When Circle and Stripe Announced Their Own Stablecoin L1 Blockchains
With the announcements from Circle and Stripe regarding the development of their own stablecoin L1 blockchains, the crypto community has once again plunged into a familiar debate: “Why don’t enterprises choose Ethereum or L2?” This is a straightforward business decision. For established companies, the certainty, control, and profit margins that come with vertical integration are far more appealing than integrating with Ethereum or L2 technologies.
An Overview of the Competitive Stablecoin L1 Blockchain Landscape: Who Will Dominate the Global “On-Chain Payment” Battlefield?
Vertical Integration: Companies Value Control Over “Chain Loyalty”
From Circle’s Arc blockchain to Tether’s Stable, all are complete L1s, even using their own stablecoins as Gas. The logic behind such choices is quite pragmatic: when companies control the entire technology stack, they can reduce external dependencies and avoid having critical business components controlled by others.
As Ethan Buchman, co-founder of Cosmos, stated: “This is a standard business decision, as predictability itself is valuable.” Whenever people choose to build their own chains, it reflects the same decision: they prioritize vertical integration. This also explains why both Stripe and Circle do not intend to deploy their businesses on Ethereum or its L2s, as the technical details of L2 are too complex for the CTOs or CFOs of mature enterprises to grasp. In contrast, L1 has a development history of several decades, with a mature architecture and clear concepts, making it easier to explain to shareholders and regulators, and less likely to generate problems.
Payment Replaces Traceability: A New Theme for Enterprise Blockchain
Barry Plunkett, co-CEO of Interchain Labs, reflects on the previous wave of “enterprise chains,” where application scenarios mostly revolved around supply chain traceability, cross-company process tracking, or the transparency of public funding usage. However, these needs could also be addressed using traditional databases, lacking strong momentum. Today, the focus has completely shifted; the primary demand for enterprises going on-chain is “payments.”
He emphasizes that pain points in the payment market include high cross-border fees, lengthy clearing times, and settlement risks: For multinational companies like Airbnb or Uber, blockchain-based payment solutions can save billions of dollars while improving the payment experience for users and employees. Coupled with the gradual implementation of regulations on stablecoins in the U.S., enterprises are no longer fearful of holding or circulating digital dollars and are instead actively building infrastructure to adapt. Barry refers to this as the true driving force behind the return of enterprise-level L1s.
Why L1 is Superior to L2: Familiarity, Risk Isolation, and Interoperability
From the perspective of technical governance, Barry outlines three reasons why enterprises choose L1:
- Familiarity and Maturity: Most decision-makers who are not crypto-native have only heard of L1s like Bitcoin or Ethereum. They are hesitant to take risks on concepts such as rollup tiers and validating bridges that are difficult to digest.
- Minimizing Platform Risk: Enterprises are unwilling to tie their business fate to Ethereum or Solana, especially when these chains still face uncertainties related to governance and upgrades. They even diversify their cloud providers between AWS and Microsoft, let alone stake their core business on higher-risk blockchain platforms.
- Control and Interoperability: Open and transparent L1s provide enterprises with good control and interoperability. Additionally, companies can implement KYC and AML protocols and specific application logic within their own chains, forming controlled barriers while still maintaining liquidity interoperability with the external crypto world.
This framework offers both security and regulatory compliance while retaining connections to the EVM and other ecosystems. For large companies, this balance is far more aligned with their interests than merely joining the Ethereum community.
Ethereum Faces Challenges: Weakening or Solidifying?
The emergence of Circle Arc and Stripe Tempo has divided the Ethereum community. Supporters believe that these “EVM-compatible enterprise chains” will ultimately redirect liquidity back to Ethereum, enhancing network effects; critics worry that if issuance and settlement occur entirely within enterprises, ETH’s role as a settlement layer for stablecoins will be weakened.
In reality, the answer may depend on the openness of these enterprise chains. If they lean towards establishing closed business structures, the necessity of financial existence on the Ethereum chain will certainly be challenged; however, if they broadly export liquidity through cross-chain protocols (like Circle’s CCTP), it could further strengthen Ethereum’s position as an interoperability hub.
Regardless, one thing is certain: enterprises do not make decisions based on “cultural loyalty” or “network faith,” but purely based on business interests. As Blockworks noted: Just as Phantom did not choose to collaborate with Jupiter on Solana but integrated with Hyperliquid’s perpetual contract market, all judgments return to the simplest principle: “What is best for the users and the company?”
Enterprise-Level Blockchain 2.0: Can Ethereum Maintain Its Status?
This is not an isolated event but part of a new trend. Barry revealed that many Fortune 500 companies are considering launching their own L1s. Unlike in the past, there is now a mature stablecoin foundation, clear payment scenarios, and a gradually implemented regulatory environment, making enterprise-level L1s no longer an empty concept but a genuine solution capable of delivering cost reductions and user value.
Risk Warning
Investing in cryptocurrencies carries a high level of risk, and their prices can be highly volatile; you may lose your entire principal. Please assess the risks carefully.