Circle and Stripe Announce Launch of New Blockchains for Payments
Circle has launched Arc, a new settlement network for stablecoins, shortly after Stripe unveiled Tempo, developed with Paradigm. This follows recent fundraising by startups like Plasma and Stable for dedicated chains to support USDT.
Key developments include:
- Securitize is creating Converge in collaboration with Ethena.
- Ondo Finance announced an in-house blockchain for tokenized assets.
- Dinari plans to launch an Avalanche-powered layer-1 network for tokenized stock settlements.
Stablecoins and tokenized real-world assets are projected to grow into trillion-dollar markets, enhancing cross-border payments and enabling continuous trading of traditional financial instruments on blockchains.
Reasons for Building Layer-1 Blockchains
Current tokens operate primarily on public blockchains like Ethereum, Solana, and Tron, which offer global reach but also have limitations such as exposure to external fee markets. Key motivations for firms to create their own L1s include:
- Control over compliance and transaction fees.
- Isolation from unrelated network activity.
- Potentially greater revenue from settlement layers than traditional payment processing.
- Implementation of KYC checks at the protocol level.
Impact on Existing Layer-1s
New entrants may compete with established networks. Analysts suggest that Circle's Arc and Stripe's Tempo could directly challenge Solana's low-fee payment model, while Ethereum is likely to maintain its institutional user base due to trust and security factors. Transitioning liquidity and high-value payments from incumbents will require significant time and trust-building.