--- path: /blog/stablecoin-fees/ title: Stablecoin Fees on Tempo description: Tempo supports transaction fees in eligible USD-denominated TIP-20 stablecoins. Learn fee-token selection, conversion liquidity, and fee sponsorship. image: /og/2026-q4/og_2026-q4_blog_stablecoin-fees_title-image_v02.jpg date: 2026-02-05 updatedDate: 2026-10-26 author: Tempo Team keywords: blockchain, payments, technology, fintech label: Stablecoins timeToRead: 6 heroTitle: Stablecoin fees on Tempo authors: Rachel, Veena, Matt, Veit, Devin, Nick locale: en canonical: https://tempo.xyz/blog/stablecoin-fees/ --- # Stablecoin Fees on Tempo **_Tempo lets users pay network fees in eligible USD-denominated TIP-20 stablecoins, without a separate volatile gas token. Eligibility depends on the token and available fee-conversion liquidity. Explore partner resources from [Bridge](https://www.bridge.xyz/), [Frax](https://frax.com/), and [MetaMask](https://metamask.io/), or start with [our fee documentation](/developers/docs/protocol/fees)._** Institutional adoption of stablecoins has been held back by a surprisingly small detail: the "gas token." On most blockchains, sending stablecoins means holding a separate, often volatile token just to pay transaction fees. Companies end up managing a second balance, funding it at the right times, and explaining it to their accountants and auditors. Tempo takes a different approach. Designed for payment use cases, it allows fees to be paid in stablecoins at the blockchain level: fees are treated as part of the payment flow, and the blockchain handles the mechanics needed to make stablecoin fees work reliably at scale. ## How can users send stablecoins without holding a gas token? On Tempo, users can [pay network fees in a supported stablecoin](/developers/docs/guide/payments/pay-fees-in-any-stablecoin). The fee token must be USD-denominated, use the TIP-20 standard, and have sufficient liquidity in the native Fee AMM. Users do not need a separate gas token. Applications can also [sponsor network fees for their users](/developers/docs/guide/payments/sponsor-user-fees). The application covers the network fee while the user supplies the funds being sent. [Deel uses fee sponsorship](/customer-stories/deel/) in its contractor wallet, so workers never need a separate gas asset. These capabilities cover the onchain network fee; providers may charge separately for their services. ## The case for fees in stablecoins On Tempo, an eligible USD-denominated TIP-20 token can pay transaction fees when the required Fee AMM liquidity is available. A custom-issued token or tokenized deposit must meet those same requirements. Users can choose a supported asset they already hold instead of maintaining a separate volatile gas-token balance. A separate gas token adds another balance to fund, monitor, and reconcile. Paying fees in a supported stablecoin keeps the network expense denominated in a currency familiar to the payments team. The selected asset still needs its own issuer, custody, and accounting review. There is also a regulatory dimension. The [GENIUS Act](/blog/genius-act-rewards-white-label-stablecoins/) establishes a U.S. payment stablecoin framework, with requirements and implementation dates that depend on the activity. A token's technical eligibility for fees does not establish its regulatory status or remove a company's obligations. Applications can also [sponsor network fees](/learn/fee-sponsorship/) for users. The application then manages the fee budget and sponsorship policy; a sponsored transaction still incurs a network fee. Stablecoin fees can simplify payment accounting. Tempo uses a [bounded dynamic base fee](/developers/docs/protocol/fees/), so the cost still depends on the transaction and applicable fee conditions. Teams should budget for their actual operations rather than assume a fixed fee. > Bridge is leveraging Tempo to provide low, predictable fees for our developers. Payments should not go slower or cost more because of unrelated blockchain activity and Tempo solves this pain point for our developers. > > — Aadil Mamujee, Head of Crypto, Bridge ## The building blocks behind stablecoin fees Supporting stablecoins as network fee tokens requires protocol integration. Tempo uses two core components: ### TIP-20 token standard Tempo's native [token standard](/developers/docs/protocol/tip20/overview) extends ERC-20 with payment features including transfer memos and token permissions. Fee tokens must use TIP-20, be USD-denominated, and meet the fee system's liquidity requirements. ![Stablecoin fees on Tempo](/images/blog/stablecoin_fees_1.png) ### Fee AMM This protocol-native [automated market maker](/developers/docs/protocol/fees/fee-amm) converts fees between supported stablecoins. If a payer chooses a different token from the validator's preference, the Fee AMM converts the network fee using a supported route with sufficient liquidity. It does not convert the payment principal. ![fee-amm-swap-color-dark](/images/blog/fee-amm-swap-color-dark.png) Tempo's [payment-first design](https://tempo.xyz/blog/tempo-transactions), native token [standard for stablecoins](https://tempo.xyz/blog/tip20), and stablecoin fee support make it easier to operate payment