Author: Thejaswini M A Source: Token Dispatch Translation: Shan Ouba, Golden Finance You know how things go awry from the very beginning? You started out with a harmless idea—buying some Philips Hue smart bulbs because they were supposedly the best. The app was beautifully designed, the colors were stunning, and the moment you dimmed the lights with a single tap on your phone, you felt like a tech wizard. Then you decided your thermostat deserved a smart one, but Nest's AI was the best, so you bought it. Different app, different account, but it didn't matter; it was just one more thing. By the time you come to your senses, your home is a mess. Your Ring doorbell won't communicate with your Alexa speaker, Alexa can't control your Apple HomeKit garage door, and your garage door won't communicate with your Samsung SmartThings hub. To turn on the lights, adjust the temperature, and lock the door, you have to use four different apps. Every company promises a "seamless smart home experience," but in the end, your home is even dumber than before—just a few more apps. Will Circle and Stripe repeat this story in crypto? In August 2025, two major news stories broke in quick succession. First, Stripe, the $50 billion payments giant, announced a partnership with crypto VC firm Paradigm to build a "high-performance, payments-focused" blockchain called Tempo. A day later, Circle, the issuer of the $67 billion USDC stablecoin, announced the launch of its self-developed layer-one blockchain, Arc, designed specifically for stablecoin payments, foreign exchange, and capital markets. Circle Arc Details: Arc is built entirely around USDC. Most blockchains require transaction fees to be paid in their native tokens—for example, ETH on Ethereum and SOL on Solana. But on Arc, you pay fees directly in USDC, eliminating the need to hold a volatile token just to use the network. Arc has a built-in foreign exchange engine. Instead of using external services or decentralized exchanges to exchange currencies, Arc performs foreign exchange conversions at the protocol level. You send USDC, and your recipient receives EURC (the Euro stablecoin). The conversion happens automatically, without a third party or additional fees. Arc also offers privacy controls. On most public blockchains (Ethereum, Bitcoin, Solana), transaction addresses, amounts, and times are fully public; privacy coins like Monero hide all information by default. Arc offers "optional privacy"—businesses can hide transaction amounts while maintaining visibility of addresses—and comes with built-in compliance features. It's designed for businesses that require competitive privacy but don't want complete anonymity.
Stripe Tempo Details
Tempo's differentiation lies in its abstracted user experience. Most crypto payment solutions still retain a "crypto feel"—connecting a wallet, signing a transaction, and waiting for confirmation. Tempo, on the other hand, makes blockchain payments look virtually the same as swiping a credit card from a user's perspective.
It's compatible with the Ethereum ecosystem and can directly integrate with existing DeFi infrastructure and development tools. However, its greatest advantage lies in its seamless integration with Stripe's existing merchant ecosystem. Millions of businesses worldwide using Stripe can theoretically add crypto payment functionality without having to change their checkout processes or learn a new system.
Most importantly, Stripe's existing relationships with banks and regulators could potentially solve a major challenge: the "last mile" problem: how to smoothly transfer funds from the blockchain back to bank accounts. Most crypto payment solutions struggle at this stage, while Stripe already has banking partnerships that take other companies years to build. [Unrelated text follows:] Back to my broken smart home—problems started popping up one after another, like red dot notifications on my various home apps. The first question that puzzled me was: What's the demand for these "specialized blockchains"? Circle and Stripe keep talking about stablecoin payments and enterprise functionality, but the primary use case for stablecoins is actually in DeFi. People use USDC to buy other crypto assets, participate in lending protocols, trade on decentralized exchanges, and interact with broader decentralized finance applications—and all of this activity happens primarily on Ethereum. I would say it's like building the world's most advanced smart thermostat, but it only works in a house with no other smart devices. Sure, the thermostat might be technically superior, but you've cut yourself off from the ecosystem where people actually want to use smart home features. The second question: Why reinvent the wheel? Everything Circle and Stripe claim to achieve—faster transactions, lower fees, customizable features, and enterprise branding—can actually be achieved through Ethereum's second-layer solutions. This not only inherits the underlying security of Ethereum, but also allows access to the largest DeFi ecosystem and the freedom to customize your network. Some layer-one blockchains have already realized this. Celo is an example—it started as an independent blockchain focused on mobile payments, but later announced its transition to an Ethereum layer-two. After calculating the costs and benefits, they determined that joining the Ethereum ecosystem was more cost-effective than building their own network effects from scratch. The more chains there are, the greater the need for cross-chain bridges. And cross-chain bridges are where problems are most common. Their purpose is to transfer assets from one chain to another—essentially, complex smart contracts that lock your tokens on one chain and mint an equivalent amount on another. But cross-chain bridges are frequently hacked. I swear by the Ronin incident. It's not just a simple inconvenience like switching from the Philips Hue app to the Nest app; if the cross-chain bridge software fails, you could directly lose your funds. And then there's the poor user experience. In my smart home, the