Christian Catalini, co-creator of the Facebook balance project, warned Friday that the Stripe tempo and the Circle Arc could succeed in the trade but at the cost of the ideal of decentralization of crypto.
Launched in 2019, Balance was the daring candidacy of Meta to create a global digital currency supported by a basket of stable assets. The project has promised to make payments as transparent as messaging, but it has triggered an immediate backlash of regulators concerned about financial sovereignty, systemic risk and user confidentiality. By 2022, the balance – renowned Diem in order to reset its image – has been closed and its assets sold.
Catalini, who was chief economist of the balance, used his thread of September 5 on X to review the first compromises of the project and explain why they count now. He said that the original open design, developed with Harvard Scott Kominers economist, was reduced to a short appendix after months of regulatory negotiations.
The first major retirement, he wrote, abandoned non-guardian portfolios. The regulators insisted on a “clear perimeter”, which means a responsible intermediary that they could contact – and penalize – if problems arise.
For supervisors used in intermediate finance, a world where users really owned their own money were unmanageable. “For them, killing Auto-Custodie was not a choice, it was an obvious necessity,” he recalls.
Catalini noted irony: today, open networks are developing native blockchain compliance tools that could have responded to these concerns more effectively than traditional frameworks. But at the time, the balance was forced to get rid of decentralization, a change which he described as an early signal where projects led by companies were heading.
His wider lesson was Stark: “As long as there is only one throat to suffocate – or a committee of them – you cannot really reclassle the system. Worse, any network with an architect lives with time borrowed.”
Arc and tempo under the spotlight
Catalini placed the Stripe tempo and the Circle arc in this context. The two are new block channels designed explicitly for payments, promoted as an infrastructure in Stablage for businesses and finches.
Circle launched Arc on August 12, presenting it as a Layer-1 network built in a network for the financing of Stablescoin. Unlike public channels based on volatile gas tokens, ARC uses USDC for costs, offering predictable costs and labeled in dollars.
It incorporates an integrated exchange engine, promises an end less than a second and includes opt-in privacy features. Circle said that CROI will support cross -border payments, onchain credit systems, token capital markets and programmable automated payments.
A few weeks later, Stripe and Paradigm unveiled the tempo on September 4, describing it as a payment first in blockchain capable of managing more than 100,000 transactions per second.
The network is compatible with EVM, has a dedicated payment route with the management of notes and access lists, and allows users to pay transactions and gas in any stablecoin. Stripe said that the first design partners include Visa, Deutsche Bank, Revolut, Nubank, Shopify, Openai, Anthropic and Doordash.
The two projects were marketed as steps towards interim stablecoin payments. But for Catalini, they raised a deeper concern.
A defaulting revolution or coup?
Catalini argued that channels led by companies like Arc and Tempo simply risk rebuilding the old financial system with new players in charge. Instead of moving the card networks and banks, he warned, they could raise the giants of the Fintech in the same position of domination. “The throne will have new occupants, but it will be the same throne,” he wrote.
He also predicted that such networks would be fractured geopolitically, Western and Eastern blocks probably share only one infrastructure led by the company. The result, he said, would be competing financial empires rather than the first defenders of the first defenders of the borderless system.
In the end, Catalini described the Stripe tempo as a “referendum on the ghost of the balance”. If he’s prosperous, he suggested, this can prove that the balance has failed due to the calendar, not design-and show that the dream of open money and without authorization was exceeded by more pragmatic and centralized solutions.
