Promises, damn promises, and leverage
The blockchain industry was founded on a handful of ambitious promises: censorship resistance, ownership, independence, and open access.
Someone born when the Bitcoin whitepaper was published would be in high school today. Looking back after nearly two decades, it’s worth asking a difficult question: have we actually delivered on those promises?
The early years of crypto were defined by exploration. ICOs, NFTs, and the first wave of DeFi felt revolutionary. Every month seemed to reveal another possible application for blockchain technology, and the potential appeared limitless. That optimism came largely from how much there still was to discover.
As Ethereum matured, its technical capabilities expanded dramatically. Layer 2 networks emerged, decentralised finance (DeFi) became more sophisticated, and entirely new categories of applications appeared. But alongside innovation came a different reality. Rug pulls, exploits, increasingly complex financial engineering, and endless scams became part of the ecosystem. What began as an experimental frontier slowly evolved into a financial ‘Wild West’.
More importantly, the incentives shifted.
Instead of lowering barriers, many ‘protocols’ encouraged users to assume greater and greater levels of risk. Leveraged perpetuals, memecoin launchpads, prediction markets, and countless speculative products became the dominant narrative.
As risk increased, and customer funds vanished, trust steadily declined. Some users left entirely. Others remained, but treated crypto primarily as an opportunity for short-term speculation. Those who stayed found themselves navigating an increasingly hostile environment. Every transaction required extreme caution: protect your private keys but not inside a password manager; verify every signature but remember the interface itself could be compromised; use ‘private’ RPCs that front-run you.
We often talk about compounding returns in DeFi. The industry has also experienced another kind of compounding: the steady erosion of trust. Death by a thousand hacks.
Follow the money
Crypto has now reached another inflection point. The next cycle presents an important choice. Will we continue building increasingly sophisticated financial slot machines, or will we finally deliver on the promises that attracted people to the space in the first place?
One response has been the rise of tokenisation and real-world assets. Interestingly, calling something a “real-world” asset almost implies that we’ve spent years operating outside the real world. Nevertheless, this movement represented something important. It became the industry’s first meaningful handshake with traditional finance.
Blockchain brought talented engineers, programmable assets, and entirely new financial primitives. Traditional institutions brought legitimacy, regulation, and access to enormous pools of capital.
Take perpetual futures as an example. In many ways, perpetuals are contracts for difference without requiring a broker-dealer as an intermediary. That was an extraordinary innovation. Naturally, established financial institutions took notice.
Many banks explored blockchain years ago. Goldman Sachs, for example, launched a digital asset trading desk around 2017, paused the initiative, and later restarted it in 2021. Technology was never the primary obstacle. The obstacle was risk.
Institutions operate under a very different set of constraints than crypto-native users. They face regulatory risk, operational risk, and perhaps most importantly, reputational risk. Their clients expect predictable infrastructure that satisfies compliance requirements. Public blockchains often failed to meet those expectations because very few blockchain applications were actually designed for businesses operating outside crypto. Institutions already have access to speculative yield instruments,, what they are looking for is infrastructure.
This difference becomes clear when looking at the values institutions prioritise: auditability, selective disclosure, and compliance. These are often dismissed within crypto as bureaucracy, but for many businesses they are existential necessities. A hedge fund cannot execute trades if every competitor can monitor its positions in real time. A merchant cannot expose every invoice and customer relationship simply to use programmable money. A regulated institution cannot satisfy its compliance department by saying, “It’s decentralised.”
Bits and bytes
Ethereum solved one of these challenges brilliantly. Public blockchains provide immutable audit trails unlike anything software had previously achieved. Every transaction becomes part of a permanent public record that anyone can independently verify.
The remaining challenges: privacy and compliance, once appeared fundamentally incompatible with public blockchains. That is no longer true.
Zero-knowledge proofs have matured significantly, with public goods like Noir making privacy-preserving systems increasingly accessible. More recently, fully homomorphic encryption has begun moving on-chain through projects like Fhenix and Zama. Instead of decrypting information before computation, FHE allows computation directly on encrypted data while keeping the underlying information private.
Today these systems remain slower and more expensive than traditional computation. But not long ago users routinely spent hundreds of dollars in gas fees simply to mint NFTs. Compared to that, waiting an additional second for transaction finality or paying an extra dollar for meaningful privacy seems like a remarkably reasonable tradeoff. Hardware improvements will only continue making these technologies more practical.
If privacy is becoming technically achievable, compliance becomes the next major challenge. The question is no longer whether compliance will exist – it will – but who builds it and do they have the end user’s interest in mind?
Shifting sands
Neo-finance (NeoFi) startups have begun building services around stablecoins, with Ethereum as their settlement layer. Instead of waiting for banking networks to clear payments, they settle in seconds, with full auditability and without custodial risk. What a fantastic world we live in, you can directly transact online as you would with cash.
The same principle applies upstream, to the capital structures that businesses, investment banks and funds operate in. Consider a startup issuing equity to employees and investors. Today, their shares live in spreadsheets, PDFs and promises. Recording a new issuance requires trust in a single provider which will charge you a tooth and a nail just for you to update your own entry in their system.
Proving that you own shares requires asking for a document, which you had stashed away in one of your out-of-space drives. Selling shares requires a middleman to broker the transaction and ensure compliance, for a percentage of course.
Imagine this: equity living on a public blockchain with full privacy. Employees verifying their agreements trustlessly. Compliance rules that execute automatically, hardened by mathematics rather than paperwork. Investors could prove their ownership without revealing their identity or holdings to competitors. The company’s equity ledger would be an immutable public record that auditors and regulators can verify independently, while every individual’s position remains confidential. How much money and time would this system save?
This isn’t speculative; companies are building exactly this infrastructure today, combining zero-knowledge proofs and fully homomorphic encryption to distribute equity where privacy and auditability coexist.
Freedom by design
Will financial institutions construct proprietary systems optimized solely for themselves? Or will Ethereum build open alternatives that preserve user rights while enabling legitimate regulatory requirements? The answer should be permissionless by default, permissioned where legally necessary, and trust-minimized wherever possible.
Ethereum has always represented more than software. It introduced a philosophy. The Ethereum Foundation popularized the metaphor of the Infinite Garden – an open ecosystem where anyone can build, contribute, fork ideas, and create public goods.
It remains a powerful vision, but today it reveals an uncomfortable reality. A garden may be infinite in aspiration, yet it still needs visitors.
Most ordinary people have never entered Ethereum’s garden. Neither have businesses, auditors, courts, or regulators. Instead of an open public space, Ethereum increasingly resembles an island. Reaching it still requires specialized wallets, centralized exchanges, opaque on-ramps, custodians, and numerous technical hurdles.
History offers an interesting parallel. In eighteenth-century London, crossing the Thames often required hiring licensed watermen who controlled transportation across the river. Capacity was limited, prices were fixed, and travel depended on someone else’s schedule. Then Westminster Bridge was built, allowing ordinary Londoners to cross whenever they wished without relying on intermediaries.
Today’s blockchain ecosystem resembles pre-bridge London. On-ramps, centralised exchanges, custodians, and fragmented networks have become the modern ferrymen. They exist because the bridges have not yet been built.
We already possess the technology. The real question is whether we’ll continue building faster boats or finally connect Ethereum’s island to the rest of society.