Author: Neeraj Srivastava, CTO of MNEE

When stablecoins first emerged, they were touted as a revolution in the payments space. Traditional banking systems typically take 1 to 4 days to settle debit card transactions (wire transfers can take weeks) and charge high fees for this service. Stablecoin settlements would not only be faster and cheaper but almost instantaneous, with costs nearly zero.

Unfortunately, we cannot truly claim that they have delivered on this promise. While transaction settlement times have significantly decreased, there are still considerable differences depending on the blockchain used.

Ethereum, which hosts the vast majority of stablecoin supply, takes about 3 minutes to confirm transactions, and its fees can still occasionally spike to several dollars.

We can do better. If stablecoins are to be genuinely marketed as instant currency, the blockchain infrastructure needs to become more efficient.

For developers, fintech companies, and merchants integrating stablecoins, the wish list is relatively simple: near-instant final confirmation, gas fees as low as zero, ease of integration, and predictable performance.

However, when you compare different chains, the differences are stark. If you transact with USDC on Solana, payment achieves final confirmation in about 400 milliseconds. On Arbitrum, the same transaction takes about 3 minutes. On Base, the wait time can range from 3 to 9 minutes. Some chains, like Plume or ZKsync Era, may take 30 minutes or even hours.

We are far from achieving near-instant final confirmation or predictable performance.

There is also the issue of gas fees. As the backbone of the stablecoin market, Ethereum continues to experience fee spikes, which can increase the cost of a single USDT transaction to $2 or $3. Other chains, like Avalanche or Polygon, can process transactions for less than $0.0003, although this is partly due to lower traffic on these chains.

The simple fact is that most stablecoin transactions still run on infrastructure that has never been optimized for high-volume, ultra-low-cost payments.

At first glance, waiting a few extra seconds for transaction settlement may not seem like a significant issue. So what if it costs a few more dollars than expected? After all, these settlements are still much faster and cheaper than wire transfers. However, at scale, these issues can lead to substantial financial and psychological costs.

For everyday consumers, delays mean inconvenience. No one wants to wait 3 minutes at the checkout for transaction confirmation. Unexpected fees are a major reason for shopping cart abandonment in e-commerce. The unreliability of blockchain infrastructure translates into a diminished user experience and lost sales for merchants.

For professional traders, market makers, and cross-border forex desks, the stakes are higher. In financial markets, every millisecond counts. A second of delay can mean the difference between executing an arbitrage trade and missing out, while high transaction fees can render specific trades unprofitable. These issues ultimately trickle down to end users, who are forced to accept higher costs due to market inefficiencies.

The good news is that the industry has recognized this problem and is addressing it head-on. An increasing number of stablecoin issuers are launching their own blockchains specifically designed for payments.

For example, Tether has launched Plasma, a blockchain focused on stablecoins, while Circle has introduced its own settlement network, Arc. Payment giant Stripe is also collaborating with Paradigm to build its own chain, Tempo. These dedicated chains prioritize fast confirmation times and minimal fees.

This is an encouraging development, but it raises new questions. Will these chains truly evolve into open and interoperable ecosystems, or will they shut out competitors? Ideally, a blockchain optimized for payments should not only serve the issuer that built it but also support multiple tokens and enable fair competition.

The industry must avoid recreating the fragmentation and inefficiency that plague traditional finance. However, isolated private blockchains, no matter how optimized, will do just that. Converting your USDT to USDC to use one platform, then converting your USDC to USDe to use another chain is a slow and costly process. A better path is to create open, high-performance blockchains that allow all stablecoins to operate on an equal footing.

The promise of instant, borderless digital currency is within reach. To achieve this, we need open, high-performance blockchains that allow all stablecoins to operate on an equal basis.

Author: Neeraj Srivastava, CTO of MNEE

Related: Standard Chartered CEO predicts the end of cash: "All currencies will be digitized"

This article is for general informational purposes only and is not intended to be, nor should it be construed as, legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Original: Opinion: Stablecoins Deserve Better Infrastructure, and They’re Finally Getting It

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