Key Takeaways
Is Codex enough to revive interest in Ethereum L2s as the best option for running well-optimized stablecoin chains? Experts remain divided on this.
Ethereum [ETH] Co-Founder, Vitalik Buterin, has publicly endorsed Codex, a stablecoin payments-first focused L2. Buterin added that the segment is a ‘large-scale value’ and Codex’s positioning is impressive.
“Excited to see Codex joining the arena as an L2 and thinking explicitly about synergy between itself and Ethereum L1 from day one.”
Source: X
The move was noteworthy, especially on the back of Stripe’s Tempo announcement, a similar but L1 payment chain.
Stripe said that L2s and current networks can’t handle its growing stablecoin traction, sparking a huge debate across Crypto Twitter.
And Ethereum L2s were at the receiving end of all the negative criticism. So, will Ethereum win back the narrative with Codex? Well, the answer depends on who you ask.
Too early to pick winners?
To most experts, one thing is certain: the stablecoin wars will get messier in the mid-term. However, in the near term, it may be too early to pick a winner, according to one camp.
Fundstrat’s CIO, Tom Lee, is on this camp. He echoed a post by Christian Catalini, Lightspark founder and Co-founder of the defunct Facebook-incubated Libra crypto project.
Combining his insights from how regulators killed the Libra, a Tempo-like system at that time, Catalini said,
“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 added that the central authority on the project will be a chokepoint that governments can leverage.
Interestingly, Tempo will be permissioned (private) in its early phase before transitioning to a fully permissionless (public) network. Hence, the aforementioned risk is not far-fetched.
For Mert Mumtaz, Founder of Helius Labs, the transition will be harder for Tempo.
“They say they’ll go permissionless later, but that’s much harder. Open it up, and you face what truly comes with permissionless systems.”
That’s an advantage Codex gains by building on a decentralized Ethereum. In fact, per the Co-founder Haonan Li, it was too early for people to assume Stripe’s moat.
“We’re still at the buzzword phase for the category.”
However, another camp argues that Stripe, Google, Tether, and other corporate chains have the business distribution that’s hard for L2s to replicate.
But, Rob Hadick of VC Dragonfly dismissed this camp, citing historical trends,
“History of payments innovation tells you it’s more of a product game than just a distribution game.”
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