Author: Charlie
Two stablecoin Layer 1s in one day have shaken the entire crypto and fintech worlds.
Stripe's 'Tempo' has emerged from stealth mode, while Circle officially announced 'Arc' in the rhythm of its financial report.
On the surface, they are both public chains optimized for payments.
But the underlying logic is completely different: one is a payment service provider mastering the distribution capabilities of merchants and developers, while the other is the issuer of USDC, attempting to upgrade a stablecoin into a network.
The battle between L1 and L2
First, answer the most straightforward question: why not learn from Coinbase (Base), or plan your own L2 like Robinhood?
If your advantage lies in distribution, in migrating a massive existing user and merchant base to the chain with one click, then L2 is the most straightforward solution.
Inherit the security and tool ecosystem of Ethereum, quickly launch, and also gain the benefits of ordering economics.
The rise of Base is not about stunning technology but lies in Coinbase's traffic entry and application integration. This methodology has already been validated.
So why are both Stripe and Circle talking about L1?
Because the 'payment chain' is becoming an independent track.
A group of L1s centered around Tether (Stable and Plasma) is driving a narrative: stablecoins need a native, payment-oriented underlying—stablecoins as gas, predictable fees, sub-second settlement—rather than forever being 'guests' residing on generic public chains.
This pressure on Circle is evident: if competitors' dollar stablecoins start binding their own settlement layers, USDC cannot forever just be 'a token'; it must also become 'that track'.
Interpreting Circle
Zooming in, Circle's actions are not simply 'defensive'.
Arc and Circle Payments Network (CPN) are working in the same direction, more like moving Visa's 'network of networks' strategy on-chain.
Open, EVM compatible, USDC native, payment and foreign exchange oriented, and also prepare for capital market scenarios.
Its core lies in strategic concessions: if Circle chooses to give more front-end revenue to issuing/distributing partners, taking only a thin network-level fee, it exchanges this for stronger network externalities.
This is precisely the winning strategy of card organizations back then: lower fees, first popularize, win trust, and expand endpoints.
In this lens, 'Arc vs Stable/Plasma' is more critical than 'Circle vs Coinbase'.
If the Tether system's payment chain establishes 'stablecoin native + low-friction payment experience' as the industry standard, Circle cannot merely act as a bridge to others' tracks; it must have a truly reliable track.
At the same time, openness is not a slogan: the distribution and thresholds of notarization nodes, the public nature of developer tools, and the usability of cross-chain and exit determine whether Arc is 'public infrastructure' or just a branded proprietary channel in a new guise.
Otherwise, one would fall into the vicious cycle of 'decentralization - scaling - re-centralization'.
Interpreting Stripe
Back to Stripe, whether Tempo is suitable for L1 depends on whether it is 'truly open'.
If Tempo is fully public, minimizes permissions, is EVM compatible, and natively interoperable, Stripe can turn its distribution power into a cold-start engine for the public network.
It's not about building a 'merchant garden', but rather lighting up a public road that is fair to all participants.
Conversely, if governance, verification, and bridging are closely tied to Stripe itself, the ecosystem will quickly generate concerns about dependency risks: today you are a 'shortcut', but tomorrow you may become an unavoidable 'toll booth'.
Visa has long provided the industry textbook: to build universal trust, one must first achieve interoperability to create brand value.
Thus, the judgment of 'who should do L1 and who is more suited for L2' corresponds directly to the business model.
For issuers like Circle, moving toward the network layer is inherently reasonable.
USDC, as gas, optional privacy, deterministic settlement, and built-in FX, appeals to cross-border B2B, platform merchants, and some capital market workflows; the time pressure from competitors also forces it to quickly convert 'scale' into 'network power'.
And for PSPs like Stripe, having already grasped the 'last mile', Layer 2 is often the better solution.
Take on less of the governance and security burden of L1, while enjoying more composability and developer goodwill; unless Tempo writes 'openness' into its systems and technologies from day one.
Offense vs Defense
There is a popular judgment in the community regarding the L1s of the two companies: Stripe is on offense, Circle is on defense.
The intuition of this judgment is good, but it is still incomplete.
Stripe can indeed leverage its distribution advantage to compress cold start costs, illuminating demand with a single command; Circle indeed does not control the end-user, with activities dispersed across multiple chains and partners.
But if we consider Arc + CPN as the on-chain version of the 'Visa methodology', Circle is more like rewriting the rules of the game with a network strategy.
Commoditize the peripheral links and standardize the core settlement layer.
Even if the bulk of front-end revenue is given to issuers, exchanges, or PSPs, it must be exchanged for a larger network presence.
In this way, it does not need to chase the volume of Base but rather redefine its own game.
The real systemic risk is 'fragmentation masquerading as progress'.
If every large company builds a 'semi-open' payment chain, we would return to the era of private networks before the internet.
Barely interoperable through adapters, high costs, and low resilience.
The criteria should not be TPS, but whether it is reliably open; whether it is easy to exit; whether it is equally friendly to 'non-partners'.
The essence of breaking free from the 'decentralization - scaling - centralization' vicious cycle lies in whether it can scale without sacrificing the openness of the protocol.
When it comes to execution, recommending a few 'hard indicators' for both companies.
For Circle: bring up the public test network on schedule; refine the process of 'USDC as gas' servicing real merchants to the point where it can be used without training; publish transparent and externally participatory verification node standards; ensure CPN clearly maintains a multi-chain principle to avoid short-sighted incentives to 'divert traffic to its own chain'.
For Stripe: either switch to L2 like Celo, or push the openness of Tempo to the extreme: introduce external validators early, open-source clients and key modules, decouple chain-level governance from company organization, treat 'network of networks' as a fundamental law rather than market rhetoric.
Distribution still determines speed, but it cannot come at the expense of the protocol's commons.
Conclusion
This is not a contest of speed versus functionality, but a re-selection between 'open protocols' and 'brand tracks'.
Circle's path resembles an 'offensive' dressed in 'defense'; if Stripe wishes to do L1, it must make openness a structural commitment, or else the smartest developers will vote with their feet.
What truly matters is not who shouts a higher TPS first, but who can establish universal trust across entities while maintaining composability.
This is the correct answer to 'scaling without sacrificing the openness of the protocol'.
