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We learned this week that Stripe and Circle are planning to launch their own L1 chains.
Ethereum community members were quick to question why corporations shouldn’t launch L2s instead.
Ethan Buchman has a simple explanation: Vertical integration is profitable.
Christian Catalini of Lightspark echoes this view in Forbes:
“… stablecoin issuers have strong incentives either to commoditize the rails — by issuing on multiple networks and positioning themselves at the center of interoperability across them — or to nudge most activity to a network they control. Either strategy gives them a shot at becoming massive global fintech leaders and capturing most of the value the technology creates.”
Circle/Stripe is doing simply what’s best for them. But that means these new chains aren’t contributing to Ethereum data availability fees, which does not elevate the bags of ETH token holders.
The team behind Phantom wallet faced similar “chain alignment” questions upon announcing its integration of Hyperliquid perps.
This as opposed to a perps DEX built on Solana like Drift or Jupiter.
Reasoning from a viewpoint of chain tribalism is pretty standard fare in this industry. But from an outsider’s perspective, it’s probably a very weird mental model to make decisions from. Builders should simply do whatever’s best for business.
Brandon Millman, CEO of Phantom, puts it plainly on this week’s Lightspeed podcast:
“In the world of trading and perps, how do we get the best prices for users? If you just look at the objective numbers, price, execution, liquidity…all of that is an order of magnitude greater on Hyperliquid. And so by completely ignoring that, I think we would’ve been doing a pretty big disservice to users.”
To put it another way, Hyperliquid processed $371 billion in volumes over the last 30 days. Solana’s two largest perp DEXs, Jupiter and Drift, processed a collective $52 billion over the same time.
That’s roughly 7.1x more addressable volume, which should lead to a pretty straightforward business decision.
From my time speaking to application developers in the industry, most pursue a multichain strategy simply because it’s best for business.
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