By Jason Jiang, OKG Analysis
In February 2025, Ondo Chain disrupted the steadiness of Wall Road. This Layer 1 blockchain, designed particularly for institutional-grade RWA (Actual World Property) and backed by conventional asset administration giants like BlackRock and Franklin Templeton, has a transparent ambition: to create a “compliant but open” hybrid structure. This might permit institutional traders to securely migrate trillions of {dollars} in belongings onto the blockchain whereas nonetheless benefiting from the liquidity of main public chains like Ethereal.
Ondo Chain serves as a mirror reflecting the collective nervousness of conventional monetary giants getting into Web3 — how can they safe a foothold within the onchain frontier whereas navigating a fancy regulatory panorama? Some have constructed excessive partitions, others have ventured aggressively into uncharted territory, whereas some search to bridge the gaps. As extra monetary giants enter, the divergence in technological approaches is now not only a battle over code however a contest for the way forward for monetary affect.
Within the nineteenth century, early Wall Road monetary transactions relied on guide processes and face-to-face interactions, with brokers and banks enjoying a vital middleman function. The twentieth century noticed the rise of digital buying and selling platforms and the web, democratizing monetary info, reducing obstacles for retail traders, and lowering transaction prices. The fintech growth additional improved front-end consumer experiences for traders.
These developments have been vital, however the fundamentals of conventional monetary markets remained unchanged: centralized techniques continued to dominate, information remained siloed in proprietary databases, and transaction processes nonetheless trusted intermediaries for coordination and settlement. Now, blockchain and tokenization are trying to alter this by making belongings extra accessible, clear, and interoperable. These applied sciences provide the potential for real-time settlement, decrease prices, and international accessibility whereas sustaining the integrity and belief that conventional techniques have lengthy offered.
Nevertheless, as Web3 know-how sweeps throughout the globe, conventional monetary establishments are usually not converging on a single method. As a substitute, they’re diverging of their methods. This divergence is formed by the trade-off between regulatory compliance and liquidity — ought to establishments prioritize management and safety, or embrace international market fluidity?
Initially, permissioned blockchains have been the popular alternative for a lot of monetary establishments venturing into Web3. When JPMorgan introduced in 2024 that its Onyx platform had settled $300 billion in transactions yearly, many realized that this century-old establishment — as soon as brazenly skeptical of cryptocurrencies — had quietly constructed a blockchain-based moat. Onyx operates as a meticulously designed “digital fortress”: its nodes are managed by choose establishments, counterparty info is hid, and every cross-border cost carries an embedded compliance label.
The downsides of such a closed ecosystem are evident. A banker concerned within the JPM Coin venture admitted, “Our tokenized U.S. Treasury bonds can solely flow into amongst associate establishments — liquidity appears like an vintage locked in a glass case.” Equally, BNY Mellon’s onchain custody companies, regardless of managing over $10 billion in tokenized belongings, stay trapped inside walled gardens, unable to work together with Ethereum’s DeFi protocols. This displays the inertia of conventional finance: utilizing management to mitigate danger, however at the price of openness.
As tokenization positive factors traction and the battle for onchain liquidity intensifies, asset administration giants like BlackRock and Goldman Sachs have opted for a extra aggressive technique — shifting tokenization initiatives towards public blockchains. Ethereum has emerged as the first alternative for institutional tokenization. BlackRock led the cost by launching the BUIDL tokenized fund on Ethereum. This fund not solely allows automated settlement by way of good contracts but in addition helps onchain staking, lending, and secondary buying and selling. This marked the primary deep integration between conventional finance and Web3 finance, making public blockchains a brand new institutional focus.
The adoption of any new know-how usually follows a sample of declining prices. Simply as DeepSeek revolutionized AI by considerably lowering operational bills, Layer 2 options are doing the identical for blockchain. Following Ethereum’s Cancun improve, transaction prices on Layer 2 networks like OP Mainnet, Base, Arbitrum, and Starknet have plummeted by over 97% prior to now six months. Decrease prices enhance consumer expertise and drive larger adoption of Layer 2 options. In accordance with OKG Analysis, over 90% of Ethereum-related transactions now happen on Layer 2 networks.
Decrease prices are additionally lowering the obstacles to blockchain adoption, accelerating the migration of functions and companies to Layer 2 networks. Cost giants like Visa and Stripe are leveraging Layer 2 to launch “cost blitzes.” Visa’s stablecoin cost channels, powered by Polygon and Arbitrum’s high-throughput networks, have slashed cross-border transaction prices to one-tenth of conventional strategies, processing over 500,000 transactions day by day. Stripe has constructed crypto on/off-ramp options on Layer 2, guaranteeing customers expertise seamless integration with out even realizing they’re utilizing blockchain know-how. As Stripe’s Web3 lead put it, “We don’t care if a series is decentralized — we solely care whether or not 1 million retailers can simply settle for crypto.”
This reveals the pragmatic mindset of conventional establishments: whereas public chains pose safety dangers and permissioned blockchains face interoperability obstacles, Layer 2 presents a seemingly optimum compromise — delivering blockchain’s effectivity and technological advantages at a fraction of the price, whereas remaining inside a controllable framework. The maturation of modular rollup infrastructures like OP Stack has additional simplified Layer 2 deployment, making “one-click chain deployment” a actuality. In contrast to conventional blockchains, these Layer 2 options don’t require native tokens for monetary incentives, making them extra compliant than public chains.
Many conventional establishments are utilizing Layer 2 to determine their Web3 presence. Coinbase’s Layer 2 chain, Base, has gained vital traction amid the meme coin and AI agent hype, positioning itself as a vital hub for tokenized asset issuance. Sony, Deutsche Financial institution, and different monetary and know-how companies are additionally accelerating their Layer 2 initiatives to safe a foothold within the tokenization revolution. For establishments trying to leverage Ethereum’s ecosystem for RWA issuance, launching their very own Layer 2 will be the smartest transfer.
The race to convey Wall Road onchain is now not only a contest of technological superiority. JPMorgan’s non-public chain, BlackRock’s public chain ETF, Visa’s Layer 2 cost experiments, and Ondo Chain’s hybrid mannequin — every method is an try to outline the long run distribution of economic energy.
However historical past has its ironies. Whereas conventional establishments replicate old-world order onchain, DeFi protocols are quietly consuming into their market share. Tesla inventory tokens on Uniswap now see over $100 million in day by day buying and selling quantity, and Aave’s RWA lending swimming pools are attracting growing institutional deposits — generally in defiance of rules. It will not be lengthy earlier than this silent competitors turns into an open battle: whose chain will outline the following technology of Wall Road?
