Wall Street's closed blockchains — a "race to the bottom": Etherealize CEO slams consortium networks
The market is once again witnessing a dangerous trend: major financial institutions are enthusiastically returning to the model of closed blockchains with restricted access. Vivek Raman, co-founder and CEO of Etherealize, a company that positions Ethereum as the base layer for institutional players, gave this phenomenon a harsh assessment, calling it a "race to the bottom."
At the center of the criticism are consortium networks, which, according to Raman, are not just useless but also harmful to the entire ecosystem. Such isolated circuits fragment liquidity and return us to the very closed systems that distributed ledger technology was supposed to move away from. Instead of interoperability and resource pooling, we get fragmentation that destroys the two main advantages of blockchain: interoperability and liquidity concentration.
Architectural mistake or a deliberate choice?
Raman insists on a fundamentally different approach. Privacy and access control, in his logic, should be implemented not at the level of a separate blockchain, but on top of public infrastructure—through applications or second-layer (L2) solutions. He draws an elegant analogy: in this model, Ethereum acts as HTTP—an open and universal protocol—while HTTPS with its encryption and restrictions is already an overlay for specific tasks.
The latest wave of "closed" initiatives, including Canton Network from Digital Asset, the Arc project from Circle, and Tempo from Stripe, reminds me of failed attempts from the past. Raman rightly draws parallels with consortium chains 2.0, recalling the sad fate of the interbank project R3 and the corporate platform Hyperledger, which were actively promoted since 2016 but never managed to capture the market.
"We firmly believe and have always held this position that a global, open permissionless infrastructure is necessary as the base layer," emphasizes the head of Etherealize.
It is telling that back in June, Raman stated that traditional financial organizations were moving from experiments to real implementation of solutions based on Ethereum. This contrast between words and market actions only confirms: the industry faces a choice between innovation and the familiar comfort of closed sandboxes.
My assessment: Raman's criticism is absolutely justified. Closed blockchains are a dead-end branch of evolution that exists only because large banks fear open competition and transparency. However, as the history with R3 shows, such projects are doomed to stagnation. Institutions will eventually realize that the economic efficiency of public networks with their network effects is incomparably higher than that of isolated "walled gardens."