Stablecoin giant Circle is entering the game! Why are fintech companies rushing to build their own Layer 1 public chains? Are L2 solutions trapped in a strategic deadlock?

Financial technology giants like Tether, Stripe, and the latest addition Circle (the issuer of USDC) are actively establishing their own Layer 1 (L1) blockchains, raising doubts in the industry about the strategic value of Layer 2 (L2). Circle's open source L1 chain Arc has been questioned as being a "Consortium Blockchain", due to its use of pre-selected validating nodes and a controversial arbitration mechanism. Analysts point out that when the core assets are stablecoins or RWA (real-world assets), the decentralization security advantages of L2 are weakened. The giants' choice to build their own L1 reflects a deeper demand for controlling technological sovereignty, optimizing ecosystem integration, and responding to regulation, signaling a strategic shift from "extreme decentralization" to "efficiency and control."

Financial technology giants spark a wave of L1 blockchain construction, strategic intentions raise controversy Several fintech companies, including Tether, Stripe, and recently Circle (the issuer of the USDC stablecoin), are gradually launching their own Layer 1 (L1) Blockchains.

In this wave, a core question emerges: why do these companies choose to build their own L1 instead of adopting Layer2 (L2) solutions? Has the L2 Blockchain already lost its strategic value?

Circle launches Arc chain, L1 positioning faces industry skepticism Recently, Circle unexpectedly announced the launch of the Open Source L1 Blockchain Arc. Previously, Tether and Stripe had also launched their respective L1s. This move has prompted analysts to reassess the infrastructure strategies of traditional financial institutions entering the cryptocurrency space.

Regarding Circle's Arc, analyst Adam Cochran sharply pointed out: "Calling it L1 is an insult. It is essentially a Consortium Blockchain, operated by privately pre-selected validating nodes, and can even revoke transactions through 'dispute protocols'. When using USDC as the underlying token, they cannot create a true L1—because the nodes lack the economic incentives to maintain network integrity, which is precisely why it must be designed as a private consortium blockchain."

L2 Advantages Challenged: Stablecoin Scenarios Undermine Decentralization Value Despite the advantages of L2 networks and their inheritance of Ethereum L1's security, some enterprises still insist on building their own L1. Is their core demand to maximize control over the infrastructure while optimizing integration with the existing ecosystem?

Analyst materkel believes that it is "meaningless" for stablecoin issuers to build their own chains, emphasizing that the best interoperability for stablecoins can only be achieved on Ethereum L2: "They are eager to achieve ultimate interoperability with deployed stablecoins, and only Ethereum L2 can meet this requirement." Some viewpoints bluntly state that the market "does not need a dedicated L1 for stablecoins," but opponents argue that companies have the right to independently allocate their funds.

Haseeb Qureshi, managing partner at Dragonfly Capital, maintains an open attitude: "If we can achieve token distribution on a self-built L1, that would be great. It will attract more users to the blockchain, and everyone (including us) can learn what is effective and what is ineffective."

Another viewpoint suggests that enterprises need their own chains to achieve control, speed up processes, reduce costs, and minimize downtime. A certain X user predicted: "The future does not belong to Ethereum, but to the many EVM-compatible chains. The settlement layer will ultimately return to Bitcoin."

Is L2 in a Strategic Dilemma? Efficiency and Control Become New Priorities In reality, when the primary assets are stablecoins or RWA (Real World Assets), which are essentially centralized assets, the unique security value of the Rollup model is diminished. In other words, when the underlying assets themselves are under centralized control, the decentralization advantages of L2 lose their decisive significance, leading to the gradual collapse of the "L2 narrative" (L2 thesis).

Based on the current situation, some analysts believe that Ethereum L2 is facing a strategic deadlock, and some even assert from a technical perspective that L2 is "dead." Marty Party bluntly stated: "For the engineering community, L2 is essentially no longer viable; they are being used by traditional financial players and hype machines for liquidity harvesting, becoming a Trojan horse for regulatory capture."

Upon closer examination, the movements of institutions such as Circle reveal a new trend: large enterprises are abandoning reliance on Ethereum and L2, opting instead to build their own infrastructure to control technology, business strategy, and compliance initiative. This marks a shift in the industry focus from pursuing "ultimate decentralization" to prioritizing "efficiency and control." The future of Ethereum L2 depends on whether it can demonstrate an irreplaceable competitive advantage.

Conclusion: The gathering of fintech giants to build their own L1 public chains exposes the limitations of the L2 model under the dominance of stablecoins/RWA scenarios. Circle's consortium blockchain architecture Arc highlights the rigid demand of enterprises for control over technology and compliance flexibility. Although L2 still has irreplaceability in the field of decentralized applications, the strategic shift of the giants indicates that the public chain track will diverge into a dual-track pattern of "open L1/L2" and "enterprise-level consortium blockchain." The next stage of competition will focus on ecological integration efficiency, compliance adaptability, and the ability to reach real users.