The Current State of Ethereum: An Identity Crisis
Ethereum is currently grappling with an identity crisis. Its native token, ether (ETH), is underperforming compared to its fierce competitors, leading to growing concerns among long-time developers about whether the chain’s technology is lagging behind. Additionally, there are questions about the community’s focus and direction.
The Ethereum Foundation, the nonprofit organization responsible for overseeing Ethereum’s development, has drawn criticism for many of the network’s ongoing challenges. Co-founder Vitalik Buterin is at the forefront of a significant leadership overhaul within the organization; however, his central role in this transition has sparked its own set of controversies. Meanwhile, rival ecosystems like Solana are seizing the moment, attracting top-tier talent and outpacing ETH in various market metrics.
Amidst this tumult, a new initiative named Etherealize is emerging with the goal of bringing ETH into the realm of Wall Street. Founded by former banker Vivek Raman, Etherealize aims to bridge the divide between traditional finance and Ethereum, advocating for ETH as a legitimate asset class.
Raman, who spent a decade entrenched in the banking sector before transitioning to the world of cryptocurrency, believes his background in traditional finance equips him with a unique vantage point. He has devoted the past four years to laying the groundwork for Etherealize, strategically choosing to launch in January—a period of renewed optimism in the market fueled by expectations of a crypto-friendly administration in Washington, even as Ethereum contends with internal disagreements and stagnant prices.
In a recent interview with CoinDesk, Raman shared his vision for ETH and the broader landscape of cryptocurrency, covering a variety of topics, including:
- His journey into the Ethereum ecosystem and the founding of Etherealize.
- How Etherealize is positioning ETH for Wall Street.
- The role of the Ethereum Foundation and the perspective of banks on layer-2 rollups.
This interview has been edited for brevity and clarity.
From Wall Street to Ethereum: Raman’s Journey
Interviewer: You’ve had extensive experience in traditional finance, yet you describe yourself as a newcomer to the Ethereum world. Can you walk me through your entry into crypto? What was the pivotal moment for you?
Raman: I worked as a trader at four different banks, dealing with some of the most complex and obscure financial products—high-yield bonds, distressed bonds, leveraged loans, and credit default swaps. These instruments are vital to our economy, but I witnessed firsthand how inefficient they can be. You know, when you watch the movie Wall Street and see everything being traded over the phone, it gives the impression that the system has evolved. But in reality, it hasn’t; the processes still rely on outdated methods.
After ten years in that environment, I was frustrated by the slow technological progress on Wall Street. So, I decided to explore other avenues. Shortly after leaving, I found myself in Austin, Texas, where I fortuitously met some core Ethereum developers who were working on the Merge. They introduced me to the intricacies of Ethereum. During my time on Wall Street, there was a strong anti-crypto sentiment fueled by regulatory concerns, and the “adoption moment” seemed far off. But discovering Ethereum made me realize that it could be the solution Wall Street desperately needed.
Etherealize: Marketing and Bridging Gaps
Interviewer: Etherealize consists of various components. How does the “marketing” aspect fit into the overall picture?
Raman: Etherealize has three interconnected dimensions. First, everyone is using Ethereum; it stands as the most widely adopted smart contract platform. Unlike Bitcoin, which is often discussed in isolation due to its limited utility, Ethereum boasts an abundance of use cases that often overshadow the importance of its asset, ether. It’s crucial to communicate ether’s significance as a valuable asset—a portfolio diversifier that complements Bitcoin. We aim to provide research, content, and marketing strategies to ETF issuers, the public, and institutions.
The second dimension highlights Ethereum’s capabilities as a utility platform, often referred to as “the operating system for the financial economy.” We educate stakeholders on Ethereum’s potential—how it can tokenize assets and enable banks to create customized layer-2 ecosystems for their clientele.
Lastly, we strive to inspire action. Our call to action encourages the tokenization of assets on Ethereum or the development of layer-2 solutions, and we are actively building a product suite to facilitate trading on the Ethereum blockchain.
Navigating Ethereum’s Challenges
Interviewer: Ethereum is experiencing notable challenges: its price is lagging behind other cryptocurrencies, the Ethereum Foundation is in a state of flux, and community members are expressing differing opinions about Buterin’s dominant role. Can Wall Street be the answer for Ethereum?
Raman: I wouldn’t say Wall Street is a silver bullet. The Ethereum Foundation shouldn’t bear all the responsibilities, nor should Vitalik single-handedly manage everything. Vitalik’s primary focus is on high-level research and development to future-proof Ethereum for the long term. The responsibility of communicating about these ecosystems falls to entities like Etherealize. Unfortunately, as the regulatory landscape shifted from hostility to acceptance, other layer-1 ecosystems with centralized backing gained visibility and market share. Nonetheless, the brilliance of Vitalik and the Ethereum Foundation researchers remains unparalleled.
After years of formulating our business plan, I sought approval from Vitalik and the Ethereum Foundation, which graciously provided us with a small grant to kickstart our initiatives last August. I conducted extensive due diligence, engaging with numerous institutions to determine if this was the right moment, and the consensus was affirmative.
The Role of the Ethereum Foundation and Layer-2 Solutions
Interviewer: You mentioned the Ethereum Foundation’s role. Some suggest that it runs the ecosystem. How do you delineate the responsibilities between the Foundation and Etherealize?
Raman: The Ethereum Foundation possesses exceptional marketing talent, but there is much work to be done. We operate in a sprawling ecosystem of layer-2s that require coordination. As one Ethereum Foundation leader aptly put it, “Ethereum doesn’t have one business development arm; it has thousands,” encompassing all the applications and layer-2 solutions. Etherealize exists as a bridge to these various applications and layer-2s, providing access to Wall Street players and institutions eager to engage with Ethereum.
We maintain an ongoing dialogue with the Foundation, fostering a collaborative relationship while ensuring we operate independently. I see this dynamic as mutually beneficial.
Wall Street’s Perspective on Layer-2 Networks
Interviewer: You mentioned layer-2 networks. What is Wall Street’s perspective on them? We know that Deutsche Bank is launching a layer-2 on ZKsync, and UBS has shown interest as well. What insights can you share?
Raman: Looking back, it will be ironic to see how layer-2 networks were initially criticized as value-extractive or dilutive. From my observations, Wall Street perceives layer-2 solutions as a significant opportunity. One of the many reasons Ethereum is likely to prevail over other layer-1s is its commitment to a robust layer-2 roadmap, recognizing that a single, uniform chain cannot cater to the diverse needs of companies and regions worldwide.
Wall Street views these layer-2s as a lucrative avenue. The question becomes where they can maximize profit through asset deployment and application development. Layer-2 solutions offer customization and privacy options that are essential. They allow for features like know-your-customer (KYC) compliance, which will be crucial moving forward.
The Shifting Dynamics of Wall Street and Blockchain
Interviewer: Why has Wall Street been hesitant to engage with blockchain technology? Was it solely a matter of regulatory clarity, particularly with the new administration in Washington?
Raman: While regulatory clarity is undoubtedly a factor, it may be overly simplistic to attribute Wall Street’s hesitation solely to that. The fundamental issue was the lack of economic incentives for financial institutions to adopt blockchain technology. Many viewed blockchains as competitors or threats, and there was no clear path to profitability under an oppressive regulatory framework.
With the recent shifts in regulations and advancements in technologies like layer-2s, Wall Street now sees a viable opportunity to profit from blockchain utilization—especially on Ethereum. By building layer-2 solutions and deploying assets on these platforms, they can tap into new revenue streams. The rush of interest is driven by the recognition of this opportunity.
