Author: David Hoffman, Co-founder of Bankless; Translation: Golden Finance xiaozou
This week's crypto topic revolves around Circle and Stripe successively announcing enterprise-level L1 blockchains.
The newly launched L1 network Arc by Circle is an EVM-compatible permissioned chain, with a consortium of 20 regulated authorities serving as validator nodes.
The L1 that Stripe is building is likely to adopt Paradigm's RETH client— a high-performance Ethereum client written in Rust. Paradigm founder Matt Huang serves on Stripe's board and likely provided significant technical support for this Stripe chain named Tempo.
The discussions in the crypto community this week can basically be summarized as: "Is this a blessing or a curse for the crypto industry? What impact does it have on my holdings?"
I personally find permissioned L1s extremely dull. In my view, the core value of the crypto field and the "main storyline" has always been open-source software, and Ethereum is at the center of this story.
The construction of enterprise-level L1 is far removed from the main storyline of the crypto world, even appearing completely unrelated. For Circle and Stripe, blockchain technology is merely used as a database architecture—nothing more.
Will Arc and Tempo mint L1 native assets?
If they choose to do so, it would mean there is an intention for network decentralization—such chains would start moving towards the direction I am interested in. But without more data to support this, a reasonable speculation is that neither of these chains will issue L1 assets, but will only serve as private intranets behind frontend applications to handle stablecoin settlements.
There is an iron law in the crypto field: any project that can issue tokens... will ultimately issue tokens (I’m talking about you, Base), so completely ignoring this possibility is overly naive. If these enterprise-level L1s really do issue tokens, it would mean they have taken a step towards an open-source decentralized developer platform—in my view, this is closer to the main storyline of the crypto world.
Will Stripe and Circle try to attract developers to build ecosystems on their own chains?
Will developers be willing to build on someone else's territory?—in a situation where there is no return and no partial ownership of the territory? Stripe already has a large developer community... but that is the Web2 developer community building Web2 frontends and e-commerce sites. Can this be converted into motivation for Web3 developers to build on Tempo? Will the value developed on Tempo exceed the value of building the same thing on Ethereum or any of its L2s?
Perhaps these chains will ultimately just be lifeless permissioned consortium chains, with no L1 native assets, merely serving as a backend for business logic to replace Visa, MasterCard, and Swift's own settlement networks.
All these questions remain unresolved, so I think it is still too early to argue whether "this is beneficial for BTC, ETH, SOL, or the entire crypto industry."
But the undeniable fact is that these enterprise-level L1 chains are beneficial to the Ethereum Virtual Machine (EVM).
It all started with Robinhood Chain, which set a precedent for traditional financial companies to build and own EVM instances. Robinhood has hired EVM developers, and EVM has now become the core of its business. Today, we can also add Circle and Stripe to this list—these traditional financial companies are hiring and managing EVM talent, incorporating them into their corporate structures.
So, the core conclusion is: every traditional financial company venturing into the crypto field needs to recruit EVM developers, viewing EVM as a ticket to upgrade backend logic to the blockchain era.
Just as Microsoft Excel drives traditional financial operations, the Ethereum Virtual Machine (EVM) is becoming the new ledger software that Wall Street must equip itself with—only in this way can it maintain market share and avoid being disrupted by innovations in the Ethereum ecosystem.
Once you truly dive into the "rabbit hole" of Ethereum, you will realize that all roads ultimately lead to the value capture of ETH. Although these roads may seem slightly mild and indirect, the expansion of the EVM empire will ultimately bring value appreciation to this asset at the core of EVM.
