Ethereum’s Supremacy in Stablecoins Called Into Question

Ethereum’s Supremacy in Stablecoins is Under Threat

Ethereum is losing favor with financial institutions. They are choosing blockchains that are specifically designed to satisfy their unique institutional requirements. The supremacy of the network is called into doubt by recent events like Klarna’s stablecoin introduction on an alternate network. Its position is further complicated by the emergence of privacy-focused chains such as Canton.

Klarna introduced KlarnaUSD on November 25. As a result, it became the first bank to release a stablecoin on Tempo, a blockchain used for payments by Stripe and Paradigm. The cryptocurrency community is debating this choice. Some see it as a hint that Ethereum is in danger.

Someone tell me why this isn’t bearish for Ethereum? A major fintech with a big move into stablecoins is not launching it on Ethereum. If Tempo didn’t exist then this would have likely launched on Ethereum or an ETH L2…Tempo taking marketshare in what is the main thesis for Ethereum: stablecoins,

an analyst

Browse Posts

Whale Activity Signals Shifts in Small-Cap Altcoins

XRP Price Set for 20% Breakout: Will $2.28 Resistance Hold?

Dogecoin Price Update: ETF Growth and Institutional Interest Drive Key Technical Levels

Hedera Rally Accelerates as Institutional Buying Lifts Bitcoin

Major Fintechs Bypass Ethereum, Boost Private Chains

Major stablecoins like Tether (USDT) and USDC (USDC), which combined have a market valuation of more than $100 billion, are hosted on Ethereum. They are a major source of fees and network activity. Klarna avoids the Ethereum ecosystem by using Tempo, which could siphon innovation and liquidity. Zach Rynes, another analyst, underlined that Klarna’s choice shows how corporate blockchains are becoming more popular. He continued by saying that big fintech firms continue to eclipse public chains.

Another confirmation that corpo L1 chains are here to stay and that your favorite commoditized ‘neutral’ public chain #375936 is getting steamrolled by Fintech yet again,

Rynes

This is further demonstrated by the growth of the Canton Network. The foundation of this Layer 1 network is privacy controls. Institutions have the option of limiting or increasing the visibility of their operations. It makes it possible for systems to be wholly private or entirely permissionless.

Ethereum Transparency Poses Risk for Big Financial Players

Institutions may be shifting away from Ethereum for a variety of reasons. This migration may be primarily motivated by privacy. A major problem for institutions is that all transactions are forever viewable on public blockchains like Ethereum. This transparency presents a serious concern when banks or corporations transfer large amounts of money. Rivals are able to identify key business connections, front-run trades, and evaluate patterns.

Companies using Web3 frequently ignore blockchain transparency as a risk, according to COTI Network‘s report. The report notes that all transactions and metadata are visible on public blockchains, which may reveal private information or reduce negotiating power. This reveals commercial secrets and raises regulatory issues with regulations like the GDPR. Institutions are creating private blockchains or looking for public networks with better privacy because of this divergence.

For more up-to-date crypto news, you can follow Crypto Data Space.