per call

3. Agent Nanopayments: instant USDC settlement down to ~$0.000001 with no gas

4. Circle CLI: command-line tool for wallet creation and agent connections

5. Circle Skills: modules letting AI agents operate Circle’s financial product suite directly

Revenue here is not yet at the visible stage either. The path to market adoption and revenue recognition is expected to progress through the phased roadmap below.

1. 2026 (Infrastructure phase): technical foundation for stable, large-scale nano-payment processing. Arc mainnet activation this summer anchors partner integration of Circle CLI and financial modules.

2. 2027 (Regulatory anchoring phase): GENIUS Act takes effect, completing the institutional safety net for enterprise entry. With stablecoin securities exemption and 100% safe-asset backing legally binding, even conservative corporate legal teams can adopt and test USDC payment systems internally without risk.

3. 2028 (Commercialization and monetization): technical foundation and regulatory legitimacy fully align. The agentic economy reaches full commercialization. Enterprises grant AI agents real spending authority, large-scale transactions emerge, and Agent Stack results land in reported revenue.

As a result, until full traffic-driven revenue arrives in 2028, Agent Stack is likely to operate as an ‘expectation premium’ priced into the share price as future market preemption value, ahead of actual revenue.

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Authority in DeFi lending is shifting from protocols to curators who hold judgment rights. Market entry comes down to one choice: borrow this judgment, supply it, or own it.

Key Takeaways

1. An asset manager role is emerging in DeFi. The era when protocols and governance decided everything is over.

2. The market is still early, but capital and distribution already concentrate around top curators. Their track records are becoming the institutional benchmark.

3. There are three entry paths: Distribution (curator as backend), Supply (post assets onchain), and Operator (become a curator).

4. The path chosen determines the control gained, the capabilities required, and the risks taken on.

5. The core question is not whether to enter DeFi, but which judgment rights to delegate and which to keep.

1. Risk Curators: Onchain Asset Management Specialists

Just as traditional finance has long separated judgment from execution, the crypto market has matured to the point where specialized players own each function. Traditional finance divides the work as follows.

• Asset Manager: The fund’s “brain.” Sets strategy and gives specific instructions to the custodian.

• Custodian: Holds assets, executes investments per the manager’s instructions, and oversees them.

• Distributor: Distributes fund products to investors and gathers capital.

Crypto has its own version of each role. DeFi was originally built to rely entirely on smart contract code, but over time it became clear that code alone cannot fully control onchain risk.

To run onchain lending safely, a new class of specialists emerged to assess and coordinate these complex risks. They are called Risk Curators, and they have effectively taken on the asset manager role in the onchain ecosystem.

2. Early DeFi Had No Specialists

Early DeFi protocols like Aave and Compound bundled lending infrastructure and risk standards into a single structure. Risk curators existed at the time, but with every asset sitting in one giant pool, their role stayed at the level of a system-wide “risk manager” tuning the protocol’s overall risk parameters. As volatile assets flowed in, the single-pool design meant one bad asset could spread losses across the entire system, and someone had to manage that contagion risk.

That changed with Morpho, which split collateral assets and lending terms into separate markets. Replacing the single giant pool with a multi-vault structure modularized the asset management strategy, and the role of risk curators flipped entirely. Instead of defensively managing within a single protocol’s fixed framework, external specialists could now design and operate their own independent lending vaults under their own standards.

With infrastructure and risk judgment fully separated, risk curators evolved from system-wide risk managers into the crypto market’s “asset managers,” actively running multiple vaults.

3. Who Leads the Market

As of May 2026, the risk curator market manages roughly $7B in assets. The top three teams hold 70% of that $7B. The market only took off in 2025, yet capital is already concentrating, a sign that capital is following teams with proven track records. Each of the three reached the top through a different path.

1. Steakhouse: A conservative curator that has led the adoption of high-grade real-world assets (RWA) such as US Treasuries. It serves as the backend for Coinbase’s lending service, opening a distribution channel, and ranks #1 with $1.53B AUM (as of February 2026). Beyond AUM, this team sets the standard for which real-world assets qualify as legitimate DeFi collateral.

2. Sentora: A team built on AI risk models and institutional data infrastructure. Wired into Kraken as a backend, it has secured a pipeline for institutional capital. #2 at $1.34B AUM. Won the distribution channel linking exchanges to institutional clients.

3. Gauntlet: Originally an onchain quantitative analysis firm that simulated risk parameters. In October 2025, when $775M flooded one of its pools, the team normalized the collapsed APY within 10 days, proving its capability. #3 at $1.29B AUM. Recognized as the team with risk defense and crisis response for large capital inflows.

At this stage, the risk curator market is no longer a simple TVL race. It is a fight to claim the standards first: collateral criteria, distribution channels, and risk response capability.

4. Traditional Asset Management vs DeFi Risk Curators

As Morpho fragmented the market, each collateral type needed a specialist to make the call. Professional risk teams like Steakhouse stepped in as DeFi risk curators. Through this shift, DeFi is starting to resemble the traditional asset management process.

Reading the diagram from top to bottom shows how today’s DeFi infrastructure replicates the division of labor in traditional finance onchain.

