Stablecoin Industry Chain: Profit-Making Steps After Issuance

Author: Ryan Yoon; Source: Tiger Research; Translated by: Shaw, Jinse Finance

Key takeaways

• This report steps out of the constraints of the issuer market dominated by Tether and Circle, and analyzes the real business structure that emerges across five stages of the value chain (including access, remittance, payments, and yield generation).

• The mainstream strategy is not “building a system from scratch,” but rather layering the efficiency of stablecoins (instant settlement, low-cost remittances) onto existing traditional financial infrastructure—like Stripe acquiring Bridge. However, yield generation is a domain traditional finance struggles to reach, requiring specialized expertise.

• As rate cuts reduce the attractiveness of issuance revenue, competition intensifies and market value shifts toward the “underlying settlement layer.” Stablecoins do not replace traditional finance; instead, they demonstrate a model of vertical integration with regulated financial systems.

1. The era of a comprehensive review of the full stablecoin value chain

At present, discussions about the stablecoin industry mainly focus on the issuance stage. The performance of major issuers such as Tether and Circle, along with the responses from regulators in various countries, are seen as key market indicators, but they are only the starting point of the stablecoin value chain.

The full stablecoin value chain includes the economic “processes” circulating after token issuance. It is defined as a five-stage value chain: issuance, subsequent onboarding, transfers, payments, and yield generation.

Analyzing the industry from the perspective of the value chain makes it clear that although the issuance market is monopolized by a few participants, its downstream segments involve more competitors, thereby creating market opportunities.

2. Issuance yield: tracking $1,000

Think about how the $1,000 in Ryan’s bank account moves through the stablecoin ecosystem. To understand this, you need to examine the five-stage value chain in order, from issuance to yield generation.

• Issuance: Major issuers mint stablecoins backed by collateral such as U.S. Treasuries, providing ample liquidity to the market.

• Onboarding (on-chain entry): When Ryan requests to exchange his $1,000 into stablecoins through an onboarding service, the onboarding service provider processes the request and sends the tokens to his wallet. At this point, the asset leaves the fiat currency system and becomes on-chain liquidity.

• Transfer: Ryan sends a $500 remittance to his family in Mexico to cover living expenses. The remittance system processes the payment instantly, and the recipient converts the funds into local currency for spending.

• Payment: Ryan then uses the remaining $200 to pay at a grocery store. Here, the payment system settles immediately.

• Yield: The final $300 left in his wallet is not sitting idle. Instead, it is deposited into a treasury of a yield protocol, where it is managed as a financial asset to generate returns.

Through this process, Ryan’s $1,000 is converted from fiat into stablecoins and evolves into a cross-border payment and asset-management tool. Every layer of the flow of Ryan’s funds aligns perfectly with the stablecoin industry’s value chain.

2.1. Issuance

The issuance market is an economies-of-scale market, and its access barriers are built on trust and liquidity. Early issuers Tether and Circle hold a position of oligopolistic monopoly; later entrants need to surpass the differentiation strategies beyond the reserve interest model.

1）Industry structure

Stablecoin issuance refers to locking in its value by minting and burning tokens, with reserves (primarily U.S. Treasuries) as collateral. The overall market size is about $300 billion, of which assets pegged to the U.S. dollar account for 99.99%. Tether and Circle together hold about 83% market share. Economies of scale are deeply entrenched, enhancing transaction convenience, liquidity, and trust.

As the industry matures, functions once monopolized by a single issuer are undergoing specialization and unbundling. The issuer may appear to be a single entity on the surface, but in reality, its four internal functions—licensing (regulatory qualifications), reserve management and custody, token minting and burning, and distribution—have been allocated to different institutions. Through this process, issuers are decentralizing most of their actual operational responsibilities.

For example, Circle delegates a substantial portion of distribution rights to Coinbase, while Tether delegates most of its reserves to the custodian Cantor Fitzgerald.

2）Types of business models

• Reserve interest: Revenue mainly comes from returns on reserve management, which is an advantage for leading issuers (Tether, Circle) with large liquidity pools.

