Viewpoint: Is Ethereum EVM the new Microsoft Excel of Wall Street?

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Author | David Hoffman (@TrustlessState)

Compiled by Wu Shuo Blockchain Aki

Statement: This article is for informational sharing only and does not constitute any investment advice, nor does it represent Wu's views and positions.

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This week's theme is the "Enterprise Edition L1" (corpo-L1s) announced by Circle and Stripe.

The L1 blockchain Arc, launched by Circle, is a public chain compatible with EVM, consisting of 20 permissioned validators from a regulated and trusted consortium of institutions.
Stripe is developing a new L1 chain, expected to use Paradigm's RETH client — a high-performance Ethereum client developed in Rust. Notably, Paradigm founder Matt Huang currently serves on Stripe's board and is likely to have provided significant development support for the Stripe Chain, referred to as Tempo.

This week's discussions on crypto Twitter can almost be summed up in one sentence: is this good or bad for cryptocurrency? And what about for "your position"? Personally, I find "permissioned L1s" to be extremely dull. In my view, the value of cryptocurrency and the "core narrative" lies in open-source software, and Ethereum is at the center of this story. Building a "permissioned L1" has strayed far from the main narrative of crypto and even seems completely irrelevant.

In the cases of Circle and Stripe, blockchain technology is only used as a database structure, and nothing more.

Will Arc and Tempo issue L1 assets?

If that is the case, it at least means that they have the willingness to promote the decentralization of the network, and these chains would appear to be closer to the direction I find interesting. However, at present, in the absence of further data, a reasonable judgment is that neither of these chains will issue any L1 assets, but will only serve as private intranets for stablecoin settlements behind front-end applications.

There is another "iron rule" in the crypto world: if a project has the ability to issue tokens, it will eventually issue tokens (yes, I'm talking about you, Base). So completely ruling out this possibility is actually naive and immature. If these "enterprise-level L1s" really choose to issue tokens in the end, it will bring them closer to an open-source, decentralized developer platform, which, in my opinion, is much closer to the core narrative of crypto.

Will Stripe and Circle try to attract developers to build on their chains?

If developers cannot receive rewards on this "land of others" and are not partial owners of this land, will they really be willing to build? Stripe does indeed have a large developer community... but that is a Web2 developer community, primarily building Web2 frontends and e-commerce websites.

So, can this successfully translate into driving Web3 developers to build on Tempo? Is the value built on Tempo really higher than the value built on Ethereum or any of its L2s? Perhaps these chains will still remain at the "inert" level of permissioned consortium chains, without L1 assets, merely serving as the backend for business logic, replacing Visa, Mastercard, and SWIFT, to construct their own settlement networks.

All these questions currently have no answers and cannot be determined. Therefore, it is too early to argue about whether this is good or bad for BTC, ETH, SOL, or the entire crypto industry. The only indisputable fact is that these "enterprise-grade L1" chains are beneficial to the Ethereum Virtual Machine (EVM).

This is a slide I presented during my speech at Ethereum NYC this week:

It all started with Robinhood Chain—this is the first case of a traditional financial (TradFi) company building and owning an EVM instance. Robinhood has hired EVM developers, and today, understanding EVM has become a core capability of Robinhood's business. Now, we can also add Circle and Stripe to this list, as they are similarly introducing and managing EVM technical talent within their company structures.

The key point here is: any traditional financial company entering the crypto space must hire EVM developers. For a TradFi company, understanding EVM is becoming the "entry threshold" to upgrade its backend logic to the blockchain future.

Just as Microsoft Excel supported traditional finance in the past, today the Ethereum Virtual Machine (EVM) is becoming a must-have talent and infrastructure on Wall Street — otherwise, they will face disruption from new Ethereum-based innovations and may even lose market share.

Once you dive deep into the "Ethereum rabbit hole," you'll realize that all paths ultimately lead back to the value capture of ETH, and this is one of them. Although this approach is very indirect and gentle, the expansion of the EVM empire will eventually bring value gains to the asset at its core — ETH.

Appendix: What is Ethereum EVM?

EVM (Ethereum Virtual Machine), known in Chinese as "以太坊虚拟机", is a virtual computing environment that runs on the Ethereum blockchain. You can think of it as a "decentralized computer" operating on tens of thousands of nodes worldwide. Its purpose is to allow anyone to deploy and execute smart contracts on Ethereum without needing to trust any central server.

In simple terms, the EVM allows Ethereum not only to transfer funds but also to execute code and run logic, creating a "globally shared blockchain operating system." The EVM is the runtime environment for all Ethereum smart contracts. Whenever someone calls a contract, the EVM will "execute" the code line by line, ensuring that the logic is correct and recording it on the chain. The Ethereum account, balance, and the results of contract execution are all "state changes" completed within the EVM. The EVM ensures that every change is verifiable and consistent. No matter which Ethereum node you execute the smart contract on, the EVM will produce exactly the same execution result. This is also the foundation of blockchain consensus. To prevent resource abuse, the EVM employs a Gas mechanism; the more complex the code execution and the more resources it consumes, the higher the required Gas, which users need to pay for with ETH.

End of 2013: Vitalik Buterin proposed the Ethereum white paper, aiming to create a universal platform that could not only transfer value but also enable programming. July 2015: The Ethereum mainnet officially launched, and the EVM was born. The design inspiration for the EVM came from the "Turing Machine" — in other words, it was set to be Turing complete, capable of running any complex program, just like a computer in the real world. The earliest version of the EVM used Solidity to write contracts and executed them using EVM bytecode. Later, various programming languages (Vyper, Yul) and multiple EVM-compatible chains (referred to as "EVM-compatible chains") emerged.

Solidity smart contracts written by developers are compiled into an intermediate language (EVM bytecode), and the EVM executes these bytecode instructions one by one like a virtual CPU. The EVM uses a "stack-based virtual machine" structure, which is different from a traditional memory-calling CPU and is more suitable for running on resource-constrained blockchain nodes. The EVM runs in a sandboxed environment, isolating contracts from each other, which does not affect the operation of other nodes, thus enhancing security.

The widespread adoption of EVM has led numerous new public chains (such as BNB Chain, Polygon, Avalanche C-Chain, Fantom) to opt for "EVM compatibility" because developers can directly use tools available on Ethereum (such as MetaMask, Remix, Hardhat), allowing users to easily cross-chain with the same wallet and application interface. The structure of EVM has also driven the development of scaling technologies like Layer2 (such as Arbitrum, Optimism) and Rollup.

Although EVM is powerful, it also has some limitations: low performance (limited transactions per second); the development language Solidity has security risks; bytecode is difficult to debug and optimize. Therefore, many alternatives or extensions have emerged: eWASM: after future Ethereum upgrades, WebAssembly may replace EVM to enhance performance; Move, SVM (Solana), CosmWasm (Cosmos), etc., are virtual machine designs from other chains that are not compatible with EVM.