• Capital sourcing and distribution (top): Institutional investors sit at the top as the capital source. Their large pools flow into the onchain ecosystem through major CeFi exchanges and platforms, which take the role of TradFi distributors (brokerages).

• Strategy design and risk control (middle): Below sit the DeFi risk curators, who decide how the incoming capital is managed. Like the portfolio managers (PMs) and risk committees of traditional asset managers, they set asset eligibility and limits and design the overall investment strategy.

• Product assembly and custody (bottom): The curator’s strategy becomes an investable onchain product through the vault infrastructure beneath it. At the very bottom, the lending protocol primitive holds the assets and executes settlement in code, taking the place of TradFi’s custody and trading infrastructure.

From capital sourcing through management and custody, the entire process now mirrors the division of labor seen in traditional finance. For incumbent TradFi institutions, onchain lending is no longer unfamiliar territory but a structured market they recognize, and the opening for entry follows naturally.

5. A TradFi-Like Industry: Where Is the Opportunity?

As onchain lending infrastructure adopts a division of labor similar to TradFi asset management, the door has opened for institutional entry. But not every layer carries the same barrier.

• Distribution layer: Customer-facing market, already saturated by major crypto firms. It is inefficient for TradFi firms to fight head-on at the point of contact.

• Management layer: A field driven entirely by financial expertise and manpower. Evaluating, controlling, and packaging asset risk matches the core work of traditional asset managers. Without building complex systems, they can apply their existing risk management capability onto already-built modular infrastructure and immediately secure a business model.

• Custody and infrastructure layer: Asset custody and trade processing, a technology-intensive business that demands deep blockchain engineering capability. It is unrealistic for TradFi firms to build their own systems and compete here.

Unlike the other layers, which require technology or platform incumbency, the management layer is the clearest window of opportunity, where TradFi firms can take market leadership using only the risk management capability they already hold.

Institutions currently enter the DeFi market through three paths: Distribution, Supply, and Operator. Whichever path is chosen, the engine driving the market is the asset manager’s “risk curation” capability.

5.1. Distribution: Curator as Backend

Connect a proven external curator as the backend and enter the market quickly. This fits exchanges and fintechs with customer channels but no in-house management capability. Strategy is outsourced, but reputational risk and accountability for the curator chosen stay in-house.

This is the route chosen by centralized exchanges with strong customer touchpoints but no appetite for managing the complex risks of onchain lending directly. They have connected verified external risk curators as the backend and launched lending services. The exchange distributes large pools of capital through its own platform, while collateral evaluation and risk management are handed off entirely to the partner risk curator

5.2. Supply: Push Assets onto Onchain Rails

Asset managers holding RWAs or credit assets supply those assets directly to the market. Like Apollo, they can supply assets while acquiring Morpho governance tokens, shaping the standards (such as collateral criteria) of the infrastructure that will carry their assets. The hard parts are asset standardization and regulatory infrastructure build-out.

Large private equity funds or institutions holding real-world assets (RWAs) place their own capital directly onto onchain rails. Apollo went beyond simple asset supply and acquired governance tokens of major lending protocols. The move aims to drive the rules and standards so that its real-world assets are recognized as more favorable and safer “official collateral” in the onchain market.

But asset suppliers cannot register just any asset as collateral. Someone has to coldly assess whether the asset is genuinely safe and whether it can be liquidated immediately when an onchain liquidation event hits. That requires the rigorous evaluation capability of a risk curator who vets and vouches for asset eligibility. In the end, the supply path also stands only when an asset manager’s risk validation capability backs it.

5.3. Operator: Become the Curator (Bitwise)

An asset manager designs its own strategy and runs its own vaults. Bitwise defined the onchain vault as “ETF 2.0” and jumped in directly. This path holds the strongest controls over fees and collateral standards, but the manager also bears full responsibility for any operating failure. It fits asset managers with an in-house risk team.

This is the path where a traditional asset manager steps out as a risk curator itself, without relying on external platforms. Bitwise defined the onchain lending vault structure as “ETF 2.0” and entered the market directly. Drawing on its own portfolio construction capability and risk control system, it designs and controls the vaults itself, securing the management fee model directly onchain.

6. Before Big Capital Arrives

Looking at the trajectory so far, traditional asset managers are likely the best positioned as onchain lending matures. As the DeFi ecosystem modularizes and divides labor, the capability the market actually needs has shifted. Not the ability to write code, but the traditional finance expertise of underwriting collateral and setting risk limits. The competitive edge of institutions that have done this work for decades carries over onchain.

But today’s DeFi market is too small for global mega-managers to step in directly. The global traditional asset management market is roughly $147T. BlackRock alone runs $14T in AUM. By contrast, the entire DeFi market is about $80B, and the slice handled by risk curators is just $7B. That is 1/2,000th of BlackRock’s AUM.

But the sheer scale gap is what shows the runway for growth. Institutional capital does not enter places where risk is not controlled. Once risk curators lay rails for capital to run safely onchain and the regulatory outline takes shape, the story changes. Even a sliver of the $147T flowing in expands the $80B market quickly.

Some opportunities exist only while the market is small. The main players in the risk curator market today can be counted on one hand. Rails are required for institutions to come onchain, and the teams that lay them first set the standards.

