Build It or Buy It: A Key Choice for Blockchain Stablecoin Infrastructure

Recent examples of blockchain going mainstream include SWIFT’s use of distributed ledger technology as part of its inter-bank messaging system, while payment processor Stripe created a native blockchain, Tempo. And even JPMorgan, not previously known for its crypto enthusiasm, unveiled its own JPMD stablecoin-like token in June. 

Tokenized & pegged

Stablecoins, which are tokenized assets linked to a real-world currency like the US dollar, are shaping the most recent wave of blockchain development for mass appeal. Both MetaMask and Sui have added native stablecoins to their existing ecosystems, while stablecoin giant Circle is developing a blockchain using its native USDC as the token. They mark the first step in what some predict will be a wave of tokenization efforts.

“Wall Street is going to innovate on the blockchain over the next 10 to 15 years,” BitMine Chairman Tom Lee told the Token2049 Singapore conference in October. Stablecoins are part of the story, but so are “tokenized equities, tokenizing credit, real estate, reputation, and eventually intellectual property,” he said.

At the heart of the debate lies the question of whether it’s better to own the rails or to build on existing networks, each direction introducing its own set of opportunities and challenges. Supporters of native blockchain stablecoins say the upsides of building them justify the resources required for development, allowing full control over the technology. Others warn that native blockchains could be a distraction that causes undue fragmentation and increases risk.

The case for going native

Introducing a stablecoin on a native chain has appeal on several fronts. At the technical level, controlling both the ledger and the currency makes it easier to programme the system at a deeper level, integrate it directly with treasury operations and fully capture all transaction fees.​

Going native is a natural evolution for companies with sufficient scale, said Nikhil Raghuveera, CEO and co-founder of Predicate, a company that streamlines interactions between blockchain and traditional finance. By creating a blockchain, companies can keep control over the backing and yield of their stablecoin, ensuring it aligns with their ecosystem, he said in an interview for Sandmark. “I think it makes sense,” he said.

It can also be more cost effective. Companies like Circle or Tether often charge six or seven‑figure fees to deploy their stablecoins on new blockchains. In contrast, an in‑house token can be rolled out for a fraction of the cost. Native blockchains also offer an alternative to third-party payment rails like Visa or Mastercard, reducing fees while opening potential revenue streams. 

“It's more valuable… when it's part of their product offering as a whole,” Raghuveera said, adding that just launching a native stablecoin may not get the issuer the results they want.

Understanding the user

Although the new technology comes with many potential benefits for businesses, building on a native blockchain can introduce additional friction into the transaction flow. The learning curve of wallets and onchain transactions can deter first-time users, and even experienced crypto participants may balk at the added step of bridging funds to a new network.

Unless issuers can demonstrate a genuine product-market fit it may needlessly increase costs without there being much of a return due to slow adoption, said Chris Yin, founder and CEO of Plume Network, a blockchain issuer focused on real-world assets.

“We're just excited about the word stablecoin right now, because there are real advantages to doing things onchain, but none of these people actually understand who the users are, what they're doing and how to get them,” he said. 

He noted that the introduction of new payments systems in the past, like PayPal, were only successful after years of users “being paid” in rewards. “If you're not offering huge incentives and rewards on top, no one's going to use it,” he continued. “Distribution is an advantage, but people think just because they have users on the network it acts as a trench. It’s not.”

A native stablecoin blockchain can also introduce challenges with liquidity management, Raghuveera said. Users may find themselves juggling different versions of the same asset, making it harder to move funds seamlessly between ecosystems and potentially slowing broader adoption.

Stripe and JPMorgan

When fintech company Stripe offered Tempo in September, it opted to develop a native blockchain rather than buy into a generic solution. That decision had little direct impact on its clients, who were presented with the benefits of blockchain, such as faster cross-border payments and reduced fees, without having to engage with the technicalities. Meanwhile, Stripe could move away from a reliance on traditional payment rails and reap the rewards of fully owning the technology.

On the other hand, JPMorgan’s foray into stablecoin ultimately led to its adoption of Coinbase’s public blockchain, Base, for the launch of its JPM Deposit Token, effectively a stablecoin backed by deposits in the bank, in June. The journey there began in 2019, when the bank started on a suite of blockchain-based infrastructure despite Chairman & CEO Jamie Dimon’s hesitancy to embrace crypto. It first launched a stablecoin-equivalent, JPM Coin, on an internal private blockchain used to streamline settlement between the bank and its corporate clients. 

The Wall Street giant then added programmable payments to the coin in 2023, using the same rails to introduce additional functionality. The use of a private native chain made sense for internal transactions, as it improved speed and reduced costs. However, when the bank launched its new stablecoin equivalent, the JPMD token, distribution of the asset as an alternative to leading stablecoins like USDC was a primary focus, making the case for the use of a general-purpose chain like Base.

The impact of GENIUS

As JPMorgan’s chain was only used in-house, it allowed the bank to easily remain compliant. The GENIUS act, which became law in the US in July, opened the door to further onchain payments systems, setting the regulatory framework and opening a pathway for the traditional finance industry to expand its onchain functionality and follow in JPMorgan’s footsteps.

“GENIUS was extremely useful because we had a clear regulatory framework for what it meant to issue a stablecoin and for it to be legal,” said Will Beeson, founder of Multiliquid, a provider of liquidity for institutional DeFi projects, speaking at a panel discussion. “But I think the even bigger unlock was a broad-based acknowledgement of the fact that this is a sanctioned industry. I think the flood of activity that we saw post GENIUS was driven primarily by that,”

While much of the innovation with onchain payments systems has so far been led by fintech companies, new regulation may also cause the landscape to shift. Compliance requirements may increase the costs and complexity of launching blockchain products – these may be prohibitive for smaller companies. If so, the regulatory environment would favour the development of native blockchain products by large traditional institutions, banks, and Wall Street.

Actions to introduce native stablecoins are typically embroiled in a wider drive to create new proprietary payments systems. “When I hear ‘stablecoin chain,’ my immediate interpretation of that is ‘payments network,’” said Beeson. As a revenue source, “the future of stablecoins is not yield captured by the issuer, it's clearly transaction fees.”

“There are a trillion dead chains out there,” said Plume Networks’ Yin. The key, he underlined, is in understanding the user base enough to design products that mean native blockchains make sense.