Wall Street's private blockchain obsession is a 'race to the bottom,' Ethereum advocate Raman warns
Etherealize CEO Vivek Raman warns that the resurgence of private, permissioned blockchain networks risks recreating siloed systems that undermine the interoperability and liquidity blockchain technology was meant to enable.
Intelligence analysis by Llama
Etherealize CEO Vivek Raman warns that the resurgence of private, permissioned blockchain networks risks recreating siloed systems that undermine the interoperability and liquidity blockchain technology was meant to enable. Etherealize is pitching Ethereum's open mainnet as the neutral base to which institutions can add permissioned and privacy-preserving features at higher layers.
Imagine you have a big library with many books. Each book represents a different computer system. If all the books are locked away in separate rooms, it's hard for people to find and use the information they need. But if the books are all in one big room, it's easy for people to find and use the information. Blockchain technology is like a big library, and it needs to be open and accessible for everyone to use it effectively.
Analysis
Consortium Chains vs. Open Networks: A Race to the Bottom?
The resurgence of private, permissioned blockchain networks, also known as consortium chains, has sparked a debate over whether institutional adoption will favor open, public chains or curated systems controlled by corporate sponsors. According to Vivek Raman, the co-founder and CEO of Etherealize, this trend risks recreating siloed systems that undermine the interoperability and liquidity blockchain technology was meant to enable.
Etherealize is pitching Ethereum's open mainnet as the neutral base to which institutions can add permissioned and privacy-preserving features at higher layers. This approach allows for maximum interoperability and liquidity in one place, which is essential for the widespread adoption of blockchain technology.
However, the rapid adoption of gated systems with clear sponsors suggests that the market may not care about decentralization and the aims of the blockchain originators. Christian Catalini, founder of the MIT Cryptoeconomics Lab and the former chief economist of Facebook's Diem stablecoin project, notes that this phase is all about enterprise sales, and it's not clear which way the market will land.
If the market lands on curated networks with clear sponsors, some of the pro-competitive benefits of blockchains will never materialize. This is because these networks will be controlled by corporate sponsors, which will limit their potential for innovation and growth.
On the other hand, if the market lands on open networks, the benefits of blockchain technology will be realized, and it will be able to achieve its intended goals of increasing interoperability and liquidity.
The choice between consortium chains and open networks is a critical one, and it will have significant implications for the future of blockchain technology. As Raman notes, it's like we're having consortium chain 2.0, and this is going to end up being a race to the bottom for consortium chains.
The Importance of an Open Base Layer
Raman emphasizes the importance of an open base layer for blockchain technology to achieve its full potential. He notes that a more secure, permissioned, privacy-enabled layer, such as HTTPS, sits on top of the open base layer, which is like Hypertext Transfer Protocol (HTTP).
An open base layer is necessary because it allows for maximum interoperability and liquidity in one place. This is essential for the widespread adoption of blockchain technology, as it enables different systems to communicate with each other and facilitates the exchange of value.
The Role of Institutional Adoption
Institutional adoption is a critical factor in the success of blockchain technology. As Raman notes, when we have regulatory clarity, the institutional money goes toward open networks because that's the rails that no one owns.
If you go to consortium chains, you're kind of paying the consortium. You have to get permission or be one of the consortium members. And if you're not an early consortium member, then the incentives go away very quickly.
The Future of Blockchain Technology
The future of blockchain technology is uncertain, and it will depend on the choices made by the market. If the market lands on curated networks with clear sponsors, the benefits of blockchain technology will be limited, and it will not be able to achieve its full potential.
On the other hand, if the market lands on open networks, the benefits of blockchain technology will be realized, and it will be able to achieve its intended goals of increasing interoperability and liquidity.
The choice between consortium chains and open networks is a critical one, and it will have significant implications for the future of blockchain technology.
Key points
- The resurgence of private, permissioned blockchain networks risks recreating siloed systems that undermine the interoperability and liquidity blockchain technology was meant to enable.
- Etherealize is pitching Ethereum's open mainnet as the neutral base to which institutions can add permissioned and privacy-preserving features at higher layers.
- Institutional adoption is a critical factor in the success of blockchain technology, and it will depend on the choices made by the market.
- The future of blockchain technology is uncertain, and it will depend on the choices made by the market.
If the market lands on open networks, the benefits of blockchain technology will be realized, and it will be able to achieve its intended goals of increasing interoperability and liquidity. This will lead to a more efficient and secure financial system, and it will enable new opportunities for innovation and growth.
If the market lands on curated networks with clear sponsors, the benefits of blockchain technology will be limited, and it will not be able to achieve its full potential. This will lead to a less efficient and less secure financial system, and it will limit the opportunities for innovation and growth.
