The landscape of blockchain innovation is experiencing an unprecedented surge, as companies focus on launching stable cryptocurrencies and tokenizing tangible assets. Circle, the organization behind USDC, introduced its new payment network named Arc. Simultaneously, Stripe’s confidential initiative, Tempo, in collaboration with Paradigm, was unintentionally publicized. These events illustrate a growing inclination among companies towards establishing their own blockchain networks.
What Drives Investment in Blockchain?
Startups such as Plasma and Stable have successfully attracted considerable investments aimed at developing blockchain infrastructures dedicated to USDT. In a similar vein, Securitize, teaming up with Ethena, is working on a project called Converge, designed as a corporate blockchain. Additionally, companies like Ondo Finance and Dinari have outlined their intentions to create blockchain solutions to facilitate trading and settlement processes for tokenized assets.
Experts anticipate that both stablecoins and tokenized assets could expand to become trillion-dollar asset categories soon. While stablecoins promise to revolutionize global remittances, the tokenization method revolutionizes the utilization of blockchain to expedite traditional financial transactions.
Why Establish Proprietary Blockchain Networks?
Presently, most tokens are based on public blockchains such as Ethereum, Solana, and Tron. These platforms provide global reach and liquid markets but also have certain limitations. Martin Burgherr from the Sygnum crypto bank explains that companies opt for creating their unique blockchain networks to incorporate compliance and manage transaction costs efficiently.
Burgherr argues that having control over the underlying network allows organizations to embed regulations directly and stabilize transaction fees. Dependency on public networks often subjects businesses to external fee models and governance hurdles.
Meanwhile, Morgan Krupetsky from Ava Labs notes that bespoke blockchain networks empower companies to oversee their operational costs and optimize performance. Guillaume Poncin from Alchemy believes new revenue avenues offered by these networks could eclipse those of traditional systems. He stresses that alignment with Ethereum Virtual Machine accelerates cross-network integrations.
Will New Networks Overthrow Established Ones?
Industry insiders suggest that newly minted blockchains may not immediately affect existing giants like Ethereum and Solana. Coinbase analysts mention that although Circle’s Arc and Stripe’s Tempo aim to reduce payment costs, Ethereum might remain dominant due to its substantial ecosystem.
Using these insights, stakeholders can draw concrete observations:
- New ventures might not displace larger networks quickly.
- Corporate customization boosts regulatory and operational advantages.
- Innovations offer potential surpassing current monetary systems.
- Broad network compatibility is crucial for integration.
Burgherr concludes that while it may take time for fledgling networks to gain traction, the desire for security and robust systems remains paramount for financial institutions. As the blockchain landscape continues to evolve, these enterprise efforts highlight significant strides in the industry.
