Wall Street's closed blockchains — a 'race to the bottom': Etherealize CEO explains why privacy shouldn't be built on isolation
The wave of interest from traditional financial giants in closed blockchain networks is raising more and more questions among industry experts. Vivek Raman, co-founder and CEO of Etherealize, has sharply criticized this trend, calling it a "race to the bottom." In his view, consortium networks with restricted access not only slow down the industry's development but also return it to the very isolated systems that distributed ledger technology was supposed to eliminate.
The key issue Raman highlights is liquidity fragmentation. Closed loops simply do not interact with each other, destroying the two main advantages of blockchain: system interoperability and capital concentration. Instead of spawning new isolated "gardens," the expert insists on the opposite approach: privacy and access control should be implemented at the application or L2 solution level, but on top of open public infrastructure. He draws a direct analogy with the internet: Ethereum is the base HTTP protocol, and additional privacy layers are like HTTPS, which works on the same foundation rather than creating a parallel network.
As examples of the new wave of "closed" projects, Raman cites Canton Network from Digital Asset, Circle's Arc blockchain, and Stripe's Tempo payment network. He calls these "consortium chains 2.0," recalling the sad fate of their predecessors — the R3 initiative and the Hyperledger ecosystem, which were actively promoted starting in 2016 but never gained widespread adoption. "We firmly believe that a global, open permissionless infrastructure is necessary as the base layer," emphasizes the head of Etherealize.
Notably, back in June, Raman stated that traditional financial organizations were moving from experiments to real adoption of Ethereum in business processes. Now his warning sounds like a signal: Wall Street risks repeating past mistakes by creating costly and inefficient closed systems instead of using the already existing open platform.
My comment: Raman's position is completely logical from a network economics perspective. Closed blockchains are an oxymoron: they sacrifice the technology's main asset — the network effect — for illusory security. In the long term, those who build privacy on top of open protocols will win, not those who try to reinvent the wheel in isolation.