• Payment fees: Revenue comes from fees generated when tokens are used for payments and settlement. Profitability depends on transaction speed rather than market cap (StraitsX).

• Issuance-as-a-service: Service providers do not directly issue tokens; instead, they lease infrastructure and licenses and capture the spread. Growth is driven more by network effects than scale (M0, Paxos, Bridge).

• Regional: Providers secure exclusive liquidity by entering jurisdictions with unclear regulation first or markets for non-USD currencies (KRWQ, JPYC).

3）Case study: Circle

When institutional clients deposit dollars into Circle Mint (Circle’s deposit and withdrawal platform), Circle mints USDC 1:1. Because Circle’s main revenue comes from interest on these deposits, it does not charge an additional minting fee during issuance. Its core operating goal is to maximize this interest-free circulating supply. The deposited dollars are held together with cash and cash equivalents in the Circle Reserve Fund, a money market fund managed by BlackRock and registered with the U.S. Securities and Exchange Commission, which primarily invests in short-term U.S. Treasuries.

Circle allocates this interest income through agreements with its distribution channels. Under a cooperation agreement signed in August 2023, Circle and Coinbase will split the interest earned on USDC reserve funds as follows:

• USDC held on the Coinbase platform: Coinbase receives 100% of the interest income generated by the corresponding reserve funds.

• USDC deposited on Circle’s own platform: Circle retains 100% of the interest income generated by the corresponding reserve funds.

• USDC held outside the two platforms (remaining interest income): Interest earned on USDC reserves circulating outside the two platforms, including third-party exchanges, individual and institutional wallets, and DeFi, is split 50:50 between Circle and Coinbase.

This reflects a carefully designed strategy. Circle builds incentive mechanisms both inside and outside its platform with core distribution partners, sharing part of issuance revenue with partners in exchange for maximizing USDC distribution rails and ecosystem share.

4）Main impacts

Stablecoin issuance is an economies-of-scale market. The advantage of early entry and the scale of available liquidity determine outcomes, making the access threshold for later entrants adopting a direct issuance model extremely high. Therefore, new entrants should focus on functional decoupling within the value chain rather than obsessing over issuance itself.

A more effective strategy is to build incomparable expertise at specific points in the value chain (e.g., licensing, asset custody, settlement infrastructure, or distribution channels) and establish an indispensable middleware position that other participants cannot replace. In other words, the essence of future competition will no longer be who issues the most stablecoins, but which participants can capture value throughout the entire process of stablecoin circulation and consumption—and occupy strategic positions in it.

2.2. On-ramps

On-ramp revenue comes from transaction-volume-related fees and spreads. The actual fees consumers pay vary by payment method: bank transfers are 2–4%, credit cards are 4–7%, but according to Banxa data, the service providers’ actual net yield margin is about 3%. The conversion function itself is hard to differentiate, and competition is intense—so aggregation platforms emerge to route transactions to the lowest-cost option.

1）Industry structure

This layer consists of on-ramp services (responsible for exchanging fiat into tokens) and wallet and custody service providers (responsible for holding the converted assets). The two are closely connected: the former exchanges fiat into stablecoins, while the latter stores those stablecoins.

On-ramp revenue comes from transaction-volume-related fees and spreads, and profit margins vary significantly across payment methods. However, the conversion function itself is difficult to differentiate, so products offered by multiple service providers are broadly similar and take-rate net percentages tend toward around 3%.

2）Types of business models

• Consumer on-ramps: Provide currency exchange services directly to end users and charge transaction fees and spreads. Because differentiation is hard, competitiveness ultimately depends on the breadth of license coverage, the reach of payment networks, and reputation—where reputation is reflected in exchange rates (e.g., MoonPay, Ramp Network, and Banxa).

• B2B white-label model: Embed the on-ramp channel into wallets and applications, and share about 1% of the fee from each transaction with partners. This enables distribution without needing a consumer-facing brand, and the deeper the integration with large partners, the higher the conversion costs—forming a moat (Transak).

