Wall Street's closed blockchains are a "race to the bottom": Etherealize CEO warns of liquidity fragmentation
A vital discussion about the future of institutional blockchains is gaining momentum. Vivek Raman, co-founder and CEO of Etherealize, has issued sharp criticism of Wall Street's growing trend toward creating closed, consortium networks with restricted access. In his view, this path leads the industry into a dead end, returning it to isolated systems that distributed ledger technology was originally intended to eliminate.
Raman emphasizes that closed blockchain circuits are unable to interact with each other. This is not just a technical inconvenience, but a fundamental mistake that undermines two key advantages of the technology: system interoperability and liquidity concentration. Instead of a single global pool of assets and data, we get fragmented "digital oases" that only complicate operations and reduce market efficiency.
Architecture of the future: public base layer
Etherealize, which promotes Ethereum as an open base layer for institutional players, offers a fundamentally different approach. Raman insists: privacy and access restrictions should be built on top of public infrastructure — at the application or L2 solution level, rather than by creating separate closed networks. He draws an elegant analogy: Ethereum is HTTP, the global communication standard, while additional layers with restricted access and privacy are HTTPS, which provides security without breaking the underlying protocol.
As examples of "consortium chains 2.0," Raman cites Digital Asset's Canton Network, Circle's Arc project, and Stripe's Tempo. He reminds us that we have already been through this: the R3 initiative and the Hyperledger enterprise ecosystem, actively promoted since 2016, never gained widespread adoption. The lessons of the past, it seems, have not been learned.
"We firmly believe and have always held this position that a global, open permissionless infrastructure is necessary as the base layer," stated the head of Etherealize. This statement sounds like a manifesto in defense of open protocols, which, unlike closed corporate solutions, can provide the network effects and resilience needed for long-term growth.
It is worth recalling that back in June, Raman argued that traditional financial organizations had begun integrating Ethereum-based solutions into real business processes. However, the current trend toward closedness is cause for concern.
My analysis: Raman's criticism is absolutely justified. The financial system is built on network effects, and liquidity fragmentation is a direct path to inefficiency. Closed blockchains can solve local problems, but they do not create a global market. The question is whether institutional players can overcome their fears of open competition and trust public infrastructure, which in the long term offers far more opportunities for innovation and growth.