The annual transfer scale of the on-chain dollar system has reached approximately $27.6 trillion according to a single data provider, with some data suggesting that this volume has already surpassed the total payment processing of the two major networks, Visa and Mastercard. Meanwhile, Vitalik Buterin recently proposed the judgment that "the 2030s will rewrite the traditional understanding of 'bugs are inevitable'," bringing the development paradigm and the security of financial infrastructure to the same topic. The market is reassessing the highly concentrated pattern surrounding USDT, with a market value of about $199 billion and approximately 60% market share (both according to a single source), as well as the launch of the new dollar-pegged token $U by United Stables: as on-chain payments transition from "toy scale" to "system scale," must the thresholds for security and verifiability also be raised in tandem?
Current market debates focus on three points: first, whether the expanded scale of on-chain settlement is sufficient to support a new round of infrastructure upgrades; second, to what extent technical routes such as formal verification can compress code risks into an "engineering acceptable" range; and third, how regulation and sovereign funds will reshape the rules of the game in this process. Participants need to pay close attention to changes in on-chain payment volumes, the market value and concentration of mainstream dollar-pegged tokens, the frequency of major contract security incidents, and the breadth of leading protocols adopting tools like formal verification; these data points may constitute key coordinates for industry structural adjustments in the next 5 to 10 years.
Core of the Event
The latest round of discussions surrounding on-chain dollars has seen signals from both the technical and market sides emerge simultaneously: on one hand, the settlement scale has broken through the symbolic threshold of traditional payment networks, and on the other hand, there is a forward-looking judgment regarding the "bug-free code era."
According to a single data provider, the total transfer amount of various dollar-pegged tokens on public chains in 2024 is approximately $27.6 trillion. This figure has been used by some research institutions to compare with the annual payment processing scale of Visa and Mastercard, emphasizing "total on-chain transfers" rather than operational metrics like revenue or profit. The key point is that on-chain dollars have entered a scale range similar to "system-level financial infrastructure" in terms of transaction volume, thereby raising the requirements for underlying security and verifiability.
In terms of specific asset structure, also according to a single source, as of this year, USDT has a market value of approximately $199 billion, accounting for about 60% of the total market value of dollar-pegged tokens, showing a highly concentrated pattern. At the same time, United Stables has launched the new dollar-pegged token $U, attempting to carve out incremental space in an already highly concentrated market, which the market views as a potential new variable that could differentiate in terms of compliance transparency and underlying technical standards.
A more symbolic move is that, according to a single report, the Swiss National Bank has purchased approximately $38 million worth of MicroStrategy stock, a company known for its large Bitcoin holdings. This action has been viewed by some observers as a case of "sovereign funds indirectly holding Bitcoin through equity assets," reflecting a marginal increase in the traditional public sector's acceptance of the financialization trend of crypto assets.
Incentive Analysis
The leap in the scale of on-chain dollars is intertwined with three main lines: technological iteration, interest rate environment, and global capital allocation. On one end, there are more convenient cross-platform payments and DeFi application scenarios; on the other end, there are accessibility constraints of traditional dollar assets under different jurisdictions, with a neutral macro environment in between.
On the news front, PANews has summarized the market function of these assets as "on-chain dollars," emphasizing their role as a settlement medium in exchanges, DeFi protocols, and on-chain payment scenarios. As the market becomes increasingly accustomed to using tokens like USDT, USDC, and the newly introduced $U for accounting and settlement, the status of "on-chain dollars" as a liquidity hub and collateral lingua franca is further solidified.
On the funding side, with the Federal Reserve being analyzed by some institutions as gradually approaching the "neutral interest rate" range, there remains a preference for dollar assets globally. However, under the constraints of cross-border capital flows and local regulatory differences, on-chain dollars provide a relatively standardized and technically programmable channel. This "detour" configuration demand is one of the important driving forces behind the rise in on-chain settlement volume.
On the sentiment side, with several traditional financial institutions announcing their involvement in custody, payment, and on-chain settlement businesses over the past few years, the market's perception of these assets as having "tool attributes greater than speculative attributes" has strengthened. The report of the Swiss National Bank holding MicroStrategy stock, even if the amount is far from sufficient to change the macro asset allocation pattern, has reinforced the narrative that "sovereign funds can indirectly expose themselves to crypto risks through financial assets," emotionally supporting the legitimization of on-chain financial infrastructure.
Deep Logic
The process of on-chain dollars moving from a marginal tool to the core settlement layer is intertwined with the security boundaries of the underlying code, the evolution of development paradigms, and the adaptation of regulatory systems. Recently, Vitalik Buterin proposed in his personal remarks that the traditional view of "bugs are inevitable, and it is impossible to write bug-free code" may be rewritten in the 2030s, bringing engineering ideals into the discussion framework of financial system risk management.
Historically, from Web2 internet to public chain smart contracts, mainstream engineering culture tends to acknowledge that "code defects cannot be completely avoided," thus emphasizing monitoring, hotfixes, and gray releases. However, in on-chain financial scenarios, once contracts are deployed, they are often difficult to change at will, and assets are settled in real-time, creating direct tension between the traditional security concept of "iterative fixes after going live" and capital safety. In this context, a more reasonable engineering interpretation of "bug-free code" is: through formal verification and other means, to strictly align the behavior of key modules with expected specifications at a mathematical level, thereby significantly enhancing confidence in code correctness, rather than a literal interpretation of "zero defects."
