Solana News Today: Stripe and Circle Launch EVM-Based L1s Challenging Solana Thesis

Custom-built Layer 1 (L1) blockchains from major fintech companies like Stripe and Circle have ignited a debate on whether these developments challenge the broader Solana thesis. Stripe’s Tempo and Circle’s Arc are both EVM-based blockchains, raising questions about their implications for Ethereum and Solana alike. While some argue the trend signals a shift away from centralized solutions and a rejection of Solana’s high-throughput model, others see it as an evolution of the blockchain ecosystem, not a refutation of any one platform [1].

The EVM is a software environment, and while its adoption by Stripe and Circle might seem bullish for Ethereum, in practice, it is unlikely to significantly benefit ETH as an asset. Circle, for example, is using USDC for gas fees, and Stripe is expected to prioritize minimizing Ethereum gas costs, which weakens the argument that these developments boost ETH’s utility or value [1]. The broader concern is not just for Ethereum but also for Solana, which has struggled to attract major fintech projects this market cycle. Stripe and Circle’s decision to build their own chains, rather than adopt an existing one, could further weaken the Solana thesis, which assumes that most applications will opt for a shared high-throughput chain rather than building their own [1].

mteam, co-founder of Ethereum infrastructure firm Spire Labs, noted that the launch of L1s by big corporations rejects both the L2 and Solana theses, but more so the latter. Solana’s vision—where “everything fits in one computer”—is challenged when companies choose to build their own chains for specific use cases. In contrast, the L2 thesis, which assumes most activity will occur on secondary layers settling to Ethereum, is less directly impacted [1].

Critics, however, argue that this interpretation is overly rigid. Mert Mumtaz, CEO of Helius, dismissed the idea that these projects hurt Solana more than Ethereum, comparing it to a romantic scenario where the loss of one person feels more personal than another [1]. He emphasized that the rise of L1s does not necessarily mean that Solana’s model is invalid, but rather that the blockchain landscape is becoming more fragmented and purpose-driven [1].

Despite the debate, the long-term impact of these projects remains uncertain. Large companies often approach blockchain with varying degrees of seriousness, and the mere announcement of a custom L1 does not guarantee commercial success. Stripe and Circle’s chains will have to prove their value in real-world applications to gain traction. Solana, for its part, continues to attract developers and projects that prioritize speed and low costs, and the ecosystem has shown resilience in the face of these new developments [1].

Ultimately, the emergence of custom L1s reflects a broader shift toward specialization and decentralization in the blockchain space. While it may challenge Solana’s thesis by offering alternative solutions to high-performance needs, it also highlights the dynamic and evolving nature of the crypto landscape. The long-term success of these chains will depend on their real-world performance and ability to sustain developer and user adoption [1].

Sources:

[1] Blockworks: https://blockworks.co/news/stripe-circle-l1s-solana