Web3 Opens New Battlefield in Traditional Finance

The waves of the Yangtze River push the waves ahead.

Written by: Eric, Foresight News

In the last week of August, the product launches of Sui and LayerZero unexpectedly collided.

Kostas Kryptos, co-founder of Mysten Labs, announced that Havenex, for which he serves as an advisor, is about to complete its Series A financing, providing compliant white-label digital asset infrastructure for banks and asset management institutions, and is applying for an Austrian regulatory license. On the other hand, LayerZero launched ATLAS, a set of “headless exchange” back-end services, packaging matching, clearing, settlement, and risk control for institutions, without engaging in any user-facing trading business.

In 1848, gold flakes were discovered in the water ditch of a mill in California. When the news spread, 300,000 people flocked to California from all over the world, most of whom exhausted their funds in the riverbed and left empty-handed. The real money was made by those selling water, shovels, and canvas pants at the entrance of the mining area. That canvas pant later became known as Levi’s.

This is also the reason why cryptocurrency exchanges, whether centralized or decentralized platforms, always have money to collect.

Now, project teams holding exclusive technology of public chains have raised the stakes of this competition. Havenex’s technical foundation is Sui, and ATLAS runs on LayerZero’s self-developed Zero chain. The sellers of water are also the ones who repair the river.

To understand the weight of this detail, one must first acknowledge a fact: the old business of public chains has encountered a bottleneck.

For the past eight years, the business model of public chains has essentially been one: selling block space. This business sounds sexy but is miserable in practice. The differences between chains are increasingly akin to those between mobile and Unicom; no one is loyal to a chain, only to the yield. Gas fees cannot support valuations in the tens of billions, and as the price war drags on, block space becomes almost free. Public chains have told the story of the world computer for eight years, only to find themselves more like a cloud computing vendor on the brink of oversupply, with more and more cabinets built and thinner and thinner rents collected.

As the flow of rivers decreases, new water sources are needed.

The on-chain RWA market currently stands at about $44.6 billion, while two years ago this figure was less than $10 billion. BlackRock‘s tokenized treasury fund BUIDL has surpassed $2 billion, and the overall tokenized U.S. treasury exceeds $13.4 billion. The backend of traditional finance is a layered structure: trading occurs at exchanges, clearing at clearinghouses, and custody at custodial banks. A treasury bond takes several days to settle, passing through several institutions. When the asset itself becomes an on-chain object, this layered structure loses its reason for existence, and trading, clearing, and custody are compressed into the same ledger, which is a physical inevitability.

Ten years ago, IBM and Microsoft sold blockchain as a service, and companies like Hyperledger and R3 raised countless funds, most of which ended up quietly. Their failure was not due to poor technology, but because the sequence was wrong: first build the road, then wait for the assets. As a result, the road was built, but the fleet never arrived. This round has the sequence reversed: assets go on-chain first, and the demand for infrastructure explodes afterward, so the road builders no longer need to pray for traffic; the traffic is already queuing.

Thus, a subtle identity shift occurs. Public chains are no longer satisfied with being neutral roads; they want to become the underlying ledger of the financial system and personally step in to reclaim the business from the ledger layer by layer.

The “blockchain revolution” that has been shouted for over a decade has materialized at this moment. When all assets can improve trading efficiency through tokenization, blockchain is no longer just a ledger carrying certain assets in centralized exchanges; it is finally set to replace centralized settlement mechanisms.

Sui’s actions best illustrate this reclamation. Mysten Labs has long built DeepBook, a fully on-chain central limit order book, and after Figure’s yield-bearing security YLDS went on-chain, it directly integrated into its margin trading system. On August 25, tZERO, which holds multiple SEC registrations and is a FINRA member, announced a partnership with Sui to move the entire regulated securities infrastructure, including issuance, transfer agency, custody, trading, compliance, and settlement, to Sui. Havenex then filled in the white-label compliance layer, allowing banks to open shops directly on this foundation. Liquidity, securities settlement, and compliance front-end are stacked on the same chain, and each layer has the shadow of its own development team.

LayerZero’s path is almost symmetrical. In February this year, it launched Zero, with a platform list including Citadel Securities, ARK Invest, Tether, DTCC, Intercontinental Exchange, and Google Cloud. Market-making giant Citadel even directly purchased ZRO tokens. Six months later, ATLAS debuted, breaking down the exchange itself into sellable standard components. More straightforwardly, the design of the token economy states that 75% of the revenue after deducting rebates from Open ATLAS will be used for repurchasing and burning ZRO. Translated, this means that the chain is no longer satisfied with collecting Gas; it wants to tax all financial activities running on it. This is the last ballast stone that the public chain valuation system can find and the most genuine motive for this transformation.

Financial history has long established the value of this position. In modern finance, the most profitable and hardest to disrupt roles have never been the investment banks and funds fighting in the front lines, but the exchanges, clearinghouses, and custodial banks that collect rents. They do not participate in the ups and downs of the market but take a