Wall Street's closed blockchains — a 'race to the bottom': Etherealize CEO on the fatal mistake of consortia
A troubling trend is growing in the industry: the largest financial institutions, instead of embracing open protocols, are increasingly retreating into the sandboxes of isolated blockchains. Vivek Raman, co-founder and CEO of Etherealize, calls this not just a mistake, but a deliberate step backward—a "race to the bottom" that destroys the very essence of the technology.
In my firm conviction, Raman's argument hits the mark precisely. The consortium networks that banks are now enthusiastically promoting fragment liquidity into isolated pools. Instead of a single global market, we get dozens of closed "aquariums" that do not interact with each other. This is exactly the architecture that blockchain was supposed to move away from—systems where there is neither compatibility nor capital concentration.
Privacy as an overlay, not a foundation
Raman's key thesis, which I fully share: privacy should not be a property of the base layer. It makes sense to implement it at the application level or through L2 solutions on top of public infrastructure. He draws an elegant analogy: Ethereum is HTTP, a global open standard, while privacy tools like HTTPS are an overlay that does not break compatibility. Building separate closed networks, on the other hand, means spawning new "intranets" in a world that has already invented the internet.
The current wave of "consortium chains 2.0"—Canton Network from Digital Asset, the Arc project from Circle, Tempo from Stripe—repeats the fate of their predecessors. We already saw this in 2016 with the high-profile initiatives of R3 and Hyperledger, which never became mainstream. History repeats itself, but the lessons, it seems, have not been learned.
"We have always argued that a global, open permissionless infrastructure is necessary as the base layer," emphasizes the head of Etherealize. And these are not just words. In June, he already noted that traditional finance is beginning to integrate Ethereum into real business processes, not just pilot projects.
My conclusion: betting on closed blockchains is a strategic dead end. Institutions that choose isolation win in short-term privacy but lose in long-term liquidity and network effects. In the end, the market will punish those who build walls where there should be an open highway.