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Corporate Blockchains on the Rise
Corporate blockchains have never looked so good.
In rapid succession, news broke that both payments giant Stripe and stablecoin darling Circle would be building their own layer-1 blockchains. While major companies coming on-chain theoretically poses a competitive threat to all existing layer-1s, there may be reason to believe the news is particularly troublesome for Solana’s vision that “everything can fit in one computer.”
New Entrants: Tempo and Arc
Stripe and Circle’s chains — named Tempo and Arc, respectively — are set to be EVM-based. Some Ethereum boosters were quick to chalk this up as bullish for Ethereum, but this may be overly optimistic, in this newsletter writer’s view.
The EVM (Ethereum Virtual Machine) is a software environment. The only way it directly affects ETH the asset is through gas fees, but Circle is using USDC for gas fees. For Stripe, it’s hard to imagine that the online payment behemoth will willingly pay higher Ethereum gas fees. Plus, both companies could undermine Ethereum’s position as the primary blockchain for stablecoins.
The Impact on Solana
It’s not immediately clear why initiatives like Robinhood’s layer-2 would necessarily benefit ETH the asset. Supporters of these EVM layer-1s are stretching the argument that they are bullish for ETH, especially since a successful launch of Tempo or Arc could be detrimental for Solana, which has now missed two significant fintech opportunities in this market cycle.
“Big companies launching L1s is a rejection of the L2 thesis but even more so of the Solana thesis,” said mteam, pseudonymous co-founder of Ethereum infrastructure firm Spire Labs.
Upon further discussion, mteam elaborated: “The Solana thesis suggests that apps will prefer a shared state layer and won’t launch independent chains unless they absolutely need to. Any importance of an L1 or L2 premium to apps, infra, or institutions seems to reject Solana’s thesis even more than Ethereum’s L2 thesis.”
In summary, if major firms opt for their own blockchains instead of building on Solana, it suggests that the L2 thesis regarding Ethereum might hold more truth than Solana’s approach.
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