Financial technology giants are launching L1 Blockchains, while L2 faces survival challenges.

[Coin World] Many fintech companies, such as Tether, Stripe, and the recent Circle, have launched their own Layer-1 (L1) Blockchain. In this wave, a question arises: why are these companies launching their own L1 instead of opting for Layer-2 (L2) solutions? Has the L2 Blockchain become irrelevant?

L1 adopts trends

Recently, the issuer of the USDC stablecoin, Circle, unexpectedly announced Arc, an open-source L1 Blockchain. Prior to this, both Tether and Stripe launched their own L1. This move has prompted analysts to question the infrastructure development strategy of traditional financial institutions entering the cryptocurrency space.

Although L2 networks have advantages and inherit the security of Ethereum L1, some companies still choose to build their own L1. Do they want to maximize control over the infrastructure while optimizing integration with existing ecosystems? Some analysts believe that stablecoin issuers developing their own blockchain is "useless," as they think that the best interoperability for stablecoins today can only be achieved on Ethereum L2.

Some people believe that the market does not need "L1 for stablecoins". In response to this view, another user claimed that companies can use their own funds to do whatever they want. Others argue that these companies need their own blockchain to gain control, improve speed, reduce costs, and minimize downtime.

L2 stuck in a deadlock?

In fact, when the main assets are stablecoins or real-world assets (RWAs), the unique security features of the rollup model diminish in value because these assets are essentially centralized. In other words, when the underlying assets are already under centralized control, the decentralized advantages of L2 lose their decisive edge, gradually undermining the "L2 theory."

Given the current situation, some analysts believe that Ethereum L2 is facing a strategic deadlock. Some even argue that, from a technical perspective, L2 is already "dead".

In-depth research reveals a trend in the actions of Circle and other organizations: large companies are no longer relying on Ethereum and L2, but are seeking to have their own infrastructure to gain more control over technology, business strategy, and regulatory compliance. This may begin to shift the priority from 'maximal decentralization' to 'efficiency and control.' The future of Ethereum L2 now depends on proving its unique competitive advantages.