L1 Is The New Battleground, And The Playing Field Isn’t Even

Opinion by: Ray Song, founder of aPriori

When you’ve been in the markets long enough, you start to see patterns. The instruments we trade and the bars we build on are never static. In the world of cryptocurrencies, one of the biggest shifts happening right now is at the base layer.

For years, Ethereum has dominated the Layer-1 conversation if you want composability and a broad developer base, Solana if you want speed, and Cosmos if you want sovereignty. Choosing L1 was a matter of choosing a place to trade and evaluating fees, liquidity and execution.

But recently, this decision has shifted from tactical to strategic. Far from developers choosing between ecosystems, major companies are now building their own blockchains from scratch. And when the companies doing this are Stripe, Coinbase, or other giants with deep regulatory and distribution advantages, the L1 stops being a neutral playing field and starts looking like a moat.

Tape beat moment

Take the news tape. It turns out that Tempo, the first layer focused on payments, is being built in partnership with Paradigm. If you’ve traded long enough, you know that Stripe doesn’t do it for no reason. It’s a leveling-layer-based game, with control over the base layer, graphics, and runtime.

In traditional markets, clearing and settlement are often invisible to end users, but they are where the real leverage is. Tempo would give Stripe a tailor-made chain with predictable fees, deterministic settlement times, and commerce distribution that no one else could match. This is 20 years of payment processor muscle memory applied to crypto rails.

From not allowed to allowed

There is a clear spectrum emerging. On the one hand, there are protocols that are completely decentralized and censorship-resistant. These chains may lack the polish or comfort that organizations crave, but they are the crucible where real innovation happens. Ethereum in its early days, Bitcoin still today, and newer privacy blockchains are pushing the boundaries of what is possible without KYC gates.

Conversely, you have company-controlled L1s that align with custodians and regulated exchanges. Coinbase’s main chain already exists. Binance’s BNB chain is a powerful institutional ecosystem. The bar joins this level.

In the middle are the hybrids, those L1s that want to be open enough to attract the native crypto crowd but regulated enough to keep institutions comfortable. This middle ground is where some of the most interesting battles will be fought – because it is the only place where the two sides might meet.

This is not a level playing field

Native cryptocurrency founders cannot compete with Stripe or Coinbase in terms of distribution and regulatory terms. Large companies can obtain licenses overnight and onboard millions of merchants through an Application Programming Interface (API) call.

Related: aFollowing its stablecoin push, Stripe has acquired cryptocurrency wallet developer Privy

This doesn’t make it hopeless for unlicensed builders, but it changes the game. Competing head-to-head on the same vectors (licensing, institutional distribution) is suicidal. Opportunity is what the L1s in the company will not or cannot do.

They won’t prioritize privacy features that could raise regulatory eyebrows, and they can’t move quickly in shipping new DeFi fundamentals, as every new feature needs a legal signature. They will always have to balance decentralization with shareholder value.

Where opportunities still exist

The most important breakthroughs in DeFi occurred because anyone could enter into anyone else’s contracts without asking for permission. This is difficult to do in the company-controlled L1 equipped with handrails. If you can offer real composability, you will attract builders who otherwise wouldn’t.

Native cryptocurrency founders can also experiment with tokenization, governance models, or cross-chain integrations when existing companies are required to conduct a risk assessment.

Finally, people forget how important cultural compatibility is. Ethereum has an identity, Bitcoin has a mission. If you can articulate a vision that resonates with a specific user base, whether they’re from Extreme Privacy, Degens, or regional adoption niches, you can outperform L1s for companies in those verticals.

The emergence of L1 firms changes the liquidity map. If Stripe’s Tempo gains traction with merchants, you’ll see high-volume, predictable flows, which is great for low-risk payout strategies. However, volatility and asymmetric opportunities will still exist within the bounds, as protocol changes, governance shifts, or market narratives can cause valuations to fluctuate overnight.

In permissionless chain, the risks are technical and market driven. In a chain of companies, risks are regulatory and business model based. Tempo may not technically cheat you, but it may kill your payout with a policy update.

End game

This is not a zero-sum battle between corporate chains and permissionless chains. They will likely complement each other. L1 companies will handle high-volume compliant flows that bring in conservative capital, while unlicensed chains will continue to push the boundaries, generating innovation that companies will eventually adopt.

For traders and builders alike, true alpha will come from understanding how value migrates between these worlds. Stripe Tempo news indicates that the core layer is now strategic real estate. In the markets, whoever controls the bars ultimately controls the spreads.

Opinion by: Ray Song, founder of aPriori.

This article is for general information purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.