Two stablecoin Layer 1 announcements in one day shook the entire crypto and fintech world.

Stripe’s "Tempo" was exposed from stealth mode, while Circle officially announced "Arc" during its earnings cycle.

On the surface, both are public chains optimized for payments.

But the underlying logic is entirely different: one is a payment service provider with merchant and developer distribution capabilities, while the other is the issuer of USDC, attempting to upgrade a stablecoin into an entire network.

The L1 vs. L2 Debate

First, answer the most straightforward question: Why not follow Coinbase’s lead and build an L2?

If your advantage lies in distribution—migrating massive existing users and merchants to the chain with "one click"—then L2 is the most convenient solution.

Inheriting Ethereum’s security and tooling ecosystem allows for rapid launch, along with the economic benefits of sequencer revenue.

Base’s rise wasn’t technically groundbreaking; the key was Coinbase’s traffic funnel and application integration. This methodology has already been proven.

So why are Stripe and Circle both talking about L1?

Because "payment chains" are becoming a distinct track.

A group of L1s centered around Tether (Stable and Plasma) are pushing a narrative: stablecoins need a native, payment-optimized foundation—using stablecoins for gas, predictable fees, sub-second settlement—rather than forever being "guests" on general-purpose blockchains.

The pressure on Circle is obvious: if competitors’ dollar stablecoins begin binding to their own settlement layers, USDC can’t remain just "a token"; it must also become "the rails."

Decoding Circle

Zooming in, Circle’s moves aren’t purely "defensive."

Arc and the Circle Payments Network (CPN) are synergistic, resembling Visa’s "network of networks" strategy ported to the chain.

Open, EVM-compatible, USDC-native, optimized for payments and forex, and also preparing for capital market use cases.

The core lies in a strategic concession: if Circle chooses to cede more front-end revenue to issuance/distribution partners, retaining only thin network-level fees, it gains stronger network effects.

This is precisely how card networks won in the past: lower fees, widespread adoption first, win trust, and expand endpoints.

In this lens, "Arc vs. Stable/Plasma" is more critical than "Circle vs. Coinbase."

If Tether-aligned payment chains establish "stablecoin-native + low-friction payment experience" as the industry standard, Circle can’t just be a bridge to others’ rails; it must own a rail others can truly rely on.

At the same time, openness isn’t just a slogan: the distribution and accessibility of validator nodes, the public nature of developer tools, and the ease of cross-chain and exit determine whether Arc is "public infrastructure" or a rebranded proprietary channel.

Otherwise, it risks falling into the "decentralization—scaling—recentralization" vicious cycle.

Decoding Stripe

For Stripe, whether Tempo should be an L1 depends on whether it’s "truly open."

If Tempo is fully public, minimally permissioned, EVM-compatible, and natively interoperable, Stripe could turn its distribution power into a cold-start engine for a public network.

Not building a "merchant garden," but lighting a public path fair to all participants.

Conversely, if governance, validation, and bridging are tightly controlled by Stripe, the ecosystem will quickly worry about dependency risks: today’s "shortcut" could become tomorrow’s unavoidable "toll booth."

Visa has long taught the industry: to build universal trust, prioritize interoperability, and brand value will follow.

Thus, the "who should build L1, who fits L2" question aligns with business models.

For issuers like Circle, moving toward the network layer has inherent logic.

USDC as gas, optional privacy, deterministic settlement, and built-in FX are attractive for cross-border B2B, platform merchants, and some capital market workflows; competitive pressure also forces it to convert "scale" into "network power" quickly.

For PSPs like Stripe, already controlling the "last mile," L2 is often the better solution.

Less governance and security baggage from L1, more composability and developer goodwill—unless Tempo bakes "openness" into its design and tech from day one.

Offense vs. Defense

A popular take is that Stripe is on offense, Circle on defense.

This intuition isn’t wrong but incomplete.

Stripe can indeed leverage distribution to reduce cold-start costs, lighting up demand with a command; Circle lacks end-user control, with activity scattered across chains and partners.

But viewing Arc + CPN as an on-chain "Visa playbook," Circle seems to be rewriting the rules with a network strategy.

Commoditizing the periphery, standardizing the core settlement layer.

Even if front-end revenue goes to issuers, exchanges, or PSPs, it trades for greater network reach.

Thus, it doesn’t need to chase Base’s volume but can redefine its own game.

The real systemic risk is "fragmentation disguised as progress."

If every major company builds a "semi-open" payment chain, we’ll return to the pre-internet era of walled gardens.

Barely connected via adapters, high-cost, low-resilience.

The metrics shouldn’t be TPS but: Is it credibly open? Easy to exit? Equally friendly to "non-partners"?

Scaling without sacrificing protocol openness is the true escape.

Execution Priorities

For Circle: Launch the testnet on schedule; refine "USDC as gas" for merchants to be intuitive; publish transparent, externally participable validator standards; ensure CPN remains multi-chain, avoiding shortsighted incentives to "steer traffic to its own chain."

For Stripe: Either pivot to L2 like Celo or push Tempo’s openness to the extreme—onboard external validators early, open-source clients and key modules, decouple chain governance from corporate structure, and treat "network of networks" as foundational, not marketing.

Distribution still dictates speed but not at the cost of protocol commons.

Conclusion

This isn’t a race of speed or features but a re-choice between "open protocols" and "branded rails."

Circle’s path resembles an "offensive" disguised as "defensive"; if Stripe builds L1, openness must be a structural commitment, or the smartest developers will vote with their feet.

What truly matters isn’t who shouts the highest TPS but who can maintain composability while building cross-entity trust.

That’s the right answer to "".