Source: Token Dispatch

Compiled and compiled by: BitpushNews

Have you ever bought some Philips Hue smart bulbs with pure intent, simply because they're the best? The app interface is cool, the colors are amazing, and you feel like a tech wizard, knowing you can dim the lights with your phone—it's so cool.

Then, you decide your thermostat should be smart, too, but Nest's AI is the best, so you buy that, too. Different apps, different accounts, but it doesn't matter; it's just one more.

Before you know it, you're in chaos.

Your Ring doorbell won't talk to your Alexa speaker, which can't control your Apple HomeKit garage door, which can't communicate with your Samsung SmartThings hub. You need to use four different apps to turn on the lights, adjust the temperature, and lock the door. Each company promises you a "seamless smart home experience."

But somehow, the house you end up living in is "dumber" than before because it has so many more "apps".

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

In August 2025, two pieces of major news came.

First, Stripe, the $50 billion payments giant, announced it would partner with crypto venture capital firm Paradigm to build a "high-performance, payments-centric" blockchain called Tempo.

A day later, Circle, which owns the $67 billion USDC stablecoin, also announced Arc, its own Layer 1 blockchain designed specifically for stablecoin payments, foreign exchange, and capital markets.

Internal analysis of Circle's Arc

Circle will be building Arc specifically for its USDC stablecoin. While most blockchains require you to pay transaction fees in their native tokens, like ETH on Ethereum or SOL on Solana, Arc allows you to pay fees directly in USDC, eliminating the need to hold a volatile coin.

Arc has a built-in exchange rate engine. Instead of using external services or decentralized exchanges (DEXs) to convert currencies, Arc handles exchange rates natively within the protocol. You send USDC, and your recipient receives EURC (the Euro stablecoin). The conversion happens automatically, without third-party services or additional fees.

Then there's privacy controls. Most public blockchains (Ethereum, Bitcoin, Solana) display all information: addresses, amounts, and timestamps. Privacy coins like Monero hide everything by default. Arc offers selective privacy, allowing institutions to hide transaction amounts while keeping addresses visible, and has built-in compliance features. It's designed for businesses that require competitive privacy without requiring complete anonymity.

Stripe's Tempo Internals

Stripe's differentiation lies in its abstraction of the user experience. While other crypto payment solutions still have a strong "crypto flavor" (connecting a wallet, signing a transaction, and waiting for confirmation), Tempo's design goal is to make blockchain payments look exactly like credit card payments.

Compatibility with Ethereum means it can leverage existing DeFi infrastructure and developer tools, but its biggest advantage lies in its integration with Stripe’s existing merchant ecosystem. Millions of businesses using Stripe can easily add crypto payments without having to change their checkout processes or learn a new system.

Most importantly, Stripe's existing banking and regulatory relationships solve a major problem. Most crypto payment solutions struggle with the "last mile"—moving funds from the blockchain back to a bank account. Stripe already has these partnerships, something other crypto companies have spent years building.

Why do I feel so confused?

So we're back to my broken smart home, and the problems are multiplying like the notification bar of various smart home apps on my phone.

The first thing that bothers me is: where is the demand for these specialized blockchains?

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

People use USDC to purchase other crypto assets, participate in lending protocols, trade on decentralized exchanges, and interact with the broader ecosystem of financial applications, all primarily on Ethereum.

I feel like it's like building the world's most advanced smart thermostat, but it only works in a house without any other smart devices.

Sure, the thermostat might be technologically superior, but you've isolated yourself from an entire ecosystem of smart home features that people actually want to use.

The second question: Why do we need to reinvent the wheel?

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

Some Layer 1 blockchains have already figured this out. Celo, initially focused on mobile payments, was once an independent blockchain, but later announced plans to transition to becoming an Ethereum Layer 2. After some calculation, they realized that becoming 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 the problems arise...

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

Terrible user experience. The worst thing that happens in my smart home is that I have to open another app to turn off the lights in the living room hallway.

But for enterprise blockchains, users might need different wallets, different gas tokens, different interfaces, and different security settings. Most people struggle with managing a single crypto wallet. Imagine having to explain why Stripe payments and Circle transfers require different wallets.