Institutions that arrive later will get a safer, clearer market. They will also be one of many participating inside standards that have already been set.

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• On-Chain to RWA. The New DeFi Base Built on Yield-Bearing Stablecoins

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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The Senate Banking Committee passed the CLARITY Act on May 14. Indirect stablecoin interest has been banned, but activity-based rewards are now permitted. Several other significant provisions were also amended. What business opportunities do these changes create?

Key Takeaways

• Stablecoin yield dispute resolved via bipartisan compromise: passive holding interest banned, activity-linked rewards permitted. Largest legislative obstacle cleared.

• Senate Banking Committee vote complete. Hard deadline: August recess. Executive pressure: Trump targeting July 4 signing. Final passage expected by July.

• Key provisions on enactment: indirect passive interest banned; activity-based rewards (payments, trading) permitted; unregistered token sales allowed within caps; securities reclassification safe harbor established; sufficiently decentralized DeFi protocols exempt from SEC oversight.

• Business model implications: activity-based lock-in reward models activated to reduce capital outflow; token IB ecosystem (advisory, investor matching, issuance SaaS) emerges as a new market vertical.

• 2026: institutional order replaces the ungoverned era as jurisdictions globally benchmark U.S. rules. Dual dynamic: institutional capital drives mass adoption; compliance costs slow early-stage innovation.

1. What Stalled the CLARITY Act?

The CLARITY Act’s core purpose is to codify the jurisdictional boundary between the SEC and CFTC. What delayed it by four months was a single provision: the stablecoin interest ban.

The central dispute: should platforms continue paying 4-5% annual yield to stablecoin holders? Banks demanded a full ban, citing deposit outflows. The crypto industry pushed back, calling it a threat to core business models. Coinbase’s opposition to the full ban stalled negotiations into May.

On May 1, Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks introduced a bipartisan compromise: ban interest on passive holding, but permit rewards tied to bona fide activity such as payments, trading, and staking. Coinbase, which had blocked the January markup, announced support the same day.

With the White House, SEC, and Treasury aligning behind the compromise, the Senate Banking Committee passed the amended bill 15-9 on May 14.

2. How Long Until Final Passage? (~2 Months)

The May 14 committee vote completed the markup phase. Four steps remain before the bill becomes law:

1. Consolidation of three bills into one unified text

2. Senate floor vote

3. House floor concurrence vote

4. Presidential signature and enactment

Two factors make July passage the most likely outcome.

First, the August recess is the practical deadline. Approximately 11 weeks remain before Congress breaks. Missing that window means the bill collides with midterm campaign season and the budget cycle, making passage within the 119th Congress uncertain.

Second, the Trump administration is actively pushing. The president has publicly stated a July 4 signing goal, roughly 7 weeks out. The administration has already applied pressure to Congress before, and will again if the schedule slips. Critically, the stablecoin interest provision, which triggered two failed markups over four months, is now resolved.

The hardest part of the negotiation is done.

3. Key Provisions of the CLARITY Act Amendment

Regardless of when the bill achieves final passage, the May 14 markup already signals a significant shift for the U.S. cryptocurrency market. The sections below examine which provisions matter most.

3.1. Prohibition on Indirect Stablecoin Interest (Sec. 404)

Stablecoin yield was the sharpest point of conflict between the banking sector and the crypto industry. Banks called for a complete ban; crypto firms argued that paying yield on stablecoins was fundamental to their business.

Sec. 404 resolves the dispute by prohibiting exchanges from passing interest to users indirectly. The prior arrangement worked as follows: a user holding USDC through Coinbase would earn yield, with funds flowing through issuer Circle into U.S. Treasuries, and the resulting interest returned to the user. From the user’s perspective, this was functionally identical to a bank deposit.

From the bank’s perspective, it represented a direct deposit substitution risk. That is what drove the banking sector’s strong opposition.

The bill bans yield on passive holding and permits only rewards tied to bona fide activity. However, the definition of “activity” remains unspecified in the bill text. Whether payments, governance votes, or app logins qualify is delegated entirely to subordinate rulemaking by Treasury and the CFTC.

3.2. Legal Token Issuance Pathway (Sec. 103 + 105)

Together, these two provisions establish a legal framework for token sales to U.S. investors.

• Sec. 103 (Reg Crypto Exemption): Creates a registration exemption allowing token sales to U.S. users without SEC registration, up to $50M annually or 10% of circulating supply, whichever is greater, with a $200M cumulative cap.

• Sec. 105 (Token Design Safe Harbor): Specifies that governance rights or staking rewards alone cannot classify a token as a security. Tokens already ruled non-securities by courts cannot be reclassified by the SEC.

The two provisions serve distinct but complementary roles. Sec. 103 opens the path to selling tokens; Sec. 105 ensures that path remains open by blocking post-sale reclassification. Neither works without the other. Sec. 103 alone leaves issuers exposed to retroactive SEC action. Sec. 105 alone offers classification protection with no route to market.

For the first time, issuers have a genuine alternative to the default practice of blocking U.S. users. The U.S. market is now a viable option to incorporate into issuance design.

