Former Ethereum Foundation researcher deeply analyzes at Devconnect ARG 2025: How to eliminate counterparty risk and build L2 to support $120 trillion in global assets.
Compiled by: Pan Zhixiong
The most surprising discovery for me is that Wall Street actually has a strong demand for decentralization.
This sounds counterintuitive. We, the cypherpunks and crypto natives, care about decentralization, but the general public seems more inclined to speculate on stablecoins or meme coins. It seems like no one cares about this? But Wall Street does.
Danny Ryan is the co-founder of Etherealize and a former core researcher at the Ethereum Foundation. He shared his profound insights at Devconnect ARG 2025 after transitioning from protocol development to institutional applications.
Introduction: From Protocol Research to Viewing the World Through a "Banking Lens"
Long time no see. I missed the last Devcon, which was the only thing I could say about Ethereum at that time.
I have been working in the field of decentralized systems for nearly a few years, building Ethereum, researching mechanism design, decentralization, security, and resilience. And now, I deal with banks every day. It’s a bit strange, but actually very interesting. I’ve learned a lot, and they’ve learned a lot from us too. For example, I was surprised to find that they still use business cards; everyone is using LinkedIn, although I haven’t registered on LinkedIn (I’m pretty sure my colleagues are not too happy about that), but Wall Street still relies on these tools.
Speaking of Wall Street, "Wall Street" is no longer just Wall Street. Aside from the New York Stock Exchange still being there, most other institutions have moved to Midtown.
Current Situation: Traditional Financial Markets Are Extremely Inefficient
We usually think that institutional markets are very efficient; you might think that online instant trading is easy, but in reality, it is inefficient, with stock trading taking a day to settle (T+1), which is already the most efficient. If you look deeper, you will find that the institutional market is full of inefficiencies and a lot of manual steps.
The technology layer is extremely fragmented. An asset manager might use one software to manage positions, another to trade, and a third to handle compliance, with complex integrations required between these software. It’s like a disastrous software queue pieced together like "Frankenstein." Some institutions even still send faxes to each other. Settlements and other key activities take too long. Settlement takes two days, which was a "huge victory" when it upgraded from T+3 to T+2 ten years ago.
In the world of Ethereum, trading and settlement happen simultaneously, which is our inherent advantage.
Traditional systems are full of systemic counterparty risks. The architecture has been around for over a hundred years, with its legal burdens layered on top of each other, effectively adding weight on intermediaries. From an anthropological perspective, it’s a miracle that they could build such a system. But now we have better technology, and it’s time to fix it.
Core Insight: Institutions Have a Tangible "Thirst" for Decentralization
The most surprising discovery for me is that Wall Street (referring to institutions) actually has a strong demand for decentralization.
This sounds counterintuitive. We, the cypherpunks and crypto natives, care about decentralization, but the general public seems more concerned with speculating on stablecoins or meme coins. It seems like no one cares about this? But Wall Street does. Let me "translate" the reasons from their perspective:
Elimination of Counterparty Risk: One of the perspectives from which institutions score is "Who will screw me over?" From trading partners to associated banks to infrastructure, there is risk at every layer. Decentralization and credible neutrality at the infrastructure layer can greatly reduce or even eliminate this risk.
Uptime: This is crucial. They require 100% online availability. Ethereum can achieve this because there are dozens of clients and thousands of nodes running. This is not accidental; it is a conscious design.
Scarcity of Crypto Economic Security: There are very few decentralized systems in the world that can support "trillion-dollar" asset classes securely. I’m not talking about hundreds of dollars from countless retail investors, but rather global assets amounting to hundreds of billions of dollars. You cannot just launch a system tomorrow and have that level of security. Ethereum possesses this scarce resource.
Mature Application Layer: Ethereum has been running for ten years. If you talk to banks, as long as they understand a bit about blockchain internally, they are referring to EVM and Solidity. They need mature security standards and application standards, not the latest trendy software that appears tomorrow.
Privacy: This is something I value highly. Establishing privacy for institutions is a "Trojan horse" for promoting overall blockchain privacy narratives. For institutions, adopting privacy is a ticket to entry, not just a cool feature. If the privacy issue is not resolved, there can be no discussion of market upgrades. When Institution A and Institution B trade, they cannot directly disclose their positions, as this does not conform to market operation norms. Fortunately, Ethereum has invested hundreds of millions in the field of cryptography (especially zero-knowledge proofs), and our investment in scalability (compressed computation) has unexpectedly brought privacy protection benefits.
Network Effects and Liquidity: Capital tends to flow to concentrated places. With the widespread adoption of stablecoins, Ethereum is far ahead in this regard.
Intermediate Infrastructure (Layer 2): This point is very important. When I explain Layer 2 to institutions, they are very eager to buy in. Banks want to build customizable, scalable systems that can connect to Ethereum, the value internet.
When you truly engage with institutions and fill in the cognitive gaps, you will find that Wall Street needs Ethereum.
