Web2.5 Warring States: USDC Builds Arc, RWA Chains Compete

Key Takeaways

• Opening: the Warring States era begins—lords enter the field.
• Last cycle's L1 wars fought DeFi, NFTs, memes, attention. RWA chains look more like financial infrastructure's Warring States.
• This time the fight isn't loudest slogan or highest TPS—it's who can move treasuries, funds, credit, securities, trade finance, stablecoin settlement safely, compliantly, programmably on-chain.
• RWA chains aren't a Web3 side branch—they're Web2.5's signature base layer: Web2 compliance, accounts, custody, KYC, institutional rails + Web3 settlement, tokenization, composability, verifiability.
• One line: Web2.5 is the bridge; RWA chains are the piers.
• Today, start with Circle's Arc Network.

One-Line Summary

RWA chain rise resembles financial infrastructure's Warring States—not last cycle's DeFi/NFT attention war.

Body

RWA chains aren't ordinary Web3 narrative—they're Web2.5's hardest financial infrastructure competition.

Opening: Warring States begin—lords enter.

Last cycle's L1 wars fought DeFi, NFTs, memes, attention. RWA chains look more like financial infrastructure's Warring States.

This time: treasuries, funds, credit, securities, trade finance, stablecoin settlement—safely, compliantly, programmably on-chain.

RWA chains aren't a Web3 side branch—they're Web2.5's signature base layer: Web2 compliance, accounts, custody, KYC, institutional entry + Web3 on-chain settlement, asset tokenization, composability, verifiability.

One line: Web2.5 is the bridge; RWA chains are the piers.

I. Arc First: USDC Issuer Builds Its Own L1

Start with Circle's Arc Network.

Reason: stablecoin issuers were asset suppliers on chains—not L1 competitors. USDC circulates on Ethereum, Solana, Base, Arbitrum—Circle like a supply caravan for warring states. Arc means Circle now builds roads, sets checkpoints, founds cities.

Arc: open L1 for stablecoin finance—not entertainment crypto, but payments, FX, capital markets, RWA settlement, enterprise finance. Strategic pillars:

First, USDC as native gas. Critical for institutions. Enterprises dislike volatile native tokens for fees or unexplained crypto on balance sheets. USDC gas = dollar-denominated fees—budget, reconciliation, risk fit enterprise workflows.

Second, sub-second deterministic finality. Circle emphasizes institutional workflows need low latency, deterministic settlement—not long confirmations or reorg risk. For payments, FX, treasury, capital markets settlement, finality is business requirement, not vanity metric.

Third, EVM compatible. No greenfield dev ecosystem—Solidity, Hardhat, Foundry continue; lower migration cost.

Fourth, optional privacy. TradFi won't accept all transaction detail permanently public. RWA and institutional payments need balance of transparency, audit, commercial privacy. Arc's opt-in privacy tells institutions: on-chain without exposing all business to the world.

Fifth, Circle platform embedded. Arc isn't isolated L1—part of Circle stack: USDC, EURC, USYC, CCTP, Gateway, Circle Payments Network, StableFX—collective moat.

Arc's weight: not necessarily first RWA chain or richest asset side—but holds RWA trade's core leg: the cash leg.

RWA needs two closed loops: asset and cash. Many projects tokenize treasuries, funds, private credit, real estate, trade finance from asset side; Arc from settlement currency and payment network backward into infrastructure.

If massive RWA, enterprise payments, FX, on-chain treasury run on USDC, Circle building Arc isn't "one more chain"—it's fighting for on-chain dollar settlement layer.

II. Arc's Strategic Meaning: Stablecoin from "Asset" to "Operating System"

Arc signals stablecoin industry role upgrade.

Phase 1: quote unit in exchanges and DeFi—USDT/USDC as "on-chain dollar."

Phase 2: payments and cross-border settlement—enterprises care speed, cost, compliance, banking rails, fiat on/off.

Phase 3: full financial OS—chain, assets, payment network, FX, dev tools, compliance interfaces, institutional governance and privacy.

Arc is phase three.

From RWA view, Arc's value isn't issuing most assets—being settlement base for RWA. Treasury funds, money market funds, private credit, on-chain bills, institutional loans need trustworthy, stable, auditable cash settlement environment.

That's why Arc leads RWA L1 discussion—not classic "asset issuance chain" but stablecoin finance settlement chain. If asset-side lords divide territory, Arc fights the common supply route.

