Organizations move toward purpose-built blockchains as privacy concerns lead them to abandon Ethereum

Financial institutions are moving away from Ethereum (ETH) and opting for blockchains suited to their institutional needs.

Recent developments, such as Klarna launching its stablecoin on an alternative network and the emergence of privacy-focused chains like Canton, raise questions about the dominance of the network.

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Corporate adoption of blockchain technology signals a new threat to Ethereum: here’s why

On November 25, Klarna announced announced KlarnaUSD, becoming the first bank to issue it Stablecoin on Tempoa payment chain from Strap and Paradigm. This decision has sparked controversy in the crypto community. Some see it as a bearish signal for Ethereum.

said one analyst “Can anyone say why this is not a bearish signal for Ethereum? A large fintech company with a large movement in stablecoins is not called Ethereum. If Tempo did not exist, it would have been called Ethereum or L2 Ethereum … Tempo is taking the market shares in which is the main premise of Ethereum: stablecoins”..

Hosted by Ethereum Major stablecoinsincluding Tether (USDT) and USDC (USDC), which together control more than $100 billion in market capitalization. They drive significant network activity and fees. By choosing Tempo, Klarna goes through the Ethereum ecosystem, potentially transforming liquidity and innovation.

Another analyst, Zach Rins, emphasized that Klarna’s decision shows that institutional blockchains are being adopted in a big way, while public chains lag behind the big fintech companies.

He said “Ultra confirms that institutional blocks still exist and your ‘neutral’ public chain #375936 has been beaten by Fintech once again,”.

This became clearer with the emergence of the Cantonal Network. she A first layer network is built With privacy controls at its core. Organizations can choose how visible or restricted their activities are, allowing setups that range from completely open systems to completely private systems.

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Despite these differences, applications on Canton can communicate and interact across the network. Goldman Sachs Digital Asset Platform (GS DAP) uses the Canton Network natively.

It is worth noting that Canton exhibits a significant level of capital efficiency, generating approximately $96 of real-world resource value (RWA TVL) for every $1 of market capitalization. In contrast, Ethereum generates about $0.03 of RWA TVL for every $1 of market capitalization.

But why are organizations moving away from Ethereum? Privacy could be the main reason For this transition. Make strings public like ethereum All processes are always visible, which is a major challenge for organizations.

When banks or companies transfer large amounts of money, this transparency becomes a major risk. Competitors can analyze patterns and make advances OperationsAnd reveal strategic business relationships.

According toanalysis COTI Network Companies adopting Web3 often overlook blockchain transparency as an obstacle. The article notes that public chains expose all operations and metadata, which could expose sensitive data or undermine negotiating power. This raises regulatory concerns under laws such as GDPR and exposes trade secrets.

This disconnection explains why the organizationBuild private chains Or look for privacy-enhanced public networks. Transparency, celebrated as a virtue in cryptocurrency, creates loopholes when it comes to multi-billion dollar deals and secret relationships.

This phenomenon indicates a split: public networks like Ethereum are for decentralized use or sales, while institutions Transform into private or specialized chains To complete confidentiality. Whether Ethereum will regain the trust of institutions or take over niche networks remains uncertain as finance undergoes a digital transformation.