Decentralization Diehards Unite in Their Critique of Corporate L1s Like Tempo

A wave of corporate blockchain networks is gathering on the horizon, promising faster stablecoin payments and smoother adoption. The long-awaited vision of companies embracing blockchain tech seems to be finally taking shape, but not in the way many crypto veterans expected.

Payments giant Stripe, backed by crypto VC firm Paradigm, is building its own Layer 1 chain, Tempo, for global payments, choosing to build the network from scratch instead of making another Layer 2 on Ethereum.

Circle, one of the largest stablecoin issuers, is also developing its own L1 for its stablecoin, while Google is working on its own chain, though it won’t be targeting retail users like the other two.

Yet, despite big names behind the initiatives, the decisions have drawn wide criticism from some in the crypto community, who say corporate chains move away from the open, decentralized vision Bitcoin’s creator Satoshi Nakamoto had in mind.

L1 vs L2 Debate

Stripe and Paradigm’s Tempo stands out among corporate L1s in that the team behind it has made an effort to present the protocol as a more open, public-focused network, compared to product-specific chains like Circle’s Arc or Google’s GCUL. Unlike competitors, Tempo is positioning itself as a “neutral platform with respect to stablecoins, allowing users to make transfers and pay gas fees in any stablecoin,” according to a post from Tempo’s official X account.

Matt Huang, co-founder and managing partner at Paradigm, said in an X post on Sept. 6 that the plan is to have “permissionless validation and permissionless smart contract deployment,” drawing comparison with Bitcoin, Ethereum and Solana.

Anurag Arjun, co-founder of modular blockchain infrastructure project Avail, as well as a co-founder of Polygon, told The Defiant that Tempo shouldn’t be viewed purely through the usual L1 versus L2 debate.

“Tempo is both positive and controversial. Positive because it brings real transaction flow, potentially billions in payments, into crypto rails. Controversial because it reflects a very corporate path: a purpose-built chain, bootstrapped by a validator set of major institutions, which raises questions about decentralization and neutrality. But these aspects are still early to comment on and we would need to see more operational details as they emerge,” he explained.

According to Arjun, by moving fiat into stablecoins and sending it across Tempo’s rails, Stripe could offer faster, cheaper settlement globally while remaining fully compliant. Avail’s co-founder also noted that while there is public posturing around being “permissionless,” the chain will first serve enterprise customers and backend needs, making it different from most crypto-native projects.

Arjun told The Defiant:

‘Antithetical to Crypto’

Paradigm’s Huang acknowledged that the network will start with a permissioned validator set, but said it will gradually decentralize, framing it as a bridge between corporate adoption and open crypto rails.

But even that bridge still has critics lining up. Michael Nadeau of The DeFi Report called the move “antithetical to crypto,” warning that Stripe wants to “own the network” and displace Mastercard and Visa, which are also dipping their toes into the crypto space.

“Stripe is looking you right in the eye. And telling you they want to ‘own the network.’ They want to displace Mastercard and Visa. That’s literally what they are doing. This couldn’t be any more opposed to what crypto stands for,” Nadeau wrote in a post on X this weekend, responding to Huang’s post.

Omid Malekan, an adjunct professor at Columbia Business School who lectures on crypto, agreed with that sentiment, writing in an X post on Sept. 5 that, unlike Bitcoin or Ethereum, validators on corporate chains are known and legally accountable. Malekan explained:

The gatekeeper can alter the protocol, roll back transactions, or halt the chain under regulatory pressure, a scenario impossible on permissionless networks, he further implied.

Speaking with The Defiant, Eneko Knörr, co-founder of yield-bearing stablecoin project Stabolut, said that Stripe’s move clearly shows the company’s desire for total control over a blockchain built specifically for its payment purposes.

“It’s clear Stripe wanted total control over a blockchain designed specifically for their payment purposes, and while their entry is a massive validation for the crypto industry, the ‘walled garden’ approach is concerning,” Knörr said.

While this move validates the crypto industry, the current approach centralizes power and runs counter to the ethos of decentralization, Knörr argued, adding that that choosing to build a new L1 instead of an L2 on a public blockchain can be seen “as a vote of no confidence in the current state of Ethereum’s scaling solutions.”

Failed Attempts

Crypto history is littered with corporate L1 failures. Christian Catalini, who co-created Meta’s Libra, sees striking parallels, saying the price for this grand bargain is “just handing the fintech giant the keys to global payments.” He framed corporate L1 launches as a high-stakes experiment in combining corporate control with the rhetoric of neutrality.

“If corporate chains like Tempo and Arc succeed, it will mean the crypto experiment was not a revolution, but a failed coup. The backend technology would be different, yes, but the market structure would be eerily familiar,” Catalini said in an X thread last Friday.

Paradigm’s co-founder admitted that some of Tempo’s features are technically possible on an L2, but could be “complex, slow to implement, and/or introduce many external dependencies.”

“We aren’t Bitcoin, Ethereum, or Tempo maximalists. We’re maximalists for permissionless crypto. We want Ethereum L1 to scale, and we want L2s to thrive,” Huang added.

‘Public Blockchains Remain the Standard’

Commenting on the legal motivations behind corporations building their own L1s, Jake Chervinsky, former counsel at crypto lending protocol Compound, pointed out that regulators haven’t even required permissioned validators.

“If you have a great commercial reason to build (or build on) a product-specific L1, have at it. If not, and you’re just vaguely worried about compliance issues, decentralized public blockchains remain the standard,” he wrote in a Sept. 5 X post.

That tension between corporate utility and crypto principles defines the debate. Sandeep Nailwal, co-founder and CEO of Polygon Labs, proposed connecting corporate chains into multichain frameworks, letting companies remain sovereign while sharing interoperability.

“Stripe says Tempo is open to everyone and PayPal could use it if they wanted, but in reality PayPal would rather launch their own chain,” Nailwal pointed out in an X post on Monday.

Tempo’s defenders argue that adoption pressures justify some centralization at launch. Huang emphasized that real-world partners may require a network where validators and finality can be trusted. But critics counter that introducing gatekeepers erodes the neutrality and censorship resistance that make crypto unique.

In response to The Defiant’s request for comment, a spokesperson for Paradigm redirected The Defiant to Huang’s above-mentioned X post. Stripe did not reply to The Defiant’s request for comments by press time.

The controversy reflects a broader pattern. Whenever corporations seek to control blockchain infrastructure, the community reacts. Stripe, Paradigm, Circle, Google, and others are betting that predictable infrastructure will bring scale, but the crypto community is worried that it will bring regulation and liability.

Columbia Business School’s Malekan says corporate chains inevitably end up under heavy control, warning that because they are run by cautious professionals with lawyers, “they will censor. They will roll back the chain if something bad enough happens. They’ll even halt it if the government forces them to.”