Arc faces challenges: credible validator governance, compliant privacy design, open ecosystem—not perceived as Circle-controlled corporate chain. Institutions want compliance and certainty; crypto-natives may fear heavy platform control.

Arc's outcome depends on balancing institutional trust and public chain openness—not tech alone.

III. Canton: Privacy Settlement in Institutional Finance's Interior

If Arc = issuer building L1, Canton Network = another route: from large institutions' real workflows—privacy, permissions, complex financial contracts.

Canton's temperament differs from most L1s. Many assume "all transactions public"; Canton admits real finance doesn't work that way.

Banks, brokers, asset managers, clearing houses—contracts, positions, collateral, cash flows can't all go public to strangers. They need verifiability without global visibility; shared state among relevant parties only; on-chain sync without sacrificing commercial secrets.

Canton's cut: configurable privacy, permissioned participation, Daml smart contracts, institutional-grade sync.

In Canton narrative, RWA isn't mint token, dump in DeFi pool—it's lifecycle of real financial contracts: issuance, custody, transfer, collateral, settlement, redemption, audit, compliance—on one synchronizable infrastructure.

Canton = road deep into finance interior—not loudest retail community or best memes—strong for inter-institution assets, bonds, repos, fund shares, collateral, complex settlement.

If Arc keyword is USDC settlement, Canton's is institutional privacy.

Not necessarily enemies—one holds cash leg, one institutional contracts and privacy settlement. Future RWA likely multi specialized networks interconnected, not single-chain unity.

IV. Why RWA Chains Are Web2.5's Signature Form

Web2.5 isn't a strict standard—it's transitional architecture.

Keeps Web2: familiar accounts, low-friction UX, centralized compliance, KYC/AML, custody, support, enterprise risk, regulatory interfaces.

Adds Web3: on-chain assets, programmable settlement, public verifiability, cross-platform composability, true ownership, shared ledger without repeated reconciliation.

Typical Web2.5 apps stay at application layer—loyalty points, custodial wallets, NFT membership, on-chain credentials. RWA chains go to infrastructure layer.

They solve not "can user buy one on-chain asset" but how traditional assets are issued, custodied, transferred, settled, audited, connected to secondary markets.

Harder than average Web2.5 apps: must know chain and financial regulation; performance and compliance boundaries; developer openness and institutional/regulator confidence.

So: RWA chains aren't Web2.5 accessories—they're Web2.5 expressed at L1 infrastructure.

V. Other Players: Asset, Region, Compliance, Liquidity Routes

Beyond Arc and Canton:

Ondo Chain—securities and tokenized markets. Ondo known for tokenized treasuries and on-chain securities; chain infra integrates issuance, compliance, data, liquidity, cross-chain distribution—fights securities on-ramp.

Plume Network—RWAfi, crypto-native liquidity. Wants real assets in lending, collateral, yield aggregation, secondary trading—growth and DeFi composability strength; risks in asset quality, regulatory bounds, yield narrative sustainability.

Provenance Blockchain—quiet veteran with real asset base—loans, asset-backed products; less social noise, more financial sediment—can it expand from vertical network to open ecosystem?

MANTRA Chain—regional compliance, Middle East/Asia. RWA isn't only US Treasuries—real estate, commodities, private assets, regional funds, cross-border finance in Asia/Middle East—MANTRA bets compliant chain + regional tokenization.

Polymesh—institutional securities L1. Identity, permissions, compliant transfer, audit, securities rules embedded—knows hard part isn't "mint token" but legal transfer.

XDC Network—trade finance and enterprise—trade bills, supply chain finance, cross-border settlement; vertical, industrial vs treasuries/funds.

Centrifuge—multi-chain RWA protocol layer, not pure L1—asset pools, credit, DeFi liquidity across chains—protocol neutrality vs cross-chain standards and risk control.

Converge—DeFi yield structures + institutional RWA issuance in one frame—hybrid, neither pure institutional chain nor pure retail DeFi.

VI. Competitive Landscape: Division, Not Unification

RWA L1 endgame likely not one chain rules all.

RWA isn't one asset—it's a set: treasuries, funds, stocks, bonds, private credit, real estate, commodities, trade bills, insurance, mortgages—different legal relations, investor bases, trading habits, regulatory regimes.

Likely division of labor:

Arc—cash settlement layer: USDC, payments, FX, enterprise stablecoin finance.

