Etherealize CEO: Wall Street's closed blockchains are a 'race to the bottom' and a step backward for the industry
In recent months, a troubling trend has emerged on Wall Street: major financial institutions are increasingly turning to closed blockchain networks with restricted access. However, this approach has influential critics. Vivek Raman, co-founder and CEO of Etherealize, a company focused on integrating Ethereum into traditional finance, has openly called this trend a "race to the bottom" that destroys the very essence of the technology.
In my firm belief, Raman's arguments deserve the closest attention. He is absolutely right that consortium networks created by banks and corporations inevitably fragment liquidity. Instead of a single global pool of assets, we get isolated "lakes" of capital that do not interact with each other. This returns us to the very silo systems that blockchain was supposed to free us from, and undermines its two key advantages: interoperability and liquidity concentration.
Privacy on top of the public, not instead of it
The key thesis of Etherealize is that privacy and access control should not be properties of the base layer itself. Raman insists: it is more logical for institutional players to build their solutions on top of open infrastructure, for example, at the application level or through L2 solutions. He draws an elegant analogy: Ethereum is HTTP, a global open standard, while additional layers with restricted access are HTTPS, which provides security and confidentiality on top of the common protocol.
This architectural philosophy looks far more sustainable than creating separate "private copies" of the blockchain. Examples of the latest wave of closed solutions criticized by Raman include Canton Network from Digital Asset, the Arc project from Circle, and Tempo from Stripe. He aptly calls this "consortium chains 2.0," recalling the sad fate of previous initiatives such as the interbank platform R3 and the corporate ecosystem Hyperledger, which were actively promoted since 2016 but never gained mass 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. Notably, earlier in June, he had already stated that traditional financial organizations were moving from experiments to real-world use of Ethereum in business processes.
My analysis: The trend toward creating closed networks is an attempt by large capital to "tame" the technology by fitting it into old regulatory and business models. However, history (recall R3) shows that this path leads to a dead end. The true value of blockchain lies in openness and network effects, and attempts to restrict it ultimately result only in additional costs and missed opportunities for the institutions themselves.