Wall Street's closed blockchains are a "race to the bottom": opinion of the head of Etherealize
Recently, a troubling trend has emerged on Wall Street: major financial institutions are increasingly turning to closed blockchain networks with restricted access. However, as I have repeatedly emphasized in my analytical reviews, this path leads to a dead end. Vivek Raman, co-founder and CEO of Etherealize, a company that promotes Ethereum as the base layer for institutional players, has given this phenomenon a precise and harsh characterization — a "race to the bottom."
The essence of the problem is that consortium networks created by banks and corporations do not interact with each other. Instead of pooling liquidity and ensuring system compatibility, they fragment the market and return us to the isolated architectures that distributed ledger technology was supposed to move away from. This undermines two key advantages of blockchain: interoperability and liquidity concentration.
Privacy on top of public infrastructure
Raman rightly points out that privacy and access control do not require creating separate closed chains. These functions are more logically implemented at the application level or via L2 solutions, on top of an open base layer. He draws an apt analogy: Ethereum is HTTP, and privacy layers are HTTPS. No one thinks of building a separate "closed internet" for banks, so why should we proliferate isolated sandboxes in blockchain?
The latest wave of such initiatives includes Canton Network from Digital Asset, Circle's Arc project, and Stripe's Tempo. These are "consortium chains 2.0." We have seen this before: the R3 initiative and the Hyperledger ecosystem were actively promoted starting in 2016 but never gained significant traction beyond pilot projects. History is repeating itself, and this should serve as a wake-up call for those betting on closed networks.
Etherealize's position remains unchanged: the base layer requires global permissionless infrastructure that requires no permissions and no trust. In June of this year, Raman already noted that traditional financial organizations are beginning to integrate Ethereum into real business processes. This trend confirms that institutional players are gradually realizing that open networks offer greater opportunities for scaling and liquidity.
My analysis: The current fascination with closed blockchains on Wall Street is a defensive reaction to a lack of understanding of the technology. However, the market has already shown that isolated networks are not viable in the long term. Institutional players who bet on open infrastructure today will gain a significant competitive advantage tomorrow. Those who continue to build "gardens behind high walls" risk being left outside the ecosystem that will define the future of finance.