Bankless: Why the EVM is Wall Street's new Excel

Author: David Hoffman, Co-founder of Bankless; Translation: Jinse Caijing xiaozou

This week's crypto conversation revolved around the announcements of enterprise-grade Layer 1 blockchains by Circle and Stripe.

Circle's new Layer 1 network, Arc, is an EVM-compatible permissioned blockchain, with a consortium of 20 regulated authorities serving as validating nodes.

The Layer 1 being built by Stripe is likely to utilize Paradigm's RETH client, a high-performance Ethereum client written in Rust. Paradigm founder Matt Huang serves on the Stripe board and likely provides significant technical support for the Stripe chain, called Tempo.

The crypto community's discussion this week can be largely summarized as: "Is this a blessing or a curse for the crypto industry? What impact will this have on my holdings?"

I personally find permissioned Layer 1s incredibly boring. In my opinion, the core value and "main story" of the crypto world has always been open source software, and Ethereum is the center of this story. The construction of enterprise-grade L1s is so far removed from the main storyline of the crypto world that it seems completely irrelevant. For Circle and Stripe, blockchain technology is simply being used as a database architecture—nothing more. Will Arc and Tempo mint native L1 assets? If they choose to do so, it would indicate an intention to decentralize the network—and these chains would begin to move in the direction I'm interested in. However, in the absence of further data, it's reasonable to assume that neither chain will issue L1 assets, but will simply serve as private intranets behind front-end applications to handle stablecoin settlements. There's an iron rule in crypto: any project that can issue a coin...will eventually do so (looking at you, Base), so it would be naive to completely dismiss this possibility. If these enterprise L1s eventually do issue tokens, it would be a step closer to open-source, decentralized developer platforms—which, in my opinion, is closer to the core story of the crypto world. Will Stripe and Circle try to attract developers to build on their own chains? Will developers be willing to build on someone else's turf—without rewards or partial ownership of that territory? Stripe already has a large developer community… but it's a Web2 developer community building Web2 front-ends and e-commerce sites. Will this translate into incentives for Web3 developers to build on Tempo? Will the value of building on Tempo exceed the value of building the same thing on Ethereum or any other L2?

Perhaps these chains will ultimately be lifeless permissioned consortium chains with no L1 native assets, serving merely as business logic backends to replace Visa, Mastercard, and Swift's own settlement networks.

All of these questions are still unresolved, so I think it's too early to argue "is this good for BTC, ETH, SOL, or the entire crypto industry?"

But the indisputable fact is that these enterprise-grade L1 chains are good for the Ethereum Virtual Machine (EVM). It all started with Robinhood Chain, which set a precedent for traditional financial companies to build and own EVM instances. Robinhood hired EVM developers, and the EVM has become core to its business. Now, we can add Circle and Stripe to this list—traditional financial companies are hiring and managing EVM talent, integrating EVM into their organizational structures. The bottom line is: every traditional financial company entering the crypto space needs to recruit EVM developers, viewing the EVM as their ticket to upgrading their back-end logic to the blockchain era. Just as Microsoft Excel drives traditional finance, the Ethereum Virtual Machine (EVM) is becoming the new ledger software that Wall Street must equip itself with—the only way to maintain market share and avoid being disrupted by innovations in the Ethereum ecosystem. Once you truly delve deeper into Ethereum's rabbit hole, you'll realize that all paths ultimately lead to value capture for ETH. While these paths may be gentler and less direct, the expansion of the EVM empire will ultimately increase the value of this asset at its core.