• Aggregators: Route transactions across multiple on-ramps to find the best path and earn an intermediary fee. Their value grows with the number of on-ramps, but reliance on partner networks is also a constraint (MELD).

3）Case study: MoonPay

MoonPay is a non-custodial token purchase platform that lets users buy tokens with fiat and send them directly to their own wallets. Its main revenue sources are transaction fees and spreads. Spreads range from 1% for bank transfers to as high as 4.5% for credit card payments, and the minimum fee for small transactions is $3.99. MoonPay’s fee structure is divided into three tiers, reflecting how it distributes revenue and allocates earnings.

MoonPay’s revenue structure has two channels: direct traffic and embedded transactions via partners. It embeds solutions into more than 500 wallets and applications. Notably, this model allows partners to set their own fees and features, which is the core driver of MoonPay’s ability to efficiently scale distribution and share revenue with partners.

4）Main impacts

As services become commoditized and price competition intensifies, simple on-ramp fee revenue faces enormous margin pressure. Therefore, to build a sustainable business, the once-off fee structure must shift into stable recurring income.

As a result, consumer on-ramp service providers are expanding toward downstream value-chain segments, such as card issuance and settlement infrastructure. MoonPay’s acquisition of Iron and its move into branded card issuance services is an example of this shift, though the financial performance of this recurring-income strategy still needs to be validated.

The “embedded” strategy—where service providers integrate their services into larger platforms—has produced two clearly different outcomes. Some service providers build independent competitive advantages and preserve exclusivity (e.g., Transak and Turnkey), while others are acquired by large payment and custody companies, such as Privy acquired by Stripe and Dynamic acquired by Fireblocks.

It is still too early to judge which outcome will become the mainstream model, but the on-ramp and wallet layers clearly play a critical role in the industry.

2.3. Transfers

The transfer layer is responsible for stablecoin liquidity movement. It includes individual and enterprise transfers, as well as paying salaries to employees worldwide.

This part stands out because it shows the stablecoins’ cost advantage in the most concrete and measurable way. Traditional cross-border transfers average more than 6% cost, while using stablecoins can significantly reduce this cost.

1）Industry structure

During the process of converting dollars into tokens and converting tokens back into local currency, fees and FX spreads arise at both ends, but token transfers on-chain themselves are essentially free.

In other words, revenue is not concentrated in remittances themselves, but is concentrated in currency conversion at both ends of remittances and the license fees required for legally handling remittances. Because obtaining remittance licenses (MTL) across U.S. states takes 12 to 24 months, leasing the licenses themselves as infrastructure—what is known as a “compliance is infrastructure” model—has become a powerful revenue pattern.

2）Types of business models

• Cross-border B2B infrastructure: Coordinates cross-border payments and settlement among enterprises, typically charging transfer fees (about 5–10 basis points) and FX spreads (tens of basis points to around 1%, depending on the transaction rails and volume). Some institutions go further by issuing their own stablecoins to capture reserve interest revenue, such as Bridge’s open issuance (Bridge, BVNK, Conduit).

• Payroll management: Focused on salary payments, and responsible for building final relationships with both employees and employers. Besides SaaS subscription fees (a fixed monthly fee per contractor plus an exit fee of about 25 basis points), this model also adds a second revenue stream by investing float funds (i.e., funds waiting to pay salaries) and earning interest—similar to Rise Earn (Rise, Toku).

• Consumer transfers: A specialized model for individual-to-individual cross-border transfers, using stablecoins to reduce backend costs and expanding profit space by maintaining fixed fees that are cheaper than traditional providers (Félix Pago).

3）Case study: Rise

Rise is a stablecoin payroll platform where companies can pay salaries via fiat currencies (USD) or USDC. Every pay cycle, employees can choose their payment method from more than 90 local currencies and stablecoins. In the $1.5 billion of withdrawals processed in aggregate, more than half of withdrawals are made in stablecoins. However, Rise’s actual charges are not for token transfers, but for managing the employment relationship. The platform automatically runs KYC and AML checks, generates contracts for specific countries/regions, issues tax documents, and charges recurring fees for this service.

