Financial infrastructure requires rethinking blockchain architecture

The crypto {industry} has an infrastructure downside that’s not often mentioned straight: we’ve been constructing monetary programs on blockchains that weren’t designed for finance, which requires us to rethink blockchain structure.

I seen this the second we began constructing Momentum. Most protocols launch as remoted merchandise, a DEX, a lending market, a staking answer, treating every as a separate device slightly than a part of an interconnected system. However this fragmentation reveals a deeper architectural mismatch. The blockchain layer beneath merely wasn’t constructed to deal with what finance calls for: parallel processing at scale, composable primitives, and infrastructure that different protocols can reliably construct upon.

This isn’t theoretical. It manifests in transaction failures throughout peak demand, capital inefficiency in liquidity markets, and an ecosystem the place every protocol operates in isolation slightly than synergistically.

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The true constraint: Blockchains weren’t designed for finance

After we had been deciding the place to construct our DEX, the selection was apparent to me however appeared counterintuitive to many. Everybody requested: Why not Ethereum (ETH)? The reply reveals every part about how I take into consideration infrastructure.

Take into account the elemental distinction between how Ethereum and Sui (SUI) course of transactions. Ethereum’s sequential execution mannequin means each transaction should be processed so as, creating bottlenecks below load. This wasn’t a bug in Ethereum’s design; it was by no means the supposed use case. Ethereum was constructed to be a general-purpose compute platform.

Finance calls for one thing totally different. Most monetary operations are unbiased. When Alice swaps tokens and Bob stakes belongings, these transactions don’t depend upon one another. Sequential processing creates synthetic congestion. Parallel processing is not only an optimization; it’s structurally needed.

Sui was constructed from the bottom up with parallel execution and object-centric design utilizing the Transfer programming language. This architectural alternative isn’t simply quicker — it permits a wholly totally different class of economic merchandise to exist at scale.

The proof got here quicker than we anticipated. In six months, our DEX scaled from zero to $500M in liquidity and $1.1B in every day buying and selling quantity, accumulating $22B in cumulative buying and selling quantity whereas onboarding 2.1 million customers with out significant congestion. Processing that form of quantity with out transaction failures isn’t a advertising achievement; it’s proof of basic architectural soundness. Attempt reaching these metrics on a sequentially-executing blockchain and also you’d see precisely why the structure issues.

Why infrastructure composability issues greater than particular person merchandise

There’s a second, extra delicate downside I’ve discovered to acknowledge: monetary merchandise needs to be composable constructing blocks, not remoted silos.

A correctly designed monetary infrastructure layer ought to enable different protocols to construct on shared primitives. If each protocol has to construct its personal treasury administration, its personal staking answer, its personal liquidity infrastructure, the ecosystem fragments. Builders spend time fixing similar issues slightly than innovating on new ones. I’ve watched this occur repeatedly throughout chains.

That is the place most protocols fail. They construct one product nicely, then the ecosystem round them calcifies. Every new protocol primarily begins from scratch.

After we constructed our protocol, we intentionally selected to not simply create a DEX. We constructed infrastructure primitives that different protocols would rationally select to make use of slightly than rebuild. MSafe, our treasury administration answer, now secures lots of of hundreds of thousands throughout the Transfer ecosystem. Not as a result of we pressured adoption, however as a result of it solved an actual downside higher than the alternate options.

Extra protocols constructing on shared infrastructure means extra integration factors, extra composability, and better system worth for everybody. This solely works if the primitives are literally good. Concentrated liquidity market-making know-how with aligned incentives creates capital effectivity that conventional AMMs can’t match. Liquid staking that produces a yield-bearing receipt token creates collateral that’s concurrently productive. Multi-signature treasury administration that works reliably reduces friction for protocol governance.

These aren’t nice-to-have conveniences. They’re the distinction between an ecosystem that compounds worth and one which fragments. That is exactly what permits Momentum to supply infrastructure that different protocols rationally select to construct on slightly than rebuild themselves.

The institutional capital downside is infrastructure, not options

Crypto has all the time struggled with institutional adoption. The usual rationalization focuses on regulatory uncertainty or UX limitations. The true bottleneck is commonly less complicated: establishments can’t use decentralized infrastructure that lacks compliance capabilities.

This isn’t a cause to centralize. It’s a cause to construct the suitable layer on prime of decentralized infrastructure. For those who can supply permissioned compliance as an elective module, let institutional customers confirm their identification and commerce with full regulatory readability, whereas holding the bottom infrastructure permissionless, you clear up the issue with out compromise.

Establishments received’t deploy severe capital into programs that may’t present regulatory auditing, KYC verification, or compliance documentation. These aren’t options, they’re structural conditions for institutional participation. That’s not gatekeeping. It’s acknowledging actuality.

The precise argument

Right here’s the declare I’m making, separate from any specific protocol: Blockchains constructed for normal computation can not effectively function monetary infrastructure. Finance requires structure particularly designed for parallel processing, composable primitives, and institutional compliance. Protocols will migrate towards blockchains with these properties—not as a result of they’re stylish, however as a result of the economics of working on higher infrastructure are merely superior.

This isn’t an argument that “Sui is healthier than Ethereum.” Ethereum can and may proceed evolving. Layer-2 options are authentic approaches. That is an argument that monetary programs have to be constructed on totally different architectural foundations than general-purpose compute platforms.

The corollary is much less apparent: if a blockchain is purpose-built for finance and achieves significant adoption, it turns into the pure basis for monetary innovation. Not due to advertising, however as a result of different protocols rationally select to construct there.

The query for the {industry} isn’t which chain “wins.” It’s whether or not we’re prepared to acknowledge that one-size-fits-all blockchain structure was by no means the suitable strategy, and that specialised infrastructure produces higher monetary outcomes.

That realization modifications every part about how protocols needs to be constructed and the place they need to be deployed. It’s altering how I take into consideration Momentum, and it ought to change how you consider the place to construct subsequent.

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