worst-case scenario is I have to open another app to turn off the porch light. But in an enterprise blockchain, users might need different wallets, different gas tokens, different interfaces, and different security settings for each network. Most people struggle to manage a single crypto wallet, let alone explain why they need one wallet for Stripe payments and another for Circle transfers. But what really puzzles me is this: there's no network effect at all. The value of a payment network grows exponentially with the number of users and applications. Ethereum, on the other hand, has the most developers, applications, and liquidity. By mid-2025, Ethereum's TVL (total value locked) was $96 billion, representing 60%-65% of all DeFi activity. Solana, often positioned as a high-performance alternative, has $11 billion in TVL. Other major chains like BSC ($7.35 billion), Tron ($6.78 billion), and Arbitrum ($3.39 billion) split the rest. These enterprise chains chose to forgo this network effect, building isolated systems and hoping that users would naturally migrate. Would you build a perfect store on a deserted island? Of course, there are exceptions like the UAE, which built Dubai and people did move there, but that was because they had to do so due to physical constraints. Finally, there's the question no one wants to address directly: Do these companies truly want to build better infrastructure, or do they simply want to avoid sharing a sandbox with their competitors? When I look at the mess in my smart home, each company has its own technical rationale. But the real driving force behind it is often a desire to avoid relying on someone else's platform or paying fees to a competitor. Perhaps that's what's happening here. Circle doesn't want to pay Ethereum transaction fees, and Stripe doesn't want to build on infrastructure they don't control. Fine, that's fine. But let's be honest—this isn't about innovation or user experience so much as it is about control and economic gain. The King Seems Unconcerned Ethereum, for its part, seems unfazed by this corporate exodus. The network still processes over a million transactions per day, accounts for the majority of DeFi activity, and has recently seen significant institutional inflows via ETFs. On one day in August, Ethereum ETFs saw a single-day net inflow of $1 billion, exceeding the total inflows into Bitcoin ETFs the previous week. The Ethereum community's response to these enterprise chains is interesting. Some see it as a sign of approval—after all, Arc and Tempo are both EVM-compatible chains, essentially adopting Ethereum's development standards. But there's a subtle threat lurking here. Every USDC transaction on Arc instead of Ethereum represents fee income that doesn't flow to Ethereum validators. Every Stripe merchant payment processed on Tempo instead of Ethereum Layer 2 represents activity that doesn't contribute to Ethereum's network effect. Solana may be even more sensitive. The network has positioned itself as a high-performance alternative to Ethereum, particularly for payments and consumer applications. When major payment companies choose to build their own blockchains instead of adopting Solana, it's a blow to Solana's claim that "every application can fit on a fast computer." History has not been kind to companies that attempt to build their own blockchains. Celo, as I mentioned earlier, made this pivot in 2023. Remember Facebook's Libra? It began as an ambitious global digital currency initiative, morphed into Diem, and ultimately was sold off under regulatory pressure. However, with clearer regulations today (for example, the US GENIUS Act, which clarifies how stablecoin issuers operate), Facebook's project might actually have a chance of success. JPMorgan Chase's blockchain efforts are perhaps the most cautionary example. The bank spent years developing JPM Coin (a US dollar stablecoin), Quorum (a private blockchain network), and other blockchain projects. Despite their nearly unlimited resources, regulatory relationships, and a large existing customer base, these projects never achieved meaningful adoption outside of JPMorgan's own operations. While JPM Coin has processed billions of dollars in transactions, most of these transactions were limited to transfers between institutional clients within the bank. Other attempts by payment giants have also met with less optimism. PayPal launched its own stablecoin (PYUSD) in 2023, becoming the first major US fintech company to enter the stablecoin space. However, it chose not to build its own infrastructure, instead issuing it directly on existing networks like Ethereum. The result? PYUSD's market capitalization is only $1.102 billion—a paltry figure compared to USDC's $67 billion—and its circulation remains primarily confined to PayPal's own ecosystem. This raises the question: If a company like PayPal, with its vast user base and payment expertise, can't make a significant impact simply by creating a stablecoin, then why do Circle and Stripe believe building their own entire blockchains will yield better results? History shows that building a successful blockchain requires not only technical prowess and funding, but also network effects, developer enthusiasm, and organic user adoption—all of which are difficult to "manufacture" even with corporate backing. Will this time be different? There's reason to believe that Circle and Stripe may be able to overcome some of their past challenges. First, regulatory clarity has significantly improved. The passage of the GENIUS Act in the United States established a clear framework for stablecoin issuers, eliminating many of the uncertainties that plagued early-stage enterprise blockchains. When Circle launched Arc, they weren't operating in a legal gray area; rather, they were a publicly traded company operating under established rules. Second, both companies already possess something JPMorgan Chase lacks: a large, existing user base that isn't primarily crypto-native. Stripe processes over $1 trillion in payments annually for millions of merchants worldwide