Rise’s revenue is divided into three tiers, synchronized with the flow of payroll funds.

• Subscription and transaction fees: Employers can choose either a fixed $50 monthly subscription per contractor, or pay 3% of the amount plus a $2.50 transfer fee per transaction. Because payroll disbursements are periodic, this revenue is recurring rather than one-off.

• Legal responsibility assumption (EOR/AOR): A premium service where Rise becomes the legal contracting party itself and bears the risk of employee classification errors. The cost of recording employer (EOR) service is $399 per employee per month. Compared to simple payment processing, the price is eight times higher, mainly due to compliance responsibilities rather than transfer functionality.

• Float fund management (Rise Earn): Rise invests the company’s reserved funds before paying payroll and employees’ USDC balances that have not yet been withdrawn after they receive payroll, into an Aave lending pool on Arbitrum. It does not charge deposit or custody fees; instead, it takes a 1% commission from the generated interest, charged upon withdrawal (launches March 2026).

Because payroll is a monthly fixed cash flow, the platform balance naturally accumulates before disbursement and after employees receive funds but before they withdraw. Rise’s three-tier structure leverages exactly this feature to make profits. In an environment where on-chain transfers are almost free, this can be interpreted as a carefully designed strategy—gradually expanding the charge points from employment relationships (subscriptions) to legal responsibility (EOR) to idle capital (yield), rather than charging directly for the movement of funds.

4）Main impacts

The ultimate winner in the transfers market is not just a provider with the lowest token transfer cost, but a company that can comprehensively control the transaction flow. It needs to ensure conversions and authorizations at both ends of the transaction (Mural Pay, Yellow Card), thereby controlling customer touchpoints. It also builds substantive customer relationships through the payment system (Rise). On top of that, it provides yield (Rise Earn).

Mastercard’s final acquisition of cross-border infrastructure provider BVNK for up to $1.8 billion indicates that settlement infrastructure behind transfers and payments will converge into one.

2.4. Payments

Payments are the core layer of the value chain, where stablecoins are used to settle payments for goods and services. Merchant payments and card services lead this space, but their economic reality still looks less mature compared to market expectations. The current retail circulation speed of on-chain stablecoins is only about one-twentieth of M1 (a measure of money supply), because user top-ups and spending are intermittent rather than tightly connected to recurring financial cycles like salary income and daily expenses.

1）Industry structure

Exchange fees—that is, the fees charged by card networks and issuing banks for each transaction—are the core source of payment revenue, and their scale is proportional to payment volume. However, lower transaction turnover results in weaker profitability per card, and existing revenues need to be allocated among card networks, issuing banks, and payment gateways (PGs). Therefore, the true profit pool is not in the consumer-facing card brands themselves, but in the issuing and settlement infrastructure behind them.

Most consumer card providers do not have their own issuing permissions and rely on this infrastructure, which leads to limited revenue structures and mainly relies on swap spread income.

2）Types of business models

• Payment infrastructure: Coordinates merchant payments and settlement. Besides payment fees, service providers also capture reserve interest income by issuing their own stablecoins. Stripe’s Bridge Open Issuance allocating the reserve income structure obtained by Circle to enterprises is one of the most profitable businesses in this tier (Stripe, BVNK).

• Issuing infrastructure: Supports backend systems for enterprise card issuance. Issuers obtain a share of exchange fees by joining major payment networks such as Visa, and also generate revenue via project management and FX spreads. Its core differentiator is T+0 on-chain settlement based on USDC, which can reduce collateral requirements by up to 60% and significantly improve capital efficiency compared with existing methods (Rain, Reap).

• Consumer cards and neobanks: Provide cards and accounts to end users. Revenue sources include part of exchange fees and FX spreads, membership fees, or profits from managing deposit funds. Because these providers are not issuers themselves, their ability to capture reserve interest is limited, and most rely on issuing infrastructure such as Rain or Reap (Cypher, KAST).

• Card networks: Networks used for payment authorization and settlement. Transaction fees go to issuing banks, while card networks charge a network fee per transaction and benefit from the steadily growing transaction volume. Card networks are turning stablecoin settlement into a backend layer, strengthening the lock-in effect with partner banks (Visa, Mastercard).

