Wall Street's Private Blockchains Are a 'Race to the Bottom,' Etherealize CEO Warns

Wall Street is rediscovering private blockchains — and Vivek Raman, CEO of Etherealize, has a blunt warning: it's a mistake that will fragment liquidity, recreate walled gardens, and repeat the failures of earlier consortium efforts. He argues that the only durable path forward is an open, public blockchain like Ethereum as the base layer, with permissioning and privacy added on top.

Raman's Core Argument: Private Chains Are 'Consortium Chain 2.0'

Raman describes the resurgence of permissioned, closed-loop networks as "consortium chain 2.0" — and calls it a "race to the bottom." His critique rests on three main points:

Fragmented liquidity. Private silos split capital across incompatible networks. Instead of pooling liquidity in a single, globally accessible market, each consortium chain becomes its own isolated pool — defeating the efficiency gains blockchain was designed to deliver .

Recreating isolated systems. These gated chains don't communicate with one another. Raman argues this reverts the industry to the same walled-garden problem blockchain was supposed to eliminate: proprietary networks that don't interoperate .

Historical precedent. Raman points to earlier failed consortium efforts — R3 (which saw Goldman Sachs, Morgan Stanley, and others withdraw) and Hyperledger — as evidence that closed networks rarely achieve lasting traction .

"This is going to end up being a race to the bottom for consortium chains. You're going to have consortium chains versus consortium chains." — Vivek Raman

The Alternative: Ethereum as HTTP, Permissioning as HTTPS

Raman's proposed alternative is clear: use an open, public blockchain as the base layer, and add permissioning, privacy, and access control at higher layers — not inside the network itself .

His central analogy compares Ethereum's mainnet to HTTP, the transparent, permissionless foundation of the internet. Institutions can then build permissioned, privacy-enabled features at the application layer or on L2s — akin to HTTPS sitting securely on top of HTTP .

"We strongly believe, and always have done, that you need a global, open, permissionless infrastructure as the base layer. Then you can build all the permissioning on top of it." — Vivek Raman

This is the architectural principle behind Etherealize, the firm Raman co-founded and leads, which is laser-focused on bridging traditional finance to Ethereum. The company is backed by Vitalik Buterin and the Ethereum Foundation .

The Broader Context: Institutional Tokenization at a Fork

This debate sits at the center of a live strategic fork in institutional adoption:

The private-chain wave. Major financial firms are building or joining gated networks, including Digital Asset's Canton Network, Circle's ARC, and Stripe's Tempo. These consortium chains offer built-in privacy and reduced counterparty risk — attributes that mainstream finance finds immediately attractive .

The public-chain counter-current. BlackRock and other large asset managers are simultaneously expanding tokenized products on Ethereum, signaling real demand for an open settlement layer that can serve as a neutral, globally accessible backbone .

The core question. Which model will win? Raman's position is that the market will ultimately value decentralization and interoperability — the properties that make public blockchains useful. But the consortium approach prioritizes corporate control and curated privacy. MIT's Christian Catalini observed that the rapid uptake of gated systems suggests many institutions may not prioritize the original blockchain ethos .

Raman's argument is that public chains like Ethereum have matured enough to serve as that neutral backbone — and that institutional requirements for privacy and access control can be met through layered architecture rather than closed networks .