applications. To support this, we built the Tempo [Stablecoin DEX](/developers/docs/protocol/exchange), a protocol-native exchange designed specifically for stablecoin trading. > Tempo and Frax share the same mission: to innovate around stablecoins to make them more usable in the real world. TIP-20 is a clear example of that progress, with stablecoin-native fees, built-in reward distribution, and a token standard designed for payments from day one. We're excited to be among the first teams adopting TIP-20 with frxUSD, both for rewards streaming and as gas, to push stablecoin UX forward. > > — Sam Kazemian, Founder and CEO, Frax ## How stablecoin fees work on Tempo Paying fees in stablecoins on Tempo is straightforward. The protocol handles the complexity. ### Fee token selection Set an explicit fee token for a transaction or an account-level preference. If neither is set, [the protocol selection rules](/developers/docs/protocol/fees/spec-fee/#fee-token-preferences) can use the payment token for qualifying TIP-20 transfer calls, a swap input token for qualifying DEX calls, or the documented fallback. Same-token selection is conditional. The selected token still needs an adequate payer balance and any required conversion liquidity; a failed eligibility check does not automatically try another token. ![Stablecoin fees on Tempo](/images/blog/stablecoin_fees_2.png) ### Supported stablecoins Current fee eligibility requires a USD-denominated TIP-20 token and sufficient liquidity for conversion to the validator's preferred token when conversion is needed. Check the [current fee-token guide](/developers/docs/guide/payments/pay-fees-in-any-stablecoin/) before configuring an asset. Fee-token support does not establish a fiat conversion or payout route. ![Stablecoin fees on Tempo](/images/blog/stablecoin_fees_3.png) ### Automatic fee conversion Validators specify a supported token in which to receive fees. When conversion is needed, each [Fee AMM hop](/developers/docs/protocol/fees/spec-fee-amm/) uses a fixed rate of 0.997 output tokens per input token, before integer rounding. A two-hop conversion applies that rate twice. If the payer and validator use the same token, no conversion is needed. ![Stablecoin fees on Tempo](/images/blog/stablecoin_fees_4.png) ### Liquidity and routing Fee pools are directional. The [Fee AMM](/developers/docs/protocol/fees/spec-fee-amm/) first checks the direct pool from the selected fee token to the validator token. If that pool has insufficient liquidity, it tries a two-hop route through the selected token's quote token. Both hops need sufficient liquidity. A token name or pair listing alone does not guarantee that a transaction can pay its fee. ![Stablecoin fees on Tempo](/images/blog/stablecoin_fees_5.png) ### Putting the pieces together For an illustrative payment, a company selects eligible token USDX for fees while the validator prefers USDY. Before execution, the fee system checks the payer balance and required conversion liquidity. After execution, it refunds unused fees and converts the actual fee amount through the supported route. The company and validator can use different fee tokens without exchanging the payment principal. Learn more about stablecoin fees in [our docs](/developers/docs/protocol/fees). ## Who benefits from stablecoin fees Stablecoin fees create value across the entire payment ecosystem, from the companies making payments to the validators securing the network: - **Payers:** A company running payroll can fund fees with an eligible stablecoin and reconcile that expense alongside payments. It must maintain the selected fee-token balance and account for the fees of its actual transaction types. - **Validators:** Validators select a supported fee token and receive accumulated fees through the FeeManager. Asset liquidity and redemption remain separate considerations. - **Neobanks and fintechs:** Applications can sponsor transaction fees for users using stablecoins from their own treasury. This creates a "gasless" experience that feels like a traditional fintech app without crypto friction or complexity. - **Payment processors:** Processors can account for network fees in eligible stablecoins while tracking collection, conversion, and payout charges separately. - **Liquidity providers:** Fee AMM liquidity enables conversion between supported fee tokens. The Stablecoin DEX is a separate system for user-facing stablecoin trades, with its own pricing and liquidity. ## Start building with Tempo Whether you're exploring stablecoins or already use them in your payment stack, we can help you get started: ### Learn the fundamentals Visit the Learn section of the Tempo documentation to understand stablecoins, how they work, and the payment use cases they enable. [Learn](/learn) ### Start building If you're familiar with blockchain development, head to our docs to connect to Tempo, access test funds, download SDKs, and start building with Tempo Transactions. [Read the docs](/developers/docs/protocol/tip20/overview) ### Move faster with partners Explore the Partners directory to check current Tempo support, integration scope, and prerequisites for infrastructure providers. 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