3）Case study: Rain

Rain is a B2B back-end infrastructure that helps wallets, exchanges, and neobanks issue consumer cards under their own brands. Partners launch card programs via single API integration. Rain, as a major member of Visa and Mastercard, handles network sponsorship, compliance, issuing, operations, and so on on their behalf. When users swipe a Rain card at a merchant, the process is as follows:

• Authorization (real-time): Payments are authorized via the Visa or Mastercard network, just like any standard credit card. The merchant and consumer experience is exactly the same as with traditional credit cards, and stablecoins remain completely invisible throughout the transaction.

• Balance deduction and ledger management: The user’s on-chain balance is converted in real time and the authorized amount is deducted; Rain manages the entire ledger process.

• Network settlement (daily): Rain settles with card networks entirely in USDC. Because settlement is not constrained by bank cut-off times, settlement happens every day throughout the year (including weekends and holidays), so funds for weekend and holiday payments do not remain frozen for days.

• Fund recovery and working capital: In traditional credit structures, user repayments occur after settlement, so issuing institutions must cover the resulting funding gap. Rain tokenizes credit card receivables and uses them as collateral for on-chain loans, raising settlement funds before collecting from users. As a result, cumulative borrowed and repaid amounts exceed $175 million. Therefore, its collateral requirements are 60% lower than those of traditional issuers.

In short, when consumers use Rain cards, Rain handles everything behind the scenes—from authorization to settlement and fund arrival.

4）Main impacts

The core of payment revenue is not the visible credit card payment processing fees, but the reserve interest driven by issuer positioning and the capital efficiency achieved through T+0 settlement. Most consumer credit card brands are merely front-end customer touchpoints built on top of this infrastructure.

Major credit card networks are moving toward directly acquiring cross-border payment infrastructure, such as BVNK, while Visa, Mastercard, Stripe, and Google are seeking to form a joint stablecoin alliance OpenUSD. This is seen as a vertical integration strategy aimed at bringing the platform into internal operations to defend its unique reserve interest revenue.

2.5. Yield

Yield is the endpoint of the value chain and the tier where the most complex business structure forms. Interest that issuers cannot pass to token holders ultimately returns to users, and this lending business is evolving into a full asset management industry.

1）Industry structure

Early on-chain lending aggregated all assets into a single large pool of funds. Under that structure, default on any one asset could spread risk throughout the entire system. This structural flaw was later addressed by introducing isolated or modular models, which separate collateral and loan terms by market, clearly dividing core infrastructure (immutable lending protocols) from a yield management layer operated by risk management institutions.

This structural separation gave rise to a real on-chain asset management industry. Risk management institutions (similar to traditional asset managers) earn up to 50% performance fees and up to 5% annual management fees from the vaults they operate. The top four institutions combined control about 65% of total value locked (TVL), the total value locked across all vaults, resulting in an oligopoly structure in the field.

On top of this yield infrastructure, there is another layer of financial products that end users actually consume, including tokenized real-world asset (RWA) products that tokenize U.S. Treasuries and private credit, interest-bearing synthetic dollars, and restaking.

2）Types of business models

Lending infrastructure: Captures a portion of the spread between deposits and loans (i.e., the reserve factor), or captures protocol revenue from the interest generated by issuing its own stablecoin (e.g., Aave’s GHO). Another model (such as Morpho) does not charge protocol fees itself, but reallocates this value to downstream token managers and the token ecosystem to promote network growth (Aave, Morpho).

• Risk management institutions: Design asset allocation and risk models based on lending protocols, and charge vault management fees. For example, Steakhouse manages $1.7 billion in assets, with a team of fewer than 20 people, and charges about 5% of interest revenue. It is a model example of on-chain asset management, and its operating cost structure is far more efficient than traditional financial institutions (Steakhouse, Gauntlet).

