The Next Chapter in On-chain Finance: Stablecoins, RWAs, and Rates [FP Weekly 33]
Recap of Four Pillars research content on Week 33, 2025
[Issue] Circle Unveils Arc: A Similar Yet Different Playbook from Tether
Written by 100y
On August 13, 2025, Circle unveiled Arc, a purpose-built L1 blockchain for USDC that it has been developing in-house. In the midst of the recent surge of stablecoin networks, Arc’s launch attracted significant attention as Circle joined the trend of releasing its own blockchain.
Arc aims to enable enterprises and institutions to leverage blockchain infrastructure more seamlessly while remaining compliant with regulations by providing 1) USDC as a gas token, 2) high scalability and instant finality through the Malachite consensus algorithm, and 3) optional opt-in privacy features.
Circle’s Arc employs a playbook that is both similar to and different from USDT-focused networks like Stable and Plasma, which are backed by Tether. Arc’s differentiators include 1) integration with Circle’s extensive suite of products, 2) a regulation-friendly approach, and 3) a built-in FX engine.
The emergence of Arc offers significant implications for the industry. This article examines 1) the differing directions of Tether and Circle in the realm of stablecoin networks, 2) whether the competition between Circle and Tether will intensify, 3) the moves of other networks such as Codex and 1Money Network, and 4) whether Arc’s real competitor will be Tempo rather than Stable or Plasma.
[Issue] Avantis’ Growth Plans for the $1 Quadrillion Trading Volume Market
Written by Eren
RWAs are at the most opportune moment in the history of onchain finance. While the regulatory environment is becoming clearer and infrastructure is advancing, RWAs still remain largely in the “tokenization” phase, with very few services or asset types available for actual market participants to use.
Avantis segments RWA market participants to identify distinct demand profiles, proposing three tailored growth strategies: ① LP vaults targeting risk‑averse users seeking stable yield, ② an RWA perpetual trading engine for risk‑tolerant users looking to take leveraged bets on volatile RWA assets, ③ an onchain U.S. equities futures market for users with limited access to global assets.
Avantis operates stable‑farming‑enabled LP vaults that pay trading‑fee‑based yield to liquidity providers. The vaults currently offer around 15% APY, significantly higher than U.S. Treasuries, and feature a tranche structure that allows users to select a vault aligned with their risk profile.
The Avantis RWA perpetual trading engine supports leveraged trading and adopts synthetic RWAs to create a liquidity environment optimized for these markets. RWA perpetual markets tend to respond with relatively predictable directional moves to macroeconomic events, allowing traders to build systematic strategies around scheduled volatility, making them a differentiated alternative market.
Today’s traditional financial infrastructure imposes structural barriers such as leverage restrictions, limited asset availability, high fees, and slow settlement/liquidity. Avantis addresses these by leveraging Base Network’s onchain rails to offer a new entry point into the high‑demand U.S. equities and equity index futures markets.
[Issue] Treehouse: An Observatory Built Above the Dark Forest
Written by c4lvin
While fixed income markets in traditional finance reach $600+ trillion, which is five times the size of equity markets, they barely exist in DeFi. This gap stems from the absence of standardized benchmark rates and extreme market fragmentation. Treehouse proposes DOR and tAsset as critical infrastructure to bridge this divide.
DOR (Decentralized Offered Rates) isn't just another price oracle. It's a new primitive designed to facilitate DeFi interest rate markets and institutional capital inflows. Through a structure where five stakeholder groups provide checks and balances, combined with game-theoretic incentives, Treehouse creates manipulation-resistant benchmark rates.
tAsset goes beyond simple liquid staking tokens, employing leveraged arbitrage strategies to create market efficiency. By incorporating tAsset as an economic security element for DOR, Treehouse strengthens DOR's position as a trustworthy benchmark rate.
Through its DOR and tAsset primitives, Treehouse aims to elevate DeFi market maturity to the next level, laying the groundwork for meaningful institutional capital participation.
This Week’s Research
[Issues]
Circle Unveils Arc: A Similar Yet Different Playbook from Tether
Avantis’ Growth Plans for the $1 Quadrillion Trading Volume Market
[Comments]