Wall Street's closed blockchains are a dead end: Etherealize head warns of a "race to the bottom"
Recently, a troubling trend has emerged on Wall Street: major financial institutions are increasingly turning to closed blockchain networks with restricted access. However, in my firm conviction, this path leads nowhere. Vivek Raman, co-founder and CEO of Etherealize, has outlined the problem with utmost clarity in his recent statements: such consortium initiatives are nothing less than a "race to the bottom."
The essence of Raman's criticism is perfectly clear and well-founded. The closed circuits created by banks do not interact with each other, leading to liquidity fragmentation. Instead of leveraging the technology's key advantages—compatibility and the pooling of liquidity—we are reverting to isolated systems reminiscent of the pre-internet era. This is a direct step backward that undermines the very idea of decentralized finance.
Etherealize, which I closely follow, consistently promotes Ethereum as an open base layer for institutional players. And there is ironclad logic in this approach. Raman rightly points out that privacy and access restrictions should be implemented at the application or L2 solution level, rather than by creating separate closed networks. He draws an excellent analogy: Ethereum is HTTP, the foundation, while privacy layers are HTTPS, the overlay. Instead of reinventing the wheel, we should build on existing and proven infrastructure.
We are already seeing a new wave of such "closed" projects: Canton Network from Digital Asset, Arc from Circle, Tempo from Stripe. Raman aptly dubbed them "consortium chains 2.0." And he is absolutely right to remind us of the sad fate of their predecessors: the interbank initiative R3 and the corporate ecosystem Hyperledger, which were actively promoted since 2016 but never gained widespread adoption. History is repeating itself, but apparently not everyone is drawing conclusions.
"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. And I cannot disagree with this. It is telling that back in June, Raman noted that traditional financial organizations had begun integrating Ethereum-based solutions into real business processes. This indicates that open networks have already proven their viability and maturity for institutional use.
My analysis: Raman's concerns are absolutely justified. Closed blockchains are an oxymoron that strips the technology of its core value. Institutional players seeking efficiency and compatibility should look toward open protocols rather than spawning new digital "walled gardens." Otherwise, we risk ending up with a fragmented and inefficient market that cannot realize the full potential of blockchain.