• RWA Yield Vault: Issues and distributes tokenized U.S. Treasuries or money market funds (MMFs), and charges an annual management fee of about 0.15% to 0.5%. BlackRock’s BUIDL is the underlying asset; Ondo Finance repackages it to fit the decentralized finance (DeFi) ecosystem; Plume Nest distributes it via a Layer 1 blockchain specially built for RWA (BUIDL, Ondo, Nest).

• Interest-bearing synthetic dollars: Generates yield through delta-neutral basis trades or by managing the net interest margin (NIM), then pays that yield to token holders in the form of interest. These tokens fall into two categories: one relying on crypto-native derivatives yield, and the other relying on stable Treasury-collateralized assets (e.g., Ethena and Sky).

• Restaking: Converts already-staked assets back into liquidity; this process is called restaking, with the goal of earning additional yield. Some providers go further by vertically integrating the entire value chain—from charging DeFi vault management fees to directly interfacing with consumer credit card payments (e.g., Ether.fi).

3）Case study: Steakhouse

Steakhouse Financial is a risk management company and belongs to the on-chain asset management sector. It does not build its own lending protocol; instead, it relies on existing infrastructure operated by Morpho and others, acting as a sub-advisor: selecting collateral assets, designing risk parameters such as loan-to-value ratios, and allocating funds across different markets.

Its revenue structure is also similar to traditional asset management: it takes a portion of the interest generated as performance fees and management fees. Because lending protocols like Morpho handle infrastructure operations, accounting, settlement, and custody, custody institutions can scale efficiently using expertise in risk design alone, without bearing additional infrastructure costs.

4）Main impacts

Currently, on-chain asset management institutions manage assets of about $7 billion, which is only about one-twentieth of the global traditional asset management market (about $147 trillion). Such a massive gap suggests that there is still substantial room for growth in the on-chain asset management market.

However, high yield only matters if the underlying systems remain stable. Recent depegging events and a series of shocks in the restaking space have exposed operational risk and tail risk. These extreme cases fall outside normal expectations and cannot be detected by simple smart contract audits alone.

Therefore, capital in the market is shifting from high-yield synthetic dollars toward Treasury-collateral products with relatively lower yields, because institutional investors fundamentally want predictability—the ability to control risk—rather than very high annual percentage yields (APY).

3. Future directions of the stablecoin value chain

The success of the stablecoin market depends not only on issuance scale, but also on which company can control specific customer groups. However, building crypto-native infrastructure from scratch is time-consuming and costly.

The most realistic and feasible strategy is to layer stablecoins’ many advantages—such as same-day settlement, 24/7 operation, low-cost transfers, and programmable yield—onto existing traditional financial infrastructure (rails). A recent series of major M&A activities, including Stripe’s acquisition of Bridge and partnerships between Mastercard and BVNK, point to a trend of combining traditional financial infrastructure with the advantages of stablecoins.

Two trends together further expand this opportunity: the spread of regional currencies and integration with regulated finance.

• Spread of regional currencies: When governments and institutions prepare to issue stablecoins denominated in their local currencies, they are more likely to adopt already mature issuance infrastructure and local banking channels rather than building systems from scratch.

• Integration with regulated finance: Regulated financial institutions such as JPMorgan, Visa, and BlackRock also clearly prefer using mature infrastructure rather than developing their own technology.

Because of these trends, market opportunities are expected to expand across all layers that regulated finance must go through to enter this market, including card issuance and settlement, custody infrastructure, and the yield layer.

In conclusion, issuers need to break away from the intense competition focused on stablecoin issuance, because stablecoins are not an independent product; they are a technology upgrade meant to improve the efficiency of existing financial systems. The true winners will be participants that can control the infrastructure layer built on top of existing traditional finance.

In this structural shift, the industry’s center of gravity is moving both “down” and “inward.” As interest rates fall and weaken the economics of issuance itself, the value of the underlying settlement layer grows with increased usage, so the center of gravity shifts downward toward the settlement layer. At the same time, stablecoins do not replace existing systems; instead, they are rapidly incorporated into regulated financial systems, while national-currency stablecoins achieve organic integration by filling the gaps left in the USD network.