But what puzzles me most is that the network effects simply don’t exist.

The value of a payment network grows exponentially as users and applications increase. Ethereum has the most developers, the most applications, and the highest liquidity. By mid-2025, Ethereum's TVL (total value locked) was $96 billion, accounting for approximately 60-65% of all DeFi activity. Solana, often positioned as a high-performance alternative, has a TVL of $11 billion. Other mainstream chains such as Binance Smart Chain ($7.35 billion), Tron ($6.78 billion), and Arbitrum ($3.39 billion) account for the remainder.

These enterprise chains choose to break away from existing network effects, build an isolated network, and naively hope that users will find them automatically.

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 do go there. But that's because of physical limitations, and they have to do it that way.

Finally, there's the competition question that no one wants to confront directly: Do these companies truly want to build better infrastructure, or do they simply want to avoid sharing turf with their competitors?

Looking back at my smart home mess, each company had legitimate technical reasons for their choices, but the real driver was often a desire to not be dependent on someone else's platform or pay a competitor.

Perhaps this is what's really going on. Circle doesn't want to pay Ethereum transaction fees, and Stripe doesn't want to build on infrastructure they don't control. Fair enough. But let's be honest. This isn't about innovation or user experience; it's about control and economic interests.

The king doesn't seem worried

Ethereum seems unfazed by this. The network continues to process over a million transactions per day, accounts for the majority of DeFi activity, and has received significant institutional inflows through its ETFs. On one day in August, the Ethereum ETF saw net inflows of $1 billion, which was more than the total inflows into the Bitcoin ETF the previous week.

The Ethereum community's reaction to these enterprise chains has been interesting. Some have seen it as a sign of approval. After all, both Arc and Tempo are building EVM-compatible chains, essentially adopting Ethereum's development standards.

But there’s a subtle threat here. Every USDC transaction that happens on Arc instead of Ethereum is fee revenue that Ethereum validators don’t receive. Every Stripe merchant payment processed on Tempo instead of Ethereum Layer 2 is activity that doesn’t contribute to Ethereum’s network effect.

Solana may feel this competition more acutely. 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 chains rather than adopt Solana, it undermines Solana's thesis that "everything can fit on a single, fast computer."

The graveyard of enterprise blockchains

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

Remember Facebook's Libra? This ambitious plan to create a global digital currency ultimately became Diem, which collapsed under regulatory pressure and was sold off. Don't forget that if the GENIUS Act clearly defined how stablecoin issuers should operate in today's regulatory environment, Facebook's project might actually succeed.

JPMorgan Chase's blockchain ventures are perhaps 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 virtually unlimited resources, regulatory relationships, and a large existing client base, these projects never gained meaningful adoption outside of JPMorgan's own operations. JPM Coin processed billions of dollars in transactions, but primarily moved funds between the bank's own institutional clients.

Even attempts by major payment companies have been less than encouraging. PayPal launched its own stablecoin, PYUSD, in 2023, becoming the first major US fintech company to enter the stablecoin space. But rather than building custom infrastructure, PayPal opted to issue its token on existing networks like Ethereum. The result?

PYUSD’s market capitalization is only $1.102 billion, which is insignificant compared to USDC’s $67 billion, and is mainly confined to PayPal’s own ecosystem.

This begs the question: If a company with the scale and payments expertise of PayPal can’t make a significant impact with just a stablecoin, what makes Circle and Stripe think they’ll do better by building an entire blockchain?

This model demonstrates that building a successful blockchain requires more than just technical capability and financial resources. You also need network effects, developer enthusiasm, and organic adoption, things that are notoriously difficult to create in a vacuum, even with the backing of a major company.

Will things be different this time?

There's reason to think Circle and Stripe might succeed where others have failed.

First, regulatory clarity has significantly improved. The passage of the GENIUS Act in the United States created a clear framework for stablecoin issuers, eliminating much of the uncertainty that plagued early enterprise blockchain efforts. When Circle launched Arc, they weren't operating in a legal gray area; instead, they were a publicly traded company operating under established rules.