3.3. DeFi Regulatory Exemption (Sec. 301)

For the first time, DeFi protocols have a legal path to exemption from U.S. regulatory oversight. The SEC can no longer require a qualifying DeFi protocol to register as a securities platform.

The exemption is conditional. A protocol must be sufficiently decentralized, meaning no single party can unilaterally modify its operation. Concentration of admin keys, upgrade authority, or security council powers in one entity disqualifies a protocol.

Emergency interventions in response to security incidents, however, are not treated as centralized control. Protocols can maintain decentralization while retaining the ability to respond to exploits and breaches.

Decentralization is no longer a design philosophy. It is now a prerequisite for U.S. market access.

4. Post-CLARITY Strategy

4.1. Activity-Based Reward Businesses

The bill text (Sec. (c)(3)(A)) lists payments, governance voting, staking, and USDC transactions as explicit examples of qualifying activity. Based on this, activity can be broadly defined as specific, utility-driven user actions that contribute to blockchain network or platform activation, as distinct from passive holding.

The mechanics mirror a credit card cashback model. Rather than paying interest on deposits, platforms reward users only when a qualifying action is taken, with rewards accruing proportionally to balance. Three categories of beneficiaries emerge:

• Exchanges and crypto apps can move beyond competing on fee reductions. By linking rewards to actual trading or in-app engagement, platforms give users an incentive to keep assets on-platform and remain active, converting idle deposits into locked-in, active capital.

• High-traffic platforms and traditional card companies can fund customer reward programs through Treasury yield generated by stablecoin reserves rather than their own marketing budgets. This externalizes reward costs, reduces direct marketing spend, and allows platforms to retain a portion of yield as margin.

• DeFi protocols with established staking infrastructure stand to benefit most. Platforms unable to build their own reward systems will rely on institutionally recognized staking providers, likely producing a winner-takes-most dynamic among the most stable and credible protocols.

In summary: strong capital lock-in through activity rewards, marketing cost reduction via yield externalization, and new B2B revenue streams.

4.2. Legal Token Issuance Businesses

Sec. 103 sets a $50M annual fundraising cap ($200M cumulative), and Sec. 105 protects lawfully issued tokens from post-sale reclassification as securities. Together, these provisions are best understood as the legalization of public token sales (ICO/IDO) targeting U.S. investors, and a catalyst for rapid growth in compliant issuance infrastructure demand.

The ecosystem will broadly mirror traditional IPO infrastructure, with three analogous business categories emerging:

• Issuance infrastructure platforms will offer modular, SaaS-based systems covering KYC, accredited investor verification, automated disclosure, token lockup management, and treasury administration. Each project using the platform generates recurring B2B revenue without rebuilding infrastructure from scratch. Coinbase’s Echo is an early example of this model.

• Issuance advisory firms and major VCs will provide end-to-end services spanning token structure design, regulatory compliance, and post-issuance dispute response. This mirrors the investment banking role that Goldman Sachs and Morgan Stanley play in traditional IPOs. Firms such as a16z and Paradigm are expected to internalize advisory functions directly.

• Accredited investor matching businesses will connect global project teams with U.S. investor databases, a task that is currently near-impossible to execute independently. Traditional asset managers and digital asset IR firms will operate as dedicated brokerages, facilitating capital connections efficiently within statutory caps.

These three models will likely settle into two market structures: an integrated full-service model that handles KYC, advisory, and matching under one platform (as seen with CoinList, Republic, and Legion), and a specialized modular model where projects outsource specific functions to dedicated legal, financial SaaS, or IR providers.

In summary: a legal capital-raising channel that removes regulatory risk, and the emergence of a token investment banking ecosystem.

One caveat: quality projects seeking long-term, compliant operations will adopt this infrastructure readily. Whether the majority of the market, still oriented toward speculative projects, will forgo the flexibility of offshore issuance for a stricter U.S. regulatory environment remains an open question.

5. 2026: The Year Market Rules Are Rewritten

2026 marks a decisive shift in the global cryptocurrency market. If the CLARITY Act passes and takes effect in July, the consequences will extend well beyond U.S. borders. Resolution of U.S. regulatory uncertainty opens the door for institutional capital to enter the market through legitimate channels.

The more consequential dynamic is the reaction from other jurisdictions. Governments will not passively watch U.S. capital consolidate dominance over the global crypto ecosystem.

They will monitor in real time which businesses scale under the U.S. framework, then benchmark those results to design tailored domestic regulations, moving quickly to retain domestic capital and competitive positioning.

Formal regulation brings clear tradeoffs on both sides.

• Upside (scale and mass adoption): Regulatory clarity clears a path for institutional capital from traditional finance and big tech. Consumer-familiar, compliant products such as activity-based reward models will drive crypto beyond its niche audience toward genuine mass adoption.

• Downside (cost and innovation drag): Projects unable to bear compliance costs will be displaced. Businesses that grew in regulatory gray zones will face pressure to exit or restructure. The raw pace of innovation and the creative freedom characteristic of early crypto will slow as the industry moves inside institutional frameworks.

Ultimately, 2026 is the year the ungoverned era ends and institutional order takes its place. Those who track multi-jurisdictional regulatory shifts and establish compliant business infrastructure ahead of others will capture a disproportionate share of the next generation of value creation in crypto.

