This post reflects my current opinion, and I fully acknowledge I may be wrong. I’m open to changing my mind — but here’s how things look to me right now.
The Promise of Open Blockchains
Over the past several years, we’ve heard endless hype about permissionless, decentralized blockchains like Ethereum, Solana, and others. The vision: a new financial system built on open rails, where assets, identity, and contracts are programmable, composable, and unstoppable.
And to be fair, there has been innovation. DeFi, NFTs, and stablecoins all emerged from these platforms. But more recently, as tokenized real-world assets like treasuries, ETFs, and even stocks start entering the picture, I’ve found myself questioning:
What real role do permissionless blockchains actually play — especially if most users never interact with them directly?
Stablecoins Show the Playbook
Take stablecoins. They’re often cited as a “killer app” for blockchains. But what actually happened?
- USDC and USDT are widely used.
- But most people hold them on Coinbase, Robinhood, Binance, or PayPal — not in self-custodied wallets.
- These platforms allow you to send, receive, and spend stablecoins without touching a blockchain.
- Some even issue debit cards so you can spend USDC or PayPal USD at any store that takes Visa or Apple Pay.
In other words, the blockchain is invisible to the end user. The stablecoin is just a database entry inside a custodial app. The “permissionless” nature of the chain barely matters.
Will Tokenized Stocks and ETFs Be Any Different?
If stablecoins — which are inherently more transferable and spendable — don’t need permissionless blockchains to be useful, why would tokenized ETFs or stocks, which are much less fluid, be any different?
Consider this:
- People don’t send ETFs to their friends.
- They don’t use Apple shares as collateral in DeFi.
- They aren’t day-trading S&P 500 ETFs via self-custody wallets.
What people want is:
- Easy access
- Regulatory compliance
- Simple interfaces
- And maybe the ability to convert assets to cash or stablecoins quickly when needed.
All of that can (and likely will) be handled by custodial platforms like Coinbase, Robinhood, or PayPal. These companies already have the licenses, users, and infrastructure to abstract away the blockchain entirely.
So What’s the Point of Public Blockchains?
That’s the big question. If tokenized assets are:
- Custodied
- Regulated
- Non-transferable peer-to-peer
- And only converted into stablecoins for liquidity
…then there’s little reason for them to live on permissionless blockchains like Solana or Ethereum.
Even the argument that “blockchains are for censorship-resistant money” falls short when you consider this: Stablecoins can be frozen or blacklisted, even on public chains. USDC and USDT issuers comply with sanctions. So even on Ethereum or Solana, if your address is sanctioned, your coins can be frozen.
So what’s left?
- Maybe niche use cases in jurisdictions hostile to open finance.
- Maybe decentralized trading of native crypto assets (though even that is becoming heavily regulated).
- Maybe experimental DeFi protocols, though they too rely on stablecoins that can be shut down.
Where I Might Be Wrong
All this said, I could be wrong. Maybe:
- Regulatory environments change, making decentralized finance more open and viable.
- New decentralized stablecoins or assets emerge that truly can’t be stopped or frozen.
- Developers find novel use cases that truly require open blockchains.
But as of today, it seems to me that the core use case of public blockchains is shrinking, especially as tokenization moves into the mainstream and gets absorbed by fintech platforms that don’t need decentralization at all.
Final Thought
If stablecoins don’t need blockchains — and tokenized ETFs and stocks will just follow their model — then permissionless blockchains may turn out to be a fascinating experiment with limited practical application.
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