Wall Street's closed blockchains are a "race to the bottom": opinion of the head of Etherealize
Recently, a worrying trend has emerged on Wall Street: major financial institutions are increasingly turning to closed blockchain networks with restricted access. However, as I see it, this movement leads not to progress but to a dead end. Vivek Raman, co-founder and CEO of Etherealize, accurately characterized this process as a "race to the bottom" in his recent analysis.
Fragmentation Instead of Consolidation
The crux of the problem is that consortium networks created by banks and corporations do not interact with each other. Instead of pooling liquidity and creating a unified economic space, they fragment it into isolated pools. This brings us back to the very closed systems that blockchain technology was originally meant to move away from. Two key advantages of the technology are undermined—compatibility and liquidity concentration.
Open Base vs. Closed "Overlays"
My position, which Raman also shares, is that privacy and access control should not be the foundation. It is more logical to implement them at the upper levels—in applications or L2 solutions—on top of public infrastructure. Drawing an analogy with the internet, Ethereum acts as HTTP—an open base protocol—while additional security and privacy layers are like HTTPS. This preserves compatibility and network effects without sacrificing confidentiality.
Unfortunately, we are seeing the opposite. Initiatives like Canton Network from Digital Asset, Circle's Arc project, or Stripe's Tempo are, in essence, "consortium chains 2.0." They repeat the mistakes of the past decade, when projects such as R3 and Hyperledger were actively promoted starting in 2016 but never gained significant traction.
"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 these are not just words—in June, he noted that traditional finance is beginning to move from experiments to real-world use of Ethereum in business processes.
My verdict: closed blockchains are a tactical illusion of control that leads to strategic defeat. The market will ultimately choose open networks because only they provide the liquidity and network effects needed to scale institutional operations.