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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.

Ethena’s declining sUSDe share does not signal a failure of the protocol. It reflects a structural shift in the market. This piece examines how the DeFi landscape is changing.

Key Takeaways

1. sUSDe supply halved while capital moved into USYC and sUSDS, both offering lower yields. This is not capital flight from the market, but a change in selection criteria within it.

2. APY is no longer the line that separates assets. What matters more is whether they can be adopted as collateral, savings products, or reserves.

3. S&P assigned Sky the first credit rating ever given to a DeFi protocol.

4. Ethena is overhauling its collateral structure in April 2026, shifting from a synthetic model to a hybrid one. A single yield source is no longer enough to survive in the YBS market.

5. DeFi is shifting from a market that produces yield to one that imports and distributes yield from traditional finance. The stronger the base, the stronger the structures built on top.

1. What’s Behind sUSDe’s Decline

A Yield-Bearing Stablecoin (YBS) is a dollar-pegged token that accrues interest simply by being held. USDC and USDT work like cash. A YBS works like a deposit. Its value rises with an interest rate.

Something unusual is happening in this market. Ethena’s flagship product sUSDe, which once held more than 30% of the YBS market, has seen its supply decline by roughly $1.8B over the past 90 days, about 49% off its peak. No hack. No protocol issue.

The market itself did not shrink. Total YBS TVL actually rose during the same period. Over 90 days, USYC (Circle’s Treasury-backed stablecoin) drew $1.4B in inflows and sUSDS (Sky’s hybrid stablecoin) drew $1.2B. Combined, those inflows were larger than the decline in sUSDe.

The flows alone tell a different story. Capital hasn’t left. It’s rotating within the same market.

2. What Matters More Than APY, the Holder Base and the Underlying

On APY alone, there is no reason for capital to move. On a 30-day basis, USYC sits at around 3% and sUSDS at around 3.6%. sUSDe is actually higher at around 4%. If yield were the driver, capital should have concentrated in sUSDe. The shift appears to come not from yield, but from two other factors. (1) the holder base, (2) the underlying assets.

2.1. Retail and Institutions

By average holdings per wallet, a USDe holder is roughly 1/800 the size of a USYC holder. Strip out the large block purchases and the gap widens further. USYC was structured from the start to attract only large capital. USDe leaned heavily on retail.

USDe and USYC diverge on holder base.

For USDe, the investment thesis of both retail and institutional holders centers on yield. They enter for the APY and exit when it slips. USYC takes a different approach. No retail, institutional utility at the core.

USYC is open only to qualified investors and carries a $100K minimum purchase. In July 2025, Binance adopted it as collateral for institutional derivatives. Once traders could post a yield-bearing asset on the largest exchange, demand followed. $2.54B has been issued on BNB Chain alone.

2.2. Delta-Neutral vs. RWA

The difference between USDe and USDS comes from their reserve assets. What institutions want is predictability, in both how the yield is generated and how it moves.

USDe runs a delta-neutral structure. Crypto collateral on one side, perpetual futures shorts on the other, offsetting price moves. Yield ties to perpetual funding rates. In the 2024 bull market, sUSDe APY exceeded 47%. As the market turned sideways, it eased into the 3% range. The swing was more than tenfold in just a few months. Yield moves in step with market conditions.

USDS is backed by short-duration US Treasuries and money market funds. Yield ties to real-world interest rates. APY sat in the 9% range in late 2024 and took more than a year to ease into the 3% range.

This difference shows up in S&P’s assessments as well. In August 2025, S&P Global assigned Sky Protocol a B- credit rating, the first ever issued to a DeFi protocol. The grade itself is not high. What matters is that a DeFi protocol received a credit rating at all.

For institutions, predictability matters as much as yield. sUSDe can deliver higher returns depending on market conditions, though institutional desks may find it harder to underwrite.

3. The YBS Market’s Direction

YBS assets sort along two axes. “How stable is the yield”, and “can the yield source be verified”. A 4% APY is not always the same 4%. The kind of risk depends on who’s paying the interest. And most capital is moving toward the more predictable side.

Treasury-backed YBS (OUSG, sfrxUSD, USYC) is the easiest to describe.

Short-term Treasury yield flows from the issuer to the holder through the operating layer. As of May 2026, the average APY ranges from 3.1% to 3.5%. The constraint is that yield is tied to Treasury rates.

Synthetic YBS (sUSDe) offers transparent yield sources but is sensitive to market conditions.

Perpetual futures funding fees are the primary revenue stream. The yield is verifiable on-chain, but it swings hard with market conditions. APY exceeded 15% in September 2025 and sits in the 4% range on a 7-day basis as of May 12, 2026.

Credit-based YBS (syrupUSDC, syrupUSDT) is high on yield stability but low on verifiability.

Through Maple Finance, interest paid by hedge funds and trading firms flows back to holders. The fixed-rate structure in the 4% range keeps volatility low. Borrower credit and collateral values are hard to inspect from outside.

Hybrid YBS (sUSDS) sits at neither extreme.

The yield blends Spark lending fees, RWA returns, reserve management, and the governance-set Saving rate. The 7-day rate stands at 3.6%, below sUSDe. On the risk side, the lack of a single point of failure helps. The trade-off is that decomposing the yield structure from outside is difficult.

