Tempo’s TIP-20 token standard and why it matters

Existing token standards are not designed for stablecoins used in real-world payments, settlement, and treasury operations. The TIP-20 token standard is Tempo’s answer to the obvious problem. It stretches ERC-20 with payment-specific functionality such as transfer memos, compliance checks and native rewards distribution, while remaining fully backwards compatible. In practical terms, TIP-20 is running stable coins on Tempo in regulated, auditable payment instruments rather than in simple transferable tokens.

This article explains what TIP-20 is and why Pace built it, how it works at a technical level, and why it matters to stablecoin issuers, payment providers, and enterprises.

What is TIP-20?

TIP-20 is the native fungible token standard on Tempo, a Layer 1 blockchain optimized for stablecoins and payments in the real world. Introduced on January 6, 2026TIP-20 is primarily designed for stablecoins, but can also be used for other fungible assets, including bridged BTC or ETH.

Technically, TIP-20 is an extension of ERC-20. All standard ERC-20 features, including transfers, approvals, and balance checks, work without modification. On top of this baseline, TIP-20 adds features needed for payment systems that operate at scale, including:

• Transfer memos for reconciliation
• Built-in compliance and policy enforcement
• Role-based operational controls
• Native reward and revenue distribution

This approach allows developers and publishers to rely on a standardized onchain primitive instead of building custom logic for each stablecoin implementation.

Why Tempo Built a Payments-First Token Standard

Tempo was created to address structural limits in existing blockchains used for payments. While networks like Ethereum And Solana support stablecoins, they are not designed around large, low-latency payment flows or regulated financial transactions.

Tempo was incubated by Stripe and Paradigm and $500 million was raised by 2025 at a $5 billion valuation, backed by companies like Sequoia and Greenoaks. The network targets more than 100,000 transactions per second with sub-second finality, predictable fees and a stablecoin-native design.

Stablecoins are now used far beyond peer-to-peer transfers. They support treasury management, cross-border settlement and foreign exchange. However, issuers face recurring challenges:

• Reconciling on-chain transfers with off-chain accounting systems
• Enforcing jurisdiction-specific compliance rules
• The transparent distribution of revenues or rewards
• Maintain predictable performance during high-volume payment periods

TIP-20 exists to standardize these requirements at the protocol level.

How TIP-20 extends ERC-20

ERC-20 has developed a shared language for fungible tokens, allowing wallets, exchanges and applications to integrate assets without customization. TIP-20 follows the same philosophy, but applies it to payments-oriented stablecoins.

Important extensions include:

Backwards compatibility

TIP-20 takes over all ERC-20 functionality. Existing tools, wallets and smart contracts can interact with TIP-20 tokens without modification, reducing integration risk.

Payment streets and predictable costs

Tempo offers special payment streets and reserved block space for payment transactions. TIP-20 tokens automatically access these lanes, ensuring consistent throughput and predictable costs during periods of high demand.

Flexible reimbursements

Any USD-denominated TIP-20 stablecoin can be used to pay transaction fees on Tempo. A protocol-level Fee AMM converts fees into validators’ preferred resources. Support for non-USD stablecoins is planned.

Core functions of the TIP-20 standard

Identification of the original currency

TIP-20 supports an optional currency identifier that specifies the fiat currency the token supports, such as USD or EUR. This enables correct pricing, routing and settlement on Tempo’s own DEX and future onchain FX markets.

Transfer memos for reconciliation

Each TIP-20 transfer can include a memo field, allowing invoice numbers, payment references, or internal IDs to travel with the transaction. This feature is essential for companies integrating stablecoin payments with ERP systems or SWIFT-compatible payment engines.

Remuneration and revenue sharing

TIP-20 includes an opt-in reward distribution system. Issuers can distribute revenue or incentives directly on-chain, either as balances due or as auto-forwarded rewards. This supports interest-bearing stablecoins without manual calculations or off-chain reconciliation.

Custom policy registers

Compliance is enforced through custom policy registries, including blocklists and whitelists. These registries can be shared across multiple tokens, reducing duplication and ensuring consistent regulatory compliance.

Operational controls

Issuers can pause or resume transfers, enforce supply limits, and implement emergency shutdowns. These controls provide the safeguards required by regulated issuers and financial institutions.

Role-based access control

TIP-20 defines roles for minting, burning, pausing, and administrative actions. Roles can be assigned or revoked without redeploying contracts, improving operational security.

TIP-20 as a basis for payment-oriented stablecoins

TIP-20 is designed to support custom stablecoins tailored to specific financial workflows.

Corporate finance management

Companies can issue internal or regulated stablecoins to enable direct fund transfers between subsidiaries. Reward sharing enables automatic sharing of reserve revenue without off-chain accounting.

Cross-border payments

Smaller banks and payment providers can bypass correspondent banking networks. Transfer notes allow stablecoin payments to be integrated with existing settlement systems for cross-border settlements.

Wholesale payment and deposit tokens

Policy registries allow permitted stablecoins for bank-to-bank settlement. Transfer rules are enforced at the token level to support regulated wholesale payment systems.

Interest-bearing stablecoins

Revenue distribution is handled natively. Issuers can programmatically share returns in real time with users and intermediaries.

Non-USD Stablecoins and Onchain FX

TIP-20 supports non-USD currencies via native currency IDs. Tempo’s DEX enables stablecoin-to-stablecoin swaps and future onchain foreign exchange.

A practical example is EURAU, a regulated Euro stablecoin designed for European companies that require compliance, privacy and predictable settlement.

Infrastructure partners and ecosystem support

TIP-20 launched with support from infrastructure providers including AllUnity, Bridge and LayerZero. These partners are rolling out TIP-20 compatibility for issuance and bridging.

LayerZero makes it possible to extend existing assets to TIP-20, making them usable within Tempo’s payment ecosystem from launch. Tempo’s broader ecosystem includes integrations with wallets, developer tools, and liquidity providers.

Developers can stake TIP-20 tokens via the factory contract using the reference Solidity implementations in Tempo’s documentation. No additional packages are required for full EVM compatibility.

Conclusion

TIP-20 is a purpose-built token standard designed for stablecoins used in payment, settlement, and treasury operations. Expanding the ERC-20 to include reconciliation tools, compliance enforcement, and native reward distribution addresses gaps that have limited the adoption of stablecoins in regulated financial environments.

On Tempo, TIP-20 functions as a foundational payment primitive, enabling custom stablecoins, predictable fees, and multi-currency support without custom engineering. Its long-term relevance will depend on issuer adoption, regulatory alignment and the network’s ability to deliver throughput and reliability. As stablecoins increasingly focus on enterprise and institutional use, standards like TIP-20 define how these assets operate at scale.

Sources:

• Tempo documents: Overview of the TIP-20 standard
• X message: Tempo announcement introducing the TIP-20 standard
• Block works: Pace $500 million Series A financing round
• Tempoblog: TIP-20 standard for payments