Etherealize CEO: Wall Street's closed blockchains are a "race to the bottom"
The market is once again witnessing a paradoxical trend: the largest financial institutions, while declaring their commitment to innovation, are increasingly retreating into the sandboxes of isolated blockchains. I view this process as an alarming signal that could negate the main advantages of distributed ledger technology.
Consortium Networks as a Step Backward
Wall Street's attention to closed blockchains with restricted access is not evolution but degradation. Such consortium networks not only fragment liquidity but deliberately recreate the very isolation that blockchain was designed to eliminate. This is a classic "race to the bottom," where competition for security turns into competition for closedness.
The key problem with such systems is the lack of interoperability. Closed circuits do not interact with each other, destroying two fundamental properties of the technology: compatibility and pooled liquidity. Instead of a global network, we get a set of digital "fortresses" that merely imitate innovation.
The Case for Open Infrastructure
My position, which I consistently advocate, is that privacy and access control are tasks at the application and L2 solution level, not the base protocol. The open base layer of Ethereum serves here as an analog to HTTP, while privacy layers act as HTTPS. This approach preserves network effects and compatibility without sacrificing confidentiality.
The latest wave of "closed" initiatives—Canton Network from Digital Asset, the Arc project from Circle, and Tempo from Stripe—merely repeats the mistakes of the past. We have already seen how the interbank ambitions of R3 and the corporate ecosystem of Hyperledger, actively promoted since 2016, ended. These projects never achieved widespread adoption, remaining costly experiments.
The industry needs global, permissionless infrastructure as its foundation. Without this, we risk returning to archaic models where institutional players build their own "digital intranets," losing the very essence of blockchain—openness and unification. Traditional finance has already begun integrating Ethereum into real business processes, and it is this path, not the creation of isolated networks, that leads to true transformation.
My conclusion: closed blockchains are a temporary solution that creates an illusion of control but loses to open systems in the long run. Institutional players should invest in hybrid models where privacy is implemented on top of public infrastructure, rather than bypassing it.