The classification points to a single pattern. With the exception of Ethena’s synthetic model, every category is bringing traditional finance’s yield sources on-chain.

4. Ethena Already Knows

The first signal that Ethena recognized its structural limits came with the launch of USDtb. USDtb is a Treasury-backed dollar that uses short-term US Treasuries as its reserve. It was built to cushion USDe during periods when funding rates flip negative.

In April 2026, Ethena went a step further. It overhauled USDe’s collateral structure outright. Ethena cut the perp share to 11% of total collateral and added new categories. Stablecoin reserves, DeFi lending, CLOs, investment-grade corporate bond funds, short-term credit.

Ethena is also studying a plan to fold a gold-perp-based delta-neutral strategy into USDe’s collateral. The structure applies the same approach used for BTC and ETH to gold (PAXG, XAUT). The Risk Committee has completed its formal review.

This was the largest structural change since launch. In effect, Ethena acknowledged that a delta-neutral strategy built on crypto assets alone no longer holds.

USDe and sUSDe started as synthetic but are evolving into a hybrid. The shift confirms that a single yield source is no longer enough to remain competitive in the YBS market.

5. Foundations First

The idea of DeFi importing yield from traditional finance, rather than generating it natively, can feel at odds with the philosophy of decentralized finance. That does not mean DeFi is finished.

Blockchain set out to build a decentralized internet and ended up running on the internet itself. Without the internet, there would be no blockchain. Stablecoins set out to replace the dollar and ended up running on the dollar. They went on to drive DeFi’s rise. A traditional foundation has never blocked innovation in the layers built above it.

YBS can follow the same path. BUIDL is already collateral for USDtb. USDtb has become the reserve for USDm, MegaETH’s native stablecoin. New money legos are already stacking on top of Treasury-backed YBS.

As Treasury-backed YBS settles into infrastructure, yields will compress and the range of underlying assets will narrow. The alpha available from any single asset will keep shrinking. Just as the internet became infrastructure and access costs converged to zero, YBS will follow the same path. Stability and composability will matter more than yield.

As infrastructure matures, the experiments built on top of it can run on stronger fundamentals. Early synthetic dollars were unsustainable because their underlying assets were unstable.

Earlier DeFi yield structures were built on sand. They leaned on altcoin prices, token incentives, and leverage demand. Now verified yield sources are forming the base, with on-chain financial structures being built on top.

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• BlackRock BUIDL: $2.63B On-Chain Reserve Asset

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

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 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.

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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.

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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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.

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• 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.

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In 2026, the global crypto ETP market is gradually diversifying. While the U.S. spot ETP market remains the most active, a wide range of other crypto ETP products is also emerging. What other types of ETP products are available, and how are they structured?

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Global Crypto ETP Market Status

• Global crypto ETP total AUM reached $172.5B as of 2025, with 85% concentrated in U.S.-listed products

• Notably, the number of U.S. registered investment advisors allocating to crypto ETFs surged from under 200 in 2024 to over 2,000 in 2025, a 10x increase, driving market growth

• Outside the U.S., Europe accounts for approximately 11% of total market AUM; Canada, Hong Kong, and others represent the remaining ~4%

Products Divided by Regulation: ETF, ETC, ETN

• In Europe, funds are legally required to hold a diversified basket of assets under the diversification rule, making the ETF label unavailable for single-asset products such as Bitcoin

• As a result, European markets list and trade ETC structures, which treat Bitcoin as a commodity, and ETN structures, which are debt instruments backed by issuer credit, as alternatives to ETFs

• Unlike ETFs and ETCs, which hold actual coins as collateral, ETNs only promise returns based on issuer creditworthiness, carrying principal loss risk in the event of issuer insolvency

Global Crypto ETP Products

What Is a Spot ETP?

• The issuer directly purchases cryptocurrency and holds it with a custodian, tracking the asset’s price on a 1:1 basis — the most straightforward and fundamental ETP structure (commonly referred to as a “spot ETF”)

• Investors gain price appreciation exposure based on coin price movements, while the issuer’s sole revenue source is the annual management fee charged proportionally to AUM

• The simple 1:1 tracking structure leaves no room for product differentiation among issuers, driving intense fee competition to attract investor capital (e.g., BlackRock 0.25% → Franklin Templeton 0.19% → temporary 0% promotional fee waivers for early market capture)

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• How are Bitcoin ETFs doing in Hong Kong?

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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Key Takeaways

• In every geopolitical crisis, gold rose and Bitcoin plunged. Across past tests, the “digital gold” narrative was never once proven by data.

• Nations stockpile gold yet keep Bitcoin out of reserves. For investors, Bitcoin is asymmetric: it falls with equities but fails to rise with them.

• Three structural asymmetries shut Bitcoin out of safe-haven status: derivatives overhang (market structure), leverage-trader dominance (participant mix), and no repeated behavioral track record (behavioral accumulation).

• Bitcoin is not a safe haven, yet it is a “crisis-useful asset” that actually works where borders close and banks shut down.

• If the three asymmetries narrow, Bitcoin can become not a gold replica but a new category of “next gold.” Generational shift and algorithmic adoption are the variables that could accelerate it.

