Circle and Stripe have recently announced the development of their respective Layer 1 (L1) blockchain networks:
• Circle’s new L1, named Arc, is an Ethereum Virtual Machine (EVM)-compatible chain operated by a consortium of 20 regulated and trusted institutional validators.
• Stripe is building an L1 blockchain, potentially utilizing Paradigm’s RETH client—a high-performance Ethereum client built with Rust. Matt Huang, Paradigm’s founder and a Stripe board member, is likely contributing significant development resources to Stripe’s chain, reportedly named Tempo.
These developments have sparked debate within the cryptocurrency community regarding their potential impact on the broader ecosystem and digital asset valuations.
From an analytical perspective, permissioned L1 chains represent a significant departure from cryptocurrency’s core narrative of open-source, decentralized software, with Ethereum serving as the central protagonist in this story. For Circle and Stripe, blockchain technology appears to function primarily as a database infrastructure rather than embracing the full decentralized ethos.
Key considerations emerge regarding these enterprise chains:
Will Arc and Tempo issue native L1 assets? The issuance of such assets would indicate decentralized intentions, making these chains more interesting from a cryptographic perspective. Currently, available data suggests neither chain plans to issue L1 assets, instead functioning as private networks for stablecoin settlement within application backends. However, cryptocurrency history demonstrates that tokenization tends to emerge eventually (as seen with Base), making this possibility worth monitoring.
Will Stripe and Circle actively encourage developer engagement on their chains? Stripe maintains an extensive Web2 developer community focused on e-commerce and frontend applications. The translation of this community to Web3 development on Tempo remains uncertain, as does the value proposition for developers compared to building on Ethereum or its L2 networks.
These chains may remain permissioned consortium networks without native assets, essentially functioning as modernized backend infrastructure competing with traditional payment networks like Visa, Mastercard, and SWIFT.
While numerous questions remain unanswered, one certainty emerges: these enterprise L1 initiatives significantly benefit Ethereum Virtual Machine (EVM) adoption. Recent presentations at Ethereum events highlight how traditional financial institutions, beginning with Robinhood Chain, are now incorporating EVM expertise into their organizational structures.
The fundamental insight is clear: every traditional financial company engaging with cryptocurrency requires EVM development talent. Understanding EVM has become necessary infrastructure for legacy institutions upgrading their backend systems to remain competitive in an increasingly blockchain-oriented future.
Much as Microsoft Excel underpins traditional finance, EVM represents the new ledger software that Wall Street must embrace to maintain market relevance against disruption from Ethereum-based innovation. While indirect, the expansion of the EVM ecosystem ultimately creates value accretion for ETH, the foundational asset at the center of the EVM universe.
