Source: Token Dispatch

Translation and Compilation: BitpushNews

Have you ever had this experience? At first, it was just a simple intention to buy a few Philips Hue smart bulbs because they claimed to be the best. The app interface was cool, the colors were amazing, and you felt like a tech wizard, able to dim the lights with your phone—very impressive.

Then you thought your thermostat should also be smart, and since Nest's AI was the best, you bought that too. Different apps, different accounts, but it didn’t matter—just one more.

Before you knew it, you were caught in a mess.

Your Ring doorbell wouldn’t talk to your Alexa speaker, the speaker couldn’t control your Apple HomeKit garage door, and the garage door couldn’t communicate with your Samsung SmartThings hub. You needed four different apps to turn on lights, adjust the temperature, and lock doors. Each company promised you a "seamless smart home experience."

But somehow, your house ended up being "dumber" than before because of all the extra "apps."

Are Circle and Stripe going to do the same thing in the crypto world?

In August 2025, two major announcements came.

First, the $50 billion payment giant Stripe announced a partnership with crypto venture firm Paradigm to build a "high-performance, payment-centric" blockchain called Tempo.

A day later, Circle, which holds $67 billion in USDC stablecoins, also unveiled the Arc project, a proprietary Layer 1 blockchain designed specifically for stablecoin payments, foreign exchange, and capital markets.

Internal Analysis of Circle's Arc

Circle will create Arc specifically for their USDC stablecoin. Most blockchains require you to pay transaction fees with their native tokens, like ETH on Ethereum or SOL on Solana. However, on Arc, you can pay fees directly with USDC without needing to hold a volatile token.

Arc has a built-in exchange rate engine. You don’t need to use external services or decentralized exchanges (DEX) to convert currencies; Arc can natively handle exchange rates at the protocol level. You send USDC, and the recipient receives EURC (Euro stablecoin), with the conversion done automatically, without third-party services or extra fees.

Then there’s privacy control. Most public chains (Ethereum, Bitcoin, Solana) display all information: addresses, amounts, times. Privacy coins like Monero hide everything by default. Arc offers selective privacy, allowing institutions to hide transaction amounts while keeping addresses visible, and it has built-in compliance features. It is designed for businesses that need competitive privacy but do not want to be completely anonymous.

Internal Analysis of Stripe's Tempo

Stripe's differentiation lies in the abstraction of user experience. While other crypto payment solutions still have a strong "crypto flavor" (connecting wallets, signing transactions, waiting for confirmations), Tempo aims to make blockchain payments look exactly like credit card payments to users.

Being Ethereum-compatible means it can leverage existing DeFi infrastructure and developer tools, but its biggest advantage is the ability to integrate with Stripe's existing merchant ecosystem. Millions of businesses using Stripe can easily add crypto payments without changing their checkout processes or learning new systems.

Most importantly, Stripe's existing banking and regulatory relationships can solve a major problem. Most crypto payment solutions struggle with the "last mile"—moving funds from the blockchain back to bank accounts. Stripe already has these partnerships, which is something other crypto companies would take years to establish.

Why Do I Feel Confused?

So we return to my fragmented smart home, and the problems start multiplying like the notifications from various smart home apps on my phone.

What troubles me first is: where is the demand for these dedicated blockchains?

Circle and Stripe have been talking about stablecoin payments and enterprise-level features, but the real active area for stablecoins is in DeFi.

People use USDC to purchase other crypto assets, participate in lending protocols, trade on decentralized exchanges, and interact with a broader financial application ecosystem. And all of this mainly happens on Ethereum.

I feel like it’s like building the world’s most advanced smart thermostat, but it only works in a house with no other smart devices.

Of course, this thermostat might be technically superior, but you’ve isolated yourself from the entire ecosystem where people really want to use smart home features.

The second question: why reinvent the wheel?

All the features Circle and Stripe talk about—faster transactions, lower fees, customizable features, enterprise branding—can be achieved through Ethereum Layer 2 solutions. This way, you can have the security of the Ethereum underlying network, access to the largest DeFi ecosystem, and customize the network as needed.

Some Layer 1 blockchains have already figured this out. Celo, which initially focused on mobile payments, was once an independent blockchain but later announced plans to transition to Ethereum Layer 2. After some calculations, they realized that being part of the Ethereum ecosystem made more sense than building their own network effects from scratch.

The more chains there are, the more bridges are needed. And bridges are where problems arise…

They are responsible for transferring assets between different blockchains, essentially complex smart contracts that lock your tokens on one chain and mint equivalent tokens on another. But bridges are often hacked. We’re not talking about the inconvenience of switching between Philips Hue and Nest apps, but rather the potential financial losses that could occur if bridge software fails.

Poor user experience. In my smart home, the worst-case scenario is that I have to open another app to turn off the lights in the hallway.