The basic idea of formal verification is to first establish a formal specification description for the system and then mathematically prove that the implementation meets the specification. In the blockchain field, there have already been some practices adopting formal methods on core protocols, consensus algorithms, or high-value contracts, but they are generally still at the "spot coverage" stage. Some secondary sources summarizing Vitalik's views mentioned that "the standard for verifying 1,000 lines of code will decrease," which can be understood as the future toolchain becoming more mature and at a higher level of abstraction, allowing for more key logic to be covered at the same cost, rather than a simple linear cost decline.
The gap between these technical ideals and real-world constraints mainly comes from three aspects: first, the current formal methods require high skill levels from developers, and talent supply is limited; second, existing mainstream contract languages were not originally designed for verifiability, and backward compatibility brings additional costs; third, in the commercial environment, project parties still primarily weigh "development speed against security level" based on short-term delivery. Therefore, the technical vision needs to work in conjunction with economic incentives and regulatory expectations to be realized at the level of on-chain financial infrastructure.
Bull-Bear Game
In the reality of the rapid expansion of on-chain dollar volume and the expectation of a "bug-free code era," the game between bulls and bears focuses on whether the security demand is strong enough and whether the technical supply is reliable enough.
Supporters argue that when the total amount of on-chain dollar transfers has reached $27.6 trillion according to a single source in 2024, the systemic importance of this system can no longer be ignored. From a bullish perspective, as mainstream tokens like USDT take on core roles in DeFi collateral and settlement, any significant defect at the underlying contract level could transmit broader systemic risks through price mechanisms and settlement chains, thus making it economically rational to push for higher security standards in key contracts.
On the technical side, bulls believe that formal verification and languages designed for verifiability will gradually become the "infrastructure standard" for high-value contracts in the 2030s: prioritizing coverage of minting and redemption logic, settlement cores of lending and clearing protocols, multi-signature and governance execution, and other key links. Within this framework, if the $U launched by United Stables adopts higher thresholds in terms of technical transparency and security standards, it has the opportunity to attract some institutional and compliant capital allocation with a "safety premium," bringing structural increments to the market.
Bearish views emphasize real-world constraints: first, most security incidents currently exposed are not purely "low-level bugs," but rather boundary conditions, expected interactions, and governance-level game issues in complex state spaces, making it difficult for formal methods to cover all risks in the short term; second, the cost of formal verification for large-scale contracts is high, and project parties lack sufficient incentives to pay high upfront costs for "invisible risks" under competitive pressure; third, regulation has not yet made "provable safety" a hard requirement, leading the market to rely more on traditional audits, bug bounties, and insurance agreements as remedial measures.
This divergence between bulls and bears also spills over into the entire on-chain financial ecosystem: if key contracts cannot achieve near-infrastructure-level reliability in engineering, then the risk of systemic sell-offs and chain liquidations still exists under weakened market sentiment or external shocks; conversely, if dollar-pegged tokens represented by USDT and $U establish a "harder" safety boundary in terms of technical standards and compliance transparency, on-chain finance is more likely to be seen as an extension of the traditional financial system rather than a high-risk experimental field.
Outlook
Starting from the settlement volume of on-chain dollars and the technical ideals of code security, the key variables in the coming years will focus on the pace of infrastructure upgrades, regulatory requirements, and the reconstruction of market incentives.
In terms of infrastructure, a more realistic path is to advance in layers: first, prioritize the application of formal verification to relatively simple but highly valuable core modules, such as the minting and redemption of dollar-pegged tokens, custody and freezing logic, and the settlement core of lending and clearing protocols, and then gradually expand to more complex derivatives and composite protocols. If key financial primitives first achieve "near bug-free" engineering standards, even if the upper-layer innovative protocols maintain high complexity, they can operate under the premise of compressed underlying risks.
On the regulatory and policy front, regions like Hong Kong have been continuously improving relevant licensing and custody standards in recent years, and the pilot for cross-border payments with the digital yuan is also steadily advancing. These two routes represent different paradigms of "public chain composable finance" and "central bank-led closed-loop system engineering." Once regulatory agencies begin to introduce requirements such as "provable safety" and "transparent and auditable logic" into the rules, formal verification may shift from a voluntary choice to an entry threshold for specific business categories.
In terms of market incentives, new entrants like United Stables' $U, if they advance further in code openness, verification method disclosure, and risk control architecture, can test whether "safety transparency" is sufficient to leverage partial substitution for existing leading assets like USDT. With the total on-chain transfer amount continuing to expand and a coexistence of different dollar-pegged tokens, the settlement layer is likely to evolve into a multi-currency coexistence structure, with liquidity and safety as core competitive dimensions.
Looking towards the 2030s, the "bug-free code era" envisioned by Vitalik is more likely to manifest in: for key on-chain financial infrastructure, the industry will gradually shift from a defensive understanding of "code as risk" to an engineering standard of "code as guarantee," making technical correctness a part of credit. For participants, the focus should not be on a single price indicator, but rather on several structural data points: the total amount of on-chain dollars and payment share, the frequency and scale of major security incidents, the market value share of protocols adopting high-standard tools like formal verification, and changes in regulatory attitudes towards verifiable finance.
In this process, any institution attempting to build long-term financial businesses on-chain, whether as an issuer, trading platform, or asset manager, will need to reassess its technology stack and security budget allocation: those who can integrate "high-confidence code" into their products and brand earlier are more likely to gain a premium in the next round of on-chain financial restructuring.
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