Wall Street's closed blockchains are a dead end: Etherealize head on the "race to the bottom"
Recently, a dangerous trend has emerged on Wall Street: major financial institutions are increasingly turning to closed blockchain networks with restricted access. However, in my view, this is a move to nowhere that only worsens market fragmentation and destroys the very essence of distributed ledger technology.
Vivek Raman, co-founder and CEO of Etherealize, voiced harsh criticism of these initiatives during a recent discussion of the industry's state. In his opinion, consortium networks not only fail to solve problems but create new ones: they fragment liquidity, isolate participants, and return us to the very closed systems that blockchain was supposed to move away from.
Raman calls this wave of projects nothing less than a "race to the bottom." Closed circuits are unable to interact with each other, which undermines two key advantages of the technology—compatibility and liquidity concentration. Instead of unifying the market, such networks tear it apart into isolated segments.
Architecture of the future: public foundation, private overlays
Etherealize, which Raman represents, promotes Ethereum as an open base layer for institutional players. He 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. This makes sense: why reinvent the wheel when you can use a proven and secure foundation?
Drawing an analogy, Raman compares Ethereum to the HTTP protocol, and additional layers with restricted access to HTTPS. This is an elegant solution: the base infrastructure remains open and compatible, while privacy is ensured at higher levels.
Examples and lessons from the past
Among the recent examples of "closed" solutions are Canton Network from Digital Asset, Circle's Arc project, and Stripe's Tempo. Raman calls these "consortium chains 2.0," recalling the unfortunate experience of R3 and Hyperledger initiatives, which were actively promoted since 2016 but never gained widespread adoption.
"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. This approach seems to me the only correct one in the long term. Interestingly, back in June, Raman noted that traditional financial organizations had begun integrating Ethereum-based solutions into real business processes. This confirms: the path to institutional adoption lies through open standards, not through yet another set of closed sandboxes.
My view: the story of R3 and Hyperledger should have been a lesson for everyone. The market does not need new isolated systems—it needs a unified, compatible, and secure infrastructure, on top of which any levels of privacy can be built. Those who fail to understand this risk being left on the sidelines of progress.