and has been systematically building its crypto infrastructure—spending $1.1 billion to acquire Bridge (stablecoin infrastructure) and Privy (crypto wallet technology) to create an end-to-end payments stack. Circle's USDC has already been integrated into hundreds of apps and exchanges. Rather than building a blockchain and waiting for others to adopt it, they're building infrastructure for their existing users and are able to seamlessly onboard them. When Paradigm's Matt Huang described Stripe's strategy, he emphasized that blockchain technology would be "invisible" to the average user. Imagine making an online payment and getting instant settlement, lower fees, and programmable features, but the merchant's integration interface looks exactly like the existing Stripe checkout process. This is a completely different experience than having users download MetaMask and manage seed phrases—it's a Web2 experience combined with Web3 infrastructure, without even a "blockchain feel" to the user. Third, the technology itself is mature. When JPMorgan Chase experimented with blockchain in 2017-2018, the infrastructure was indeed primitive. Today, building a high-performance blockchain with institutional-grade functionality is challenging, but not unprecedented. Circle acquired the team behind the Malachite consensus engine, gaining proven technology with sub-second finality; Stripe's partnership with Paradigm supplemented its payments expertise with deep cryptography expertise. The shift in cost structures has also been significant. In 2017, the cost of launching a new blockchain typically ranged from $1 million to $5 million, with development cycles of one to two years or longer. By 2025, thanks to advances in development tools, consensus engines, and blockchain-as-a-service platforms, the average cost of launching a working blockchain application had dropped to $40,000 to $200,000, with a typical development time of three to six months. In some areas, modern deployments can be as much as 43% cheaper than centralized applications, thanks to increased efficiency and infrastructure scalability. Payment companies are realizing they've been paying for infrastructure provided by others, even though they could build it themselves. Rather than paying Circle fees for USDC transactions or complying with Ethereum's fee structure, building the entire infrastructure themselves can be cheaper in the long run. It's the classic "build vs. buy" decision—and now, the cost of building it has dropped from millions of dollars to just a few hundred thousand. The Coexistence Question: So, are we headed for a fragmented future where every major company operates its own blockchain? Or will market forces drive consolidation and interoperability? Early signs suggest pragmatic coexistence is more likely than a winner-takes-all landscape. Circle has made it clear that Arc will complement, not replace, its multi-chain strategy. USDC will continue to run on Ethereum, Solana, and dozens of other networks. Arc is positioned as an additional option for users who require specific features (such as institutional-grade privacy, settlement time guarantees, and built-in foreign exchange capabilities). Stripe's strategy appears similar. Tempo isn't designed to completely replace existing payment rails, but rather to provide an alternative for use cases where blockchain features offer clear advantages. Cross-border payments, programmable money, merchant settlement—these are all areas where blockchain technology offers real efficiency advantages over traditional systems. Ultimately, user experience will determine whether this fragmentation is a "prosperity" or a "flaw." If "chain abstraction" technology develops as promised, users may not even need to know or care which chain they are using to interact across different blockchains. Your payment app might automatically choose the network that's currently the best in terms of speed and cost to complete the transaction. If I were to place a slightly more optimistic bet, I'd say both outcomes will occur simultaneously, but in different market segments. Institutional and enterprise users: Multiple specialized blockchains are likely to flourish. A global corporation transferring $100 million between subsidiaries is more concerned with compliance features, settlement guarantees, and integration with existing financial systems. They don't care about gas price fluctuations, the coolest NFT project on the chain, or the most active DeFi protocol. A chain that allows businesses to withdraw funds directly to the traditional banking system, provides built-in regulatory reporting, and guarantees settlement times may be more attractive than Ethereum's general-purpose infrastructure. Arc may indeed outperform Ethereum in these areas. Stable fees, instant settlement, and built-in compliance features—these may be more important to CFOs than access to the latest DeFi protocol. Retail users and developers: Network effects continue to play a huge role. The blockchains with the most applications, the greatest liquidity, and the most developer activity will continue to attract more of the same. This remains Ethereum's advantage today, and these enterprise blockchains don't seem to be directly challenging this dominance. The only variable is whether these enterprise blockchains will remain focused on the enterprise market. If Stripe can bring faster and cheaper payments to merchants without consumers even realizing they're using a blockchain, its applications could extend beyond the enterprise sector. But here's the thing about infrastructure: the best infrastructure is invisible. When you flip a light switch, you don't think about the power plant and transmission lines. If these blockchain experiments ultimately succeed, it will be because they completely obscure the underlying technology from users' view. Whether this actually happens remains to be seen. We are currently in the "land grab" phase—everyone wants to stake out a piece of the future financial infrastructure.
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