1. Is Bitcoin Really “Digital Gold”?

On February 28, 2026, the U.S. and Israel struck Iran. When Operation Epic Fury was announced, gold prices rose immediately. Bitcoin, by contrast, plunged to $63,000 intraday before recovering within a day.

Same event, opposite reactions.

Bitcoin moves differently from gold during geopolitical shocks like war.

It tends to recover relatively quickly after the initial drop, but cascading forced liquidations of leveraged traders make the drawdown far deeper. The intraday decline reached -9.3% during the Iran-Israel strikes and -7.6% during the Ukraine invasion. Gold rose at those same moments, a stark contrast.

Can we really call Bitcoin “digital gold” when it is the first asset to fall the moment a crisis hits?

2. Bitcoin Is Not “Digital Gold” for Nations or Investors

Bitcoin was never designed to be “digital gold.” The title of Satoshi Nakamoto’s 2008 whitepaper was “Bitcoin: A Peer-to-Peer Electronic Cash System.” The starting point was a transfer mechanism, not a store of value.

The “digital gold” narrative we know today gained traction during the zero-rate, quantitative-easing era of 2020. As fears of currency devaluation peaked, Bitcoin drew attention as a store of value. In practice, however, neither nations nor investors treat Bitcoin as “digital gold.”

2.1. Nations: Stockpiling Gold, Only Considering Bitcoin

World Gold Council data show that central banks have never stopped buying gold year after year. Yet not a single major central bank has incorporated Bitcoin as a full reserve asset.

Some may counter that the U.S. formalized a “Strategic Bitcoin Reserve” by executive order in March 2025. The order’s text even states that “Bitcoin is often referred to as ‘digital gold.’” But the details tell a different story. The scope is limited to assets seized through criminal and civil forfeiture. The government is not purchasing new Bitcoin but simply holding what it already confiscated instead of selling it.

Notably, as U.S. Treasuries lose appeal, Europe and China are actively buying gold, but Bitcoin has not made it onto their list of alternatives.

2.2. Investors: Falls Together, Fails to Rise Together

The second half of 2025 was decisive. While the Nasdaq hit all-time highs, Bitcoin plunged more than 30% from its October peak of $125,000. The two assets began moving apart.

But the real problem is not the decoupling itself. It is the direction. Bitcoin falls alongside equities when they drop, yet fails to rise when they rally. For investors, this is the worst possible combination. There is no reason to hold an asset in a portfolio that shares the downside risk but misses the upside. Far from being a safe haven, Bitcoin’s appeal even as a risk asset is now in question.

3. Why Bitcoin Failed to Become “Digital Gold”

A safe-haven asset is not simply one that rises in price. Academically, it is an asset whose correlation with other assets falls to zero or turns negative during extreme downturns. The key question is whether it reacts predictably in a crisis. By this standard, the gap between gold and Bitcoin is clear.

Gold meets all four requirements. Bitcoin clearly meets only one: fixed supply. Liquidity is conditional. The remaining two are unmet. Three structural asymmetries explain this gap.

• Market structure asymmetry: Gold has physical demand that supports a price floor, and its futures leverage ratio is low. Bitcoin’s derivatives volume runs roughly 6.5 times its spot volume, and its market trades around the clock, making it the first asset sold when a crisis hits.

• Participant asymmetry: The crisis buyers of gold are patient capital such as central banks, pension funds, and sovereign wealth funds. The dominant participants in Bitcoin’s market are leveraged traders and hedge funds, the very capital that exits first in a crisis.

• Behavioral accumulation asymmetry: “Buy gold when crisis hits” is a behavioral pattern repeated over decades until it became a formula. Bitcoin needs time to earn the same trust.

4. Not Safe, but Proven Useful

It is hard to call Bitcoin “digital gold” when it comes to safety. But its proven utility in crisis is real.

Right after Russia’s 2022 invasion, Ukraine’s central bank restricted electronic transfers and capped ATM withdrawals. Bank branches closed and citizens could not even access their own deposits. Some refugees carried Bitcoin seed phrases on USB drives across the border. Once in Poland, they reportedly converted Bitcoin to local currency through Bitcoin ATMs or P2P trades to cover living expenses.

UNHCR took it a step further, distributing the stablecoin USDC to displaced people and running a program that let them exchange it for local currency at MoneyGram locations. During Operation Epic Fury in 2026, outflows from Nobitex, Iran’s largest crypto exchange, surged 700% right after the strikes.

These cases show that people turn to Bitcoin not because it is a safe haven but because it works when the financial system does not.

In finance, “safe haven” means an asset whose price holds up during a crisis. That is a different concept from an asset you can use in a crisis. Bitcoin clearly offers functional value for movement and transfer in wartime, but it cannot defend its price. What makes a safe haven is not utility but predictable price behavior. Bitcoin delivers the former but not the latter.

5. The “Next Gold” Scenario for Bitcoin

Bitcoin has moved opposite to gold in every crisis. Neither nations nor investors treat it as “digital gold.” Yet its utility in places where borders close and banks shut down is hard to deny. Given that potential, if the three asymmetries narrow, the path to “next gold” opens up.

