Wall Street's closed blockchains are a "race to the bottom": Etherealize CEO on the fatal mistake of consortiums
In recent months, we have been witnessing a troubling trend: the largest financial institutions are increasingly retreating into the sandbox of private blockchains. However, as the leadership of Etherealize rightly points out, this path leads to a dead end. The company's co-founder and CEO, Vivek Raman, sharply criticized Wall Street's fascination with closed consortium networks, calling this phenomenon nothing less than a "race to the bottom."
Fragmentation Instead of Liquidity
The expert's key complaint is that isolated blockchain silos not only fail to solve the problems of traditional finance but also exacerbate them. By creating closed perimeters, banks and corporations fragment liquidity and return us to a model of isolated systems that distributed ledger technology was supposed to move away from. Instead of global interoperability, we get new "digital offshore zones" that do not interact with each other, destroying the two main advantages of blockchain: interoperability and the concentration of liquidity pools.
Trust Architecture: The Public Layer as a Foundation
Etherealize's position is consistent: privacy and access control should not be implemented by creating separate networks. It is more logical to build these mechanisms on top of open infrastructure—at the application or L2 solution level. Raman draws an elegant analogy: Ethereum should become a base protocol, similar to HTTP, while layers with restricted access and encryption are HTTPS. This preserves compatibility without sacrificing confidentiality.
The wave of "consortium chains 2.0," represented by Digital Asset's Canton Network, Circle's Arc project, and Stripe's Tempo, raises serious concerns for me. We have already been down this path: the R3 initiative and the Hyperledger ecosystem, actively promoted since 2016, never managed to become mainstream. History repeats itself, and institutional players risk stepping on the same rake, creating costly systems that are useless from a network effect perspective.
"We firmly believe and have always held this position that a global, open permissionless infrastructure is necessary as the base layer," Raman emphasizes. Notably, back in June, he noted the transition of traditional finance from experiments to real implementation of Ethereum-based solutions in business processes.
My analysis: While Wall Street spends resources on creating isolated "walled gardens," public networks continue to scale and develop privacy tools. In the long term, it is open protocols with reputation economics and proven security that will become the standard for institutional transactions, while closed consortia will remain a niche experiment unable to compete with Ethereum's global liquidity.