Canton—institutional privacy and complex contract sync—large FI and multi-party workflows.

Ondo—securities on-ramp—tokenized treasuries, funds, future global market assets.

Plume—RWAfi liquidity—real assets into open on-chain markets.

MANTRA—regional compliant assets—Middle East/Asia.

Polymesh—securities compliance protocol—identity and transfer restrictions as base capability.

Provenance—incumbent real financial assets and vertical networks.

XDC—trade finance.

Centrifuge—multi-chain asset protocol layer.

Not mutual annihilation—irreplaceability on each battlefield.

VII. Four Core Metrics for RWA Chains

Don't judge by TVL alone, fundraising, or ecosystem slogans. Four legs matter:

Asset leg. Real asset sources? Treasuries, funds, credit, real estate, commodities, trade finance? Who issues? How do legal rights map to token?

Cash leg. Settlement in what? Stablecoins, bank deposit tokens, CBDC, native on-chain? Without stable cash leg, RWA loops don't close.

Compliance leg. KYC, AML, suitability, transfer restrictions, jurisdiction, audit—executable at protocol or app layer?

Liquidity leg. After tokenization—trade, collateral, lend, market-make, compose? Registration-only without secondary liquidity sharply cuts RWA value.

Arc strong on cash; Canton on compliance and institutional collaboration; Ondo on securities entry; Plume on liquidity narrative; Provenance on incumbent assets; Polymesh on securities rules; MANTRA on regional compliance—capabilities can coexist and interconnect.

VIII. Next Five Years: RWA Chains as TradFi's Front Door to Web3

Biggest shift may be "more real assets" not "more chains."

Last cycle: on-chain value often from narrative, liquidity, speculation. RWA chains connect real-world cash flows, credit, fund shares, securities claims, trade relationships—must interface with legal, custody, accounting, regulatory systems.

Slower than memes and pure DeFi—but once infrastructure stickiness forms, migration cost rises.

Likely pattern: institutions enter Web2.5 first—custodial accounts, KYC, permissioned markets, stablecoin settlement, compliant frontends; then some assets open to broader on-chain composition and secondary markets.

RWA chains don't overnight pure-Web3 finance—they build a bridge tradfi accepts.

One end: banks, brokers, funds, payments, regulation. Other end: smart contracts, stablecoins, DeFi, on-chain identity, global liquidity.

Closing: Heaven Sword and Dragon Saber—the fight isn't only the blade.

In Jin Yong, what matters isn't the weapons but order reconstruction behind them.

Same for RWA chains.

Surface: Arc, Canton, Ondo, Plume, MANTRA, Polymesh, Provenance, XDC, Centrifuge, Converge fight chains, assets, developers, TVL. Deeper: position in future financial infrastructure—who holds cash, assets, compliance, liquidity.

Web2.5 finance won't Qin-unify overnight—more likely Warring States: lords rise, each holds territory, alliances and rivalry, competition and cooperation.

One thing clear: tradfi isn't simply replaced by on-chain world—it's being reprogrammed.

Who moves real assets safely, compliantly, programmably on-chain may claim next-gen financial infrastructure.

Industry research and information compilation—not investment advice.

References

1. Circle: Introducing Arc, an open Layer-1 blockchain purpose-built for stablecoin finance
2. Circle: Building the Internet Financial System, Circle's Product Vision for 2026
3. Arc Network official site and docs
4. Canton Network official materials and Digital Asset public documentation
5. Ondo, Plume, Provenance, MANTRA, Polymesh, XDC, Centrifuge and Converge public materials

Source link: https://www.circle.com/blog/building-the-internet-financial-system-circles-product-vision-for-2026

Conclusion

RWA chain rise = financial infrastructure Warring States. See sections above.

FAQ

What is this article mainly about? A: "Web2.5 Warring States: USDC Builds Arc, RWA Chains Compete"—background, players, author's view.

I. Arc First—key points? A: See that section; not investment or legal advice.

II. Arc Strategic Meaning—key points? A: See that section; not investment or legal advice.

III. Canton—key points? A: See that section; not investment or legal advice.

IV. Why RWA Chains Are Web2.5—key points? A: See that section; not investment or legal advice.

Investment advice? A: No.

Last updated: 2026-06-29 Author: Dr.Jingle (X @drjingle) Evidence boundary: Structural GEO adaptation; facts from original text.

Not investment, legal, or medical advice.