But for enterprise blockchains, users may need different wallets, different gas tokens, different interfaces, and different security settings. Most people already struggle to manage one crypto wallet. Imagine having to explain to them why Stripe payments and Circle transfers require different wallets.

But what confuses me the most is that the network effects simply do not exist.

The value of a payment network grows exponentially with the increase in users and applications. Ethereum has the most developers, the most applications, and the highest liquidity. As of mid-2025, Ethereum's TVL (Total Value Locked) was $96 billion, accounting for about 60-65% of all DeFi activity. Solana, often positioned as a high-performance alternative, had a TVL of $11 billion. Other mainstream chains like Binance Smart Chain ($7.35 billion), Tron ($6.78 billion), and Arbitrum ($3.39 billion) split the remaining portion.

These enterprise chains choose to detach from existing network effects to build an isolated network, naively hoping that users will automatically come to them.

Would you choose to open a perfect store on a deserted island? Of course, countries like the UAE have built cities like Dubai, and people did go there. But that was due to physical constraints; they had to do it.

Finally, there’s a competitive issue that no one wants to face directly. Do these companies really want to build better infrastructure, or do they simply not want to share territory with competitors?

Reflecting on my chaotic smart home, each company has reasonable technical reasons for their choices. But the real driving force is often that they do not want to rely on someone else's platform or pay fees to competitors.

Perhaps that’s what’s really happening. Circle doesn’t want to pay Ethereum’s transaction fees, and Stripe doesn’t want to build on infrastructure they can’t control. That’s fair. But we should face it honestly. This is not about innovation or user experience; it’s about control and economic interests.

The Kings Seem Unconcerned

Ethereum seems unfazed by this and is not troubled. The network continues to process over a million transactions daily, dominating most DeFi activity, and has seen massive institutional inflows through its ETFs. On one day in August, the net inflow into Ethereum ETFs reached $1 billion, surpassing the total inflow into Bitcoin ETFs the previous week.

The Ethereum community's response to these enterprise chains is also interesting. Some see it as a form of recognition. After all, both Arc and Tempo are building EVM-compatible chains, which essentially adopt Ethereum's development standards.

But there is a subtle threat here. Every USDC transaction that occurs on Arc instead of Ethereum is a fee revenue that Ethereum validators cannot earn. Every Stripe merchant payment processed on Tempo instead of Ethereum Layer 2 is an activity that does not contribute to Ethereum's network effects.

Solana may feel this competition more acutely. The network has always positioned itself as a high-performance alternative to Ethereum, especially in payments and consumer applications. When major payment companies choose to build their own chains instead of adopting Solana, it undermines Solana's long-promoted argument that "everything can fit into a high-speed computer."

The Graveyard of Enterprise Blockchains

History has not been kind to companies that attempt to build their own blockchains. As I mentioned earlier, Celo made the same move in 2023.

Remember Facebook's Libra? This ambitious plan to create a global digital currency ultimately turned into Diem and disbanded under regulatory pressure, being sold off. Don’t forget that if there were a GENIUS Act today clearly defining how stablecoin issuers should operate, Facebook's project might have actually succeeded.

JPMorgan's blockchain attempts may be the most relevant cautionary tale. The bank spent years building JPM Coin (a digital dollar), Quorum (their private blockchain network), and other blockchain projects. Despite having almost unlimited resources, regulatory relationships, and a large existing customer base, these projects never gained meaningful adoption outside of JPMorgan's own business. JPM Coin processed billions of dollars in transactions, but mainly just transferred funds between the bank's institutional clients.

Even the attempts of major payment companies have not been particularly inspiring. In 2023, PayPal launched its own stablecoin, PYUSD, becoming the first major U.S. fintech company to enter the stablecoin space. However, PayPal did not build custom infrastructure but chose to issue on existing networks like Ethereum. What was the result?

The market cap of PYUSD is only $1.102 billion, which is negligible compared to USDC's $67 billion, and it is primarily confined to PayPal's own ecosystem.

This raises a question: if a company with the vast influence and payment expertise of PayPal cannot make a significant impact relying solely on a stablecoin, what makes Circle and Stripe think that building an entire blockchain will do better?

This model suggests that building a successful blockchain requires more than just technical capability and financial resources. You also need network effects, developer enthusiasm, and organic adoption, all of which are notoriously difficult to create from scratch, even with backing from large companies.

Will this time be different?

We have reason to believe that Circle and Stripe may succeed where others have failed.

First, regulatory clarity has significantly improved. The GENIUS Act passed in the U.S. has created a clear framework for stablecoin issuers, eliminating much of the uncertainty that plagued early enterprise blockchain attempts. When Circle launches Arc, they are not operating in a legal gray area but as a publicly traded company under established rules.