Real World vs. Speculative World
As a developer, it can sometimes be frustrating. You work hard to build unstoppable, decentralized systems, yet people are watching, controlled by a multi-signature wallet issued by "three people in a basement" for meme tokens. You worry that no one cares about decentralization.
But the demand for centralization from institutions is actually a window into the real world. If it’s just speculation, people are indeed crucial; but if it’s about putting pensions and property contracts on-chain, the real world will force the need for decentralization. In these scenarios, the security must be at least as good as, if not better than, the existing systems.
Strategic Shift: From "Simple Explanation" to "Building Better Products"
The Ethereum community is very good at building infrastructure and mechanism design, but we need to move beyond the mindset of "just build it, and they will come."
We cannot simply explain to institutions why they need decentralization. We need to assume that global assets will go on-chain. How do we do that? Not through simple tokenization, but by building systems that are better than the existing ones, so that global assets must migrate on-chain.
Value collaboration can be divided into two phases:
Simply Better: Faster, cheaper, consumes trust intermediaries, and has a more user-friendly interface.
Extended Ecosystem: Asset simplification, DeFi composability, etc.
We often get too fixated on the second point, but we need to spend more time on the first. Current institutional products, while superficially elegant and powerful in reporting, still remain in the Stone Age at the underlying level. By leveraging the characteristics of blockchain (such as atomic settlement), we can make products inherently better over time. Only by excelling at the first point can we attract long-tail assets into the innovative realm of the second point.
Gradual Success: Trillion-Dollar Assets and Market Growth
We should measure success in "trillions." Currently, the so-called RWA (Real World Assets) on Ethereum is about $18 billion. By the way, when you talk to institutions, they don’t call it RWA; they just call it "Assets." The global asset management scale is estimated to be $120 trillion, and if we want to put the global economy on-chain, we must mobilize institutional capital.
Another standard for success is influence and market evolution.
This includes two phases:
Rewire: Utilize Ethereum and Layer 2 programming to eliminate manual checks. For the institutional market, Ethereum is actually "fast" (compared to T+1 settlement).
Evolve: Expand market access. The current market subsidies are highly stratified, sometimes due to legal reasons, and sometimes purely to play small circle games. But through on-chain products and DeFi, we can allow more people to participate, which is a positive-sum game. Institutions want to manage more assets, and the public wants access to financial products.
Conclusion: The Most Important Work
I enjoy working on the most important problems. Currently, I am dedicated to institutional adoption of Ethereum every day. This includes filling in cognitive gaps, explaining why we should not use those "privacy chains" that lack DeFi, are strange, and closed, but rather build on Ethereum.
We need to truly build, design native environments, and understand asset flows, the complexities of law, and our compliance. If we don’t do this, we will hand over the global economy. If we want to change the world, it’s time to bring the world onto Ethereum.
On-Site Q&A
Q1: What is the biggest misconception about Ethereum's decentralization when talking to institutions?
Danny: Institutions are increasingly understanding this; they have a kind of FOMO (fear of missing out), worried that fintech will take their lunch. The main misconception might be that "decentralization" means "no governance" or "uncontrollable access." In reality, the on-chain environment is highly governed, and you can set rules. This fear is transforming into concerns about being left behind, which is a great opportunity for builders.
Q2: What advice do you have for developers wanting to enter the institutional space?
Danny: Just like understanding the Ethereum tech stack, Wall Street is also a complex beast. My advice is: find a partner. A friend who trades on Wall Street but wants to learn about decentralization can be a strong ally.
Q3: With increasing adoption, is there a risk of Ethereum being co-opted by institutions?
Danny: Of course. We need to introduce global assets while maintaining Ethereum's core values of globalization, diversity, and decentralization. As long as we retain the ability to "fork," there is no risk. I’m not an "ossificationist"; I believe there is still much work to be done, but we must be very careful in the process of introducing assets.
Q4: How to ensure the correct narrative is conveyed in front of institutions?
Danny: We need to work together. Forming a corporate group at the Ethereum Foundation is a great first step. But with hundreds of key companies and trillions of assets involved, we cannot go it alone. We need to unite in our narrative and education to ensure our voice is present at negotiation tables around the world.
Q5: What is something you know now that you wish you had known at the beginning?
Danny: The translation of language. For example, when I talked about "RWA" with the former head of oil business at JPMorgan, he didn’t understand it at all because, for them, it’s just "assets." Also, "Atomic Settlement" is a concept they don’t have because, in traditional finance, asset delivery and payment are often separate (even to earn interest on liabilities). We need to learn their language and provide the correct "translation" for them.
Q6: What can really impress institutions?
Danny: Layer 2 (L2). This really resonates. Institutions love the idea of having sovereignty (building L2 themselves and with partners) while also connecting to the Ethereum ecosystem, rather than swimming in a large public pool.
Q7: How do you view collaboration within the ecosystem?
Danny: Over the past year, I have been too focused on my own work, which has led to less collaboration, and that needs to be reflected upon. As global assets go on-chain, it’s not just about infrastructure; every part of the ecosystem, including DeFi, on-chain lending, capital, and compliance stacks, needs to be fully utilized. Everything we have built over the past few years is for this purpose.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