Second, both companies possess something JPMorgan lacks: a massive existing user base that isn't primarily crypto-native. 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 payments stack. Circle's USDC has been integrated into hundreds of apps and exchanges. Rather than blindly building blockchains, they're building infrastructure for the user base they already serve and have the tools to seamlessly onboard them.

When Paradigm's Matt Huang described Stripe's approach, he emphasized how blockchain technology can "fall behind the scenes," making it invisible to the average user.

Imagine paying online and getting instant settlement, lower fees, and programmable functionality, but the merchant's checkout interface looks exactly like the existing Stripe checkout process. This is a completely different proposition than asking people to download MetaMask and manage their seed phrases. This is the user experience of Web2, the underlying architecture of Web3. Users won't even notice anything "blockchain."

Third, the technology itself has matured. When JPMorgan Chase experimented with blockchain in 2017-2018, the infrastructure was indeed very primitive. Today, building a high-performance blockchain with institutional-grade functionality, while still challenging, is not unprecedented. Circle acquired the team behind the Malachite consensus engine, bringing with it battle-tested technology capable of achieving sub-second finality. Stripe's partnership with Paradigm complements its payments expertise with deep cryptography expertise.

Cost dynamics have also shifted dramatically. In 2017, launching a new blockchain typically cost $1 million to $5 million, with development cycles lasting one to two years or longer. By 2025, improvements in developer tools, consensus engines, and blockchain-as-a-service platforms will push the average cost of launching a functional blockchain application to $40,000 to $200,000, with a typical timeline of three to six months. Thanks to efficiency gains and expanded infrastructure, modern deployments in some sectors can cost up to 43% less than centralized applications.

Payment companies are realizing they’ve been paying for infrastructure they could have built themselves. Instead of paying Circle’s USDC transaction fees or relying on Ethereum’s fee structure, companies like Stripe can now build their own infrastructure at a fraction of the cost, which is significantly lower than what they would have been paying third parties in the long run.

This is the classic “build vs. buy” decision, and now the cost of the “build” option has dropped from millions to hundreds of thousands.

The problem of coexistence

So, where does all this take us? Are we headed for a fragmented future where every major company runs its own blockchain? Or will market forces drive consolidation and interoperability?

Early signs suggest pragmatic coexistence rather than a winner-takes-all competition. Circle has made it clear that Arc will complement, not replace, its multi-chain strategy. USDC will continue to operate on Ethereum, Solana, and dozens of other networks. Arc is positioned as an alternative for users who require specific features like institutional privacy, guaranteed settlement times, or built-in foreign exchange capabilities.

Stripe's approach appears similar. Tempo isn't designed to completely replace existing payment rails, but rather to provide an alternative for use cases where blockchain's capabilities offer clear advantages. Cross-border payments, programmable money, and merchant settlement are areas 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 may automatically choose to route your transaction on the network that offers the best speed and cost for a particular transaction.

My prediction (if I can be optimistic): We will see both outcomes happening simultaneously, but in different market segments.

For institutional and enterprise users, multiple specialized blockchains are likely to flourish. When a multinational corporation transfers $100 million between subsidiaries, they care about compliance features, settlement guarantees, and integration with existing financial systems. They don't care about gas price fluctuations or whether their blockchain has the coolest NFT project or the most active DeFi protocol. A chain that allows businesses to withdraw funds directly to the traditional banking system, provides built-in compliance reporting, or guarantees settlement times will be more popular than Ethereum's general-purpose infrastructure.

Arc may actually be able to serve these users better than Ethereum.

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

For both retail users and developers, network effects will continue to be crucial. The blockchain with the most applications, the highest liquidity, and the most active developers will continue to attract more people. Today, that's still Ethereum, and these enterprise chains don't seem to be directly challenging its dominance.

The biggest uncertainty is whether these enterprise blockchains will remain solely focused on enterprises. If Stripe makes payments faster and cheaper for merchants without customers realizing they’re using a blockchain, it could grow beyond enterprise use cases.

But here’s the thing about infrastructure: the best things are invisible. When you turn on 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 make the underlying technology disappear completely.

Whether this actually happens remains to be seen. For now, we are in a stage of land grabbing, with everyone trying to stake out a role in the future of financial infrastructure.