The EVM is Wall Street's New Microsoft Excel

The theme of this week was the corpo-L1s announced by Circle and Stripe. 

• Circle's new L1 Arc is an EVM-compatible L1 chain that has 20 permissioned validators from a consortium of regulated and trusted institutions. 
• Stripe is building an L1 that will likely use Paradigm’s RETH client – a high-performance Ethereum client built using Rust. Paradigm's founder Matt Huang is on the board of Stripe, and is likely contributing significant development work to the Stripe Chain – called Tempo. 

The Crypto Twitter discourse this week pretty much boiled down to, “Is this good or bad for crypto? And is this good or bad for [my bags]?” 

I find permissioned L1s to be supremely uninteresting. To me, the value and “main story arc” of crypto is open source software, and you will find Ethereum at the center of this story. 

Building a permissioned L1 is so far away from the main story of crypto, that it doesn’t even seem relevant. With Circle and Stripe, blockchain technology is being leveraged as a database structure, but nothing more than that. 

Will Arc and Tempo mint L1 assets?

If they do, that means there’s some intent to decentralize the network, and then these chains start to look closer to the things I find interesting. But for now, without further data, it is reasonable to think that neither of these chains will issue an L1 asset and will instead be private intranets for stablecoin settlements on the backend of frontend applications. 

There’s also a law in crypto that, if something can issue a token… it eventually will issue a token (Looking at you, Base 👀), so it’s also naive to discount this future. If these corpo-L1s do end up issuing tokens, that moves them a step closer to the open-source decentralized developer platform which, to me, is closer to the main story arc of crypto. 

Will Stripe and Circle try to encourage developers to build on their chains? 

Will developers want to build on someone else's land, if they are not rewarded or are partial owners of that land? Stripe already has a huge developer community… but that's a Web2 developer community that builds Web2 front ends and e-commerce sites. Will that translate to encouraging Web3 devs to build on Tempo? Is the value of building on Tempo larger than the value of building that same thing on Ethereum or any of its L2s? 

Maybe these chains remain inert permissioned consortium chains, with no L1 asset, that are merely business-logic backends to strip out Visa, Mastercard, and Swift for their own settlement networks. 

All of these questions are unanswered and unknown, so I find it premature to debate about “Is this good for BTC, ETH, SOL, or crypto at large?” 

What is incontrovertibly true is that these corpo-L1 chains are good for the Ethereum Virtual Machine. 

It started with the Robinhood Chain, which was the first example of a TradFi company building and owning an instance of the EVM. Robinhood has hired EVM developers, and understanding the EVM is now core to the Robinhood business. Now, we can add Circle and Stripe to the list of TradFi companies that have hired and manage EVM talent in their corporate structure. 

This is the punchline: Every TradFi company getting into crypto will need to hire EVM developers. Understanding the EVM is becoming table stakes for a TradFi company to upgrade their backend logic into the blockchain future. 

Just as Microsoft Excel runs TradFi, the Ethereum Virtual Machine is the new ledger software that Wall Street will need to staff up in order to maintain market share and not get disrupted by something on Ethereum. 

Once you are sufficiently down the Ethereum rabbit hole, you realize that all roads lead back to value capture for ETH, and this is one of them. Albeit very indirect and soft, the expansion of the EVM empire is ultimately value accretive to the asset that is at the center of the EVM. 

ETH.