Stablecoins, the dollar-pegged tokens that now rival the volumes of Visa and Mastercard for international payments, are about to get faster.
While their traditional finance rivals can process upwards of 65,000 transactions a second (TPS), the web of decentralized blockchains in existence today offer a variety of latency values. However, the connections between large chunks of today’s Web3 architecture are about to improve dramatically, according to Alchemy, a blockchain infrastructure firm sometimes described as the “AWS of crypto.”
The firm, which handles data exchange between many decentralized applications, says it has achieved a 66% reduction in delays over crypto’s transaction rails, including much of the plumbing for stablecoins.
Stablecoins may have started out as a way to park money while users traded cryptos or participated in decentralized finance (DeFi) applications, but these days dollar-pegged tokens handle a large flow of payments, rivalling the volumes of the big card networks.
“We power the vast majority of stablecoin issuers (Paxos, Circle, etc.),” said Alchemy CTO Guillaume Poncin in an email. “We do not directly support Tether Holdings Ltd today, but we facilitate a large fraction of activity that relies on USDT for various purposes – whether money movement, or Defi, or trading, or payments.”
Founded by computer scientists from Stanford University back in 2017, Alchemy emerged with developer tools to make it easier to run blockchain nodes at enterprise scale. The firm, which works with the likes of Coinbase, Stripe, JPMorgan and Anchorage, went on to offer programmable links between programs known as APIs, allowing for data indexing, smart contract automation and wallet optimizations.
In terms of actual speed, Alchemy’s new Cortex Engine architecture reduces average response times from 300-400 milliseconds to less than 50 milliseconds, enabling instant settlement experiences that rival traditional payment rails, according to Poncin.
“We all love when things go faster,” Poncin said in an interview. “I think it's easier for people to understand how things are faster, but we also massively improved the throughput, the scale that we can reach, which is incredibly important once we get to the NASDAQ scale of transactions.
Attempting to put this into perspective, around 200 milliseconds is known to be the point below which people don't notice the response time from computers. Previously, the typical response time on a transaction confirmation or on the screen refresh in a wallet app, was of the order of half a second, and now it's 100 milliseconds, Poncin said.
When it comes to throughput, Alchemy has entered the realm of hundreds of thousands of requests per second, which is roughly the scale of very large applications. In terms of running a blockchain node, this has seen a 1000x increase on the throughput of a single node on any one blockchain, he said.
Users will definitely notice improvements, Poncin said, adding: “We rolled this out to some of our users, silently, without telling them we were doing it. I was trying to see what the response would be like. And people were like, ‘Hey, I opened the app this morning and everything is twice as fast. What did you guys do?’”
