Financial infrastructure requires rethinking blockchain architecture

The crypto {industry} has an infrastructure downside that’s hardly ever mentioned immediately: we’ve been constructing monetary methods 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 moderately 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 moderately 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.

Think about the basic 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 meant 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 property, these transactions don’t rely upon one another. Sequential processing creates synthetic congestion. Parallel processing isn’t just an optimization; it’s structurally crucial.

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 allows 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 day by 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 type of quantity with out transaction failures isn’t a advertising achievement; it’s proof of basic architectural soundness. Strive attaining 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 refined 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 equivalent issues moderately than innovating on new ones. I’ve watched this occur repeatedly throughout chains.

That is the place most protocols fail. They construct one product effectively, 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 moderately than rebuild. MSafe, our treasury administration answer, now secures tons of of thousands and thousands throughout the Transfer ecosystem. Not as a result of we compelled adoption, however as a result of it solved an actual downside higher than the 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 expertise 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 offer infrastructure that different protocols rationally select to construct on moderately than rebuild themselves.

The institutional capital downside is infrastructure, not options

Crypto has at all times 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 motive to centralize. It’s a motive to construct the fitting layer on high of decentralized infrastructure. In the event you can supply permissioned compliance as an non-obligatory module, let institutional customers confirm their identification and commerce with full regulatory readability, whereas maintaining the bottom infrastructure permissionless, you resolve the issue with out compromise.

Establishments received’t deploy critical capital into methods 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 explicit protocol: Blockchains constructed for common 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 fashionable, 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 will proceed evolving. Layer-2 options are respectable approaches. That is an argument that monetary methods should 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 keen to acknowledge that one-size-fits-all blockchain structure was by no means the fitting strategy, and that specialised infrastructure produces higher monetary outcomes.

That realization adjustments 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 concentrate on the place to construct subsequent.

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