Two stablecoin Layer 1 launches in a single day have sent shockwaves through the crypto and fintech sectors.

Stripe’s “Tempo” emerged from stealth, while Circle unveiled “Arc” in sync with its financial results.

At first glance, both platforms are public blockchains built to optimize payments.

Yet, their underlying logic couldn’t be more different: Stripe is a payment service provider with deep control over merchant and developer distribution, while Circle—creator of USDC—is transforming its stablecoin into a comprehensive network.

L1 vs. L2: Strategic Choices

Let’s start with the most direct question: Why not follow Coinbase (Base) or chart an L2 strategy like Robinhood?

If your competitive edge is distribution—seamlessly migrating millions of users and merchants on-chain—L2 is the most effective approach.

It leverages Ethereum’s security and developer ecosystem for rapid deployment, while also tapping into sequencer fee economics.

Coinbase’s user access and integrated apps drove Base’s success, not breakthrough technology. This model has been proven.

So, why are Stripe and Circle both betting on L1?

Because “payment chains” are becoming a standalone vertical.

A new wave of L1s—centered on Tether, including Stable and Plasma chains—are championing a narrative: Stablecoins need their own purpose-built, payment-centric base layer—acting as gas, delivering predictable fees, and settling transactions in fractions of a second—rather than always being “guests” on generalized blockchains.

This dynamic puts clear pressure on Circle: As rival dollar stablecoins build dedicated settlement layers, USDC can’t remain just another token—it must become the infrastructure itself.

Analyzing Circle

Zoom in, and Circle’s strategy isn’t simply defensive.

Arc and the Circle Payments Network (CPN) are pushing together, echoing Visa’s “network of networks” approach but on-chain.

They’re open, EVM-compatible, natively USDC, targeting payments, forex, and preparing for capital markets use cases.

The essence lies in a bold move: Circle is willing to cede more front-end revenue to issuers and distributors, collecting only a slim network fee in exchange for stronger network effects.

This is the playbook that card networks used to win: lower fees, rapid adoption, trust-building, expanding endpoints.

From this perspective, “Arc vs. Stable/Plasma” is even more critical than “Circle vs. Coinbase.”

If Tether-backed chains set the standard for “native stablecoins + frictionless payments,” Circle must offer more than bridges to others’ rails—it needs rails that others rely on.

Crucially, openness must be more than marketing: How validator nodes are distributed, the accessibility of developer tools, and the ease of cross-chain operations and exits will determine whether Arc is true public infrastructure or just rebranded proprietary tech.

Otherwise, it risks falling into the recurring cycle of decentralization, scaling, and recentralization.

Analyzing Stripe

For Stripe, whether Tempo is suited for L1 depends on whether it’s genuinely open.

If Tempo is truly public, permission-minimized, EVM-compatible, and natively interoperable, Stripe can turn its distribution power into a launch engine for an open network.

It’s not about creating a closed merchant ecosystem—it’s about opening a fair public road for all participants.

If instead governance, validation, and bridging are tied tightly to Stripe’s controls, the community will quickly worry about dependency: Today it’s a shortcut; tomorrow it’s an unavoidable toll booth.

Visa already taught the industry: Universal trust starts with interoperability—not just brand value.

Therefore, the decision “L1 or L2” should follow the business model.

For an issuer like Circle, moving up to the network layer is logical.

USDC used as transaction gas, optional privacy, deterministic settlement, and built-in FX attract cross-border B2B, platform merchants, and some capital markets; competing solutions force Circle to quickly convert scale into network dominance.

For a payment processor like Stripe, which already owns the “last mile,” Layer 2 is typically preferred.

It avoids the governance and security burdens of L1, and delivers composability and developer goodwill—unless Tempo embraces openness as a foundational principle from day one.

Offense vs. Defense

There’s a popular notion: Stripe is on offense, Circle is playing defense in the L1 race.

That intuition is partly right, but incomplete.

Stripe can leverage its distribution to jumpstart demand instantly; Circle lacks direct user channels, with activity fragmented across chains and partners.

Yet, if Arc and CPN represent the “Visa playbook” on-chain, Circle looks less defensive and more like it’s rewriting the rules through network strategy.

Circle is transforming peripheral services into commodities and standardizing the core settlement layer.

Even if frontline revenue goes to issuers, exchanges, or processors, the trade-off is massive network reach.

Circle does not need to pursue Base’s transaction volume; instead, it can redefine its market strategy.

The real systemic risk is fragmentation disguised as progress.

If every big company launches a “semi-open” payment chain, we revert to the pre-internet era of closed networks.

Adapters barely connect the isolated networks, driving up costs and reducing resilience.

The key metric shouldn’t be TPS, but: Is it credibly open? Is it easy to exit? Is it equally welcoming to outsiders?

True scale is only possible if protocol openness is preserved—breaking out of the decentralization-scaling-recentralization cycle.

Here are actionable benchmarks for both companies:

For Circle: Launch the public testnet on schedule; perfect “USDC used as transaction gas” so real merchants can onboard with zero training; publish transparent, externally accessible validator node standards; ensure CPN maintains a multi-chain stance, avoiding short-term incentives that channel traffic solely to Circle’s own chain.

For Stripe: Either pivot to L2 like Celo, or make Tempo radically open: bring in external validators early, open-source the client and critical modules, decouple chain governance from corporate control, and integrate “network of networks” into the protocol itself—not just the pitch.

Distribution continues to drive velocity; however, it should not compromise public infrastructure.

Conclusion

This isn’t a battle of speed or features—it’s a choice between open protocols and branded rails.
Circle’s path is offensive, wearing the disguise of defense; if Stripe builds L1, openness must be an unshakable commitment—otherwise, top developers will walk away.
Ultimately, the contest isn’t about TPS bragging rights, but about who can build universal trust and composability across the ecosystem.
That’s how you scale without compromising protocol openness.

Disclaimer:

1. This article is republished from [Charlie], with copyright belonging to the original author [Charlie]. If you have concerns about republication, please contact Gate Learn directly; the team will address concerns following relevant procedures.
2. Disclaimer: The views and opinions expressed in this article are solely those of the author and do not represent investment advice.
3. Other language versions of this article have been translated by the Gate Learn team. Do not copy, distribute, or plagiarize these translations unless Gate is referenced.