Wall Street's closed blockchains are a "race to the bottom": Etherealize's head explains why institutions are choosing the wrong path
In recent months, we have been witnessing a troubling trend: the largest financial institutions on Wall Street are increasingly turning their attention to closed blockchain networks with restricted access. However, as I have repeatedly emphasized in my analytical materials, this path leads to a dead end. Vivek Raman, CEO of Etherealize, expressed an extremely clear position in a recent conversation with industry colleagues: consortium networks are not evolution, but degradation.
Liquidity fragmentation and a return to isolation
The essence of the problem is simple and critical. The closed circuits currently being actively promoted on Wall Street do not interact with each other. They fragment liquidity into isolated pools, destroying two fundamental advantages of distributed ledger technology: interoperability and capital concentration. In essence, we are returning to the "intranet" model that blockchain was supposed to free us from. Raman rightly calls this race to create private networks a "race to the bottom."
The key argument, which I consider absolutely correct, is that privacy is not a property of the base layer, but a function of applications. There is no need to proliferate separate closed networks when confidentiality and access restrictions can be implemented on top of open public infrastructure. Raman draws an excellent analogy: Ethereum is HTTP, the global communication standard, and private layers on top of it are HTTPS, which adds encryption and security without breaking the underlying protocol.
Ghosts of the past: R3 and Hyperledger
It is especially telling that the current wave of "consortium chains 2.0" — Canton Network from Digital Asset, the Arc project from Circle, Tempo from Stripe — repeats the mistakes we have already seen. I would remind you that since 2016, the interbank initiative R3 and the corporate ecosystem Hyperledger were actively promoted. They never gained mass adoption, remaining costly experiments. History is repeating itself, and this bodes ill for those who are investing billions in closed systems today.
"We firmly believe and have always held this position that a global, open permissionless infrastructure is necessary as the base layer," Raman stated. And I completely agree with him.
My conclusion: It is telling that back in June, Raman noted the transition of traditional finance from experiments to the real adoption of Ethereum in business processes. However, the current tilt toward closed networks is an attempt by institutional players to maintain control over infrastructure, which in the long term contradicts the very nature of blockchain. The market will ultimately decide, but the cost of error will be high for those who bet on the wrong horse.