5.1. Market Structure Shift

Derivatives volume at 6.5 times spot triggers cascading liquidations in every crisis. Recently, futures open interest has declined and price discovery is showing signs of shifting toward spot and ETFs. But the real test is whether leverage rebuilds in the next bull market.

5.2. Participant Shift

After spot ETF approval in 2024, institutional capital flowed in and Bitcoin became a mainstream financial asset. But this created a paradox. The more institutions add Bitcoin to their portfolios, the more it gets sold alongside equities in risk-off episodes. Accessibility improves while independent price movement disappears. This is the financialization paradox.

Gold ETFs are also mainstream, yet gold moves opposite to equities in a crisis because “buy in a crisis” is a pattern built over more than half a century. To escape this paradox, the participant base must shift from leveraged traders to patient capital.

There is one overlooked variable here: generational turnover. When Gen Z begins inheriting and managing real wealth, gold may feel like their parents’ safe haven. This generation’s first investment account was not a brokerage but a crypto exchange. A generation whose first asset experience was Bitcoin may instinctively reach for it before gold when a crisis hits. The participant shift may start not with institutional decisions but with a generational change in behavior.

5.3. Behavioral Accumulation Shift

It took roughly 50 years after the Nixon Shock for gold’s “buy in a crisis” pattern to become a formula. Does Bitcoin need the same amount of time? Not necessarily. Epic Fury was the last test, and the result was the same again. An intraday crash, then recovery. As this pattern repeats, the belief that “it drops but always comes back” is building.

The more important variable is algorithms. A significant share of Bitcoin trading volume now comes from AI agents and algorithmic trading. If “buy Bitcoin in a crisis” strategies are embedded in these algorithms, the pattern can form without human behavioral accumulation. A scenario where trust is built in code before it is built in people.

Bitcoin is not “digital gold” today. But if market structure, participant composition, and behavioral accumulation shift on the foundation of its proven utility, it can become the “next gold.” Not a replica of gold, but the birth of an entirely new category.

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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.

Gold Has Proven the Model. The Rest Is Next.

• The commodity tokenization market grew 4x in one year, from $1.9B in early 2025 to $7.13B in February 2026.

• Commodity tokenization preserves rights to physical assets while enabling fractional participation, 24/7 trading, and on-chain transparency. Gold validated the model first, with expansion now underway into energy and agriculture.

  • Gold: XAUT ($3.57B) + PAXG ($2.31B) account for 73% of the market. In 2025, tokenized gold traded $178B in volume, surpassing every major gold ETF except GLD and ranking as the world’s second-largest gold investment product by volume

  • Energy: JMWH ($861M) tokenizes electricity (MWh) but is not listed on any DEX/CEX, limiting retail access and keeping actual trading extremely thin

  • Agriculture: JSOY_OIL ($300M) introduced a 1 token = 1 ton soybean oil structure, but on-chain activity shows only Mint/Burn with no real trading

• Tokenization does not solve everything. Gold still requires offline vault storage, proof-of-reserve does not match TradFi-grade audits, and half of the 39 products remain unregulated. Fragmented global regulation across SEC/CFTC/MiCA, systemic risk from issuer concentration, and thin volume outside gold remain open challenges.

• Gold has proven that tokenization works. Energy and agriculture present significant transformation potential given existing inefficiencies in oligopolistic structures, opaque supply chains, and high entry barriers. The shift toward open participation structures is unlikely to reverse, and the pace at which these challenges are resolved will determine the market’s growth ceiling.

Amid the accelerating growth of the RWA market in 2026, commodities are also being tokenized. Please review the current types of tokenized commodities and their issuance mechanisms immediately.

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Commodity Tokenization Market Grew More Than 4x

• Market grew from $1.9B (early 2025) to $7.13B (Feb 2026), over 4x in one year

• Market cap growth blends gold price appreciation (+77%) with new issuance; simple comparison alone does not isolate real growth

• 2025 tokenized gold volume of $178B exceeded all major gold ETFs except GLD, ranking 2nd globally by volume. Proves the commodity tokenization model works in practice

Fast Growth, but 73% Is Gold

• 15 of 39 products are gold-linked, ~73% ($5.3B) of total market cap

• Top 2 gold tokens (XAUT $2.7B, PAXG $2.4B) = 71% of entire RWA token market

• Other sectors (energy, agriculture, diamonds) present but negligible in scale; early-stage

Tokenized Commodity Product Comparison

Tokenized Gold, What Is Different?

• Institutional physical gold trading on the London market requires $200M+ minimum. ETFs lowered the barrier but provide only indirect ownership via fund shares. Direct ownership and high accessibility could not coexist

• Tokenized gold resolves this by maintaining direct claims on physical bullion while enabling fractional participation, 24/7 trading, and DeFi collateral use

How Is Gold Tokenized?

• Institutional user remits fiat; Paxos buys LBMA-approved bullion, stores in allocated Brink’s London vault. Tokens minted only after physical gold secured (mint-on-demand)

• Redemption reverses the flow. Tokens burned, physical gold or cash returned. Token supply fully pegged to physical gold in/outflows

• Issuer buys gold on behalf of user, records transfers digitally within third-party-verified vault

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