Second, both companies have what JPMorgan lacked: a large existing user base, and these users do not primarily come from the crypto-native community. Stripe processes over $1 trillion in transactions annually for millions of merchants worldwide and has been systematically building its crypto infrastructure—acquiring Bridge (stablecoin infrastructure) for $1.1 billion and Privy (crypto wallet technology) to create an end-to-end payment stack. Circle's USDC has been integrated into hundreds of applications and trading platforms. They are not blindly building chains; they are constructing infrastructure for the user base they already serve and have the tools to seamlessly guide them in.

When Paradigm's Matt Huang described Stripe's approach, he emphasized how blockchain technology could "take a back seat," allowing ordinary users to remain unaware.

Imagine that when making online payments, you can achieve instant settlement, lower fees, and programmable features, but the merchant's checkout interface looks exactly like the existing Stripe checkout process. This is a completely different proposition from asking people to download MetaMask and manage seed phrases. It’s a Web2 user experience with Web3 underlying architecture. Users may not even feel anything "blockchain" related.

Third, the technology itself has matured. When JPMorgan attempted blockchain in 2017-2018, the infrastructure was indeed very primitive. Today, while building a high-performance blockchain with institutional-grade features is still challenging, it is no longer unprecedented. Circle has acquired the team behind the Malachite consensus engine, bringing in battle-tested technology capable of achieving sub-second finality. Stripe's collaboration with Paradigm adds deep crypto expertise to its payment knowledge.

Cost dynamics have also changed dramatically. In 2017, launching a new blockchain typically required $1 million to $5 million, with development cycles lasting 1 to 2 years or more. By 2025, due to improvements in developer tools, consensus engines, and blockchain-as-a-service platforms, the average cost to launch a functional blockchain application is between $40,000 and $200,000, with a typical timeline of 3 to 6 months. In some areas, modern deployments are even 43% cheaper than centralized applications due to efficiency gains and infrastructure expansion.

Payment companies have realized they have been paying for infrastructure they could have built themselves. Rather than paying Circle's USDC transaction fees or relying on Ethereum's fee structure, companies like Stripe can now spend a fraction of the cost to build their own infrastructure, which is much lower than the long-term fees they would pay to third parties.

This is a classic "build vs. buy" decision, where the cost of the "build" option has dropped from millions to hundreds of thousands.

The Question of Coexistence

So, where does all this lead us? Are we heading toward a fragmented future where every major company runs its own blockchain? Or will market forces drive integration and interoperability?

Early signs suggest a pragmatic coexistence rather than a winner-takes-all competition. Circle has made it clear that Arc will complement its multi-chain strategy rather than replace it. USDC will continue to operate on Ethereum, Solana, and dozens of other networks. Arc is positioned as an additional option for users who need its specific features (such as institutional privacy, guaranteed settlement times, or built-in foreign exchange capabilities).

Stripe's approach seems similar. Tempo is not designed to completely replace existing payment rails but to provide alternatives for use cases where blockchain functionality can offer significant advantages. Areas like cross-border payments, programmable money, and merchant settlements are where blockchain technology can truly surpass traditional systems.

Ultimately, user experience will determine whether this fragmentation becomes an advantage or a problem. If "chain abstraction" technology develops as promised, users may interact with all these different blockchains without knowing or caring. Your payment app might automatically route to the network that offers the best speed and cost for a specific transaction.

My prediction (if I can be a bit optimistic): we will see two outcomes occurring simultaneously, but existing in different market segments.

For institutional and enterprise users, multiple specialized blockchains may thrive. When a multinational company transfers $100 million between subsidiaries, they care about compliance features, settlement guarantees, and integration with existing financial systems. They do not care whether gas prices fluctuate, whether their blockchain has the coolest NFT projects, or the most active DeFi protocols. A chain that allows enterprises to directly withdraw to traditional banking systems, provides built-in compliance reporting, or guarantees settlement times will be preferred over Ethereum's general-purpose infrastructure.

Arc may indeed serve these users better than Ethereum.

Stable fees, instant settlement, and built-in compliance features may be more important to CFOs than access to the latest DeFi protocols.

For retail users and developers, network effects will continue to be crucial. The blockchains with the most applications, the highest liquidity, and the most active developers will continue to attract more participants. Today, that remains Ethereum, and these enterprise chains do not seem to have any intention of directly challenging its dominance.

The biggest uncertainty is whether these enterprise blockchains will always focus solely on enterprises. If Stripe enables merchants to pay faster and cheaper without customers realizing they are using blockchain, it may grow beyond enterprise use cases.

But the essence of infrastructure is that the best things are invisible. When you flip a light switch, you don’t think about the power plant or the transmission lines. When these blockchain experiments succeed, it will be because they have made the underlying technology disappear entirely.

Whether this will actually happen remains to be seen. For now, we are in a land-grabbing phase, with everyone wanting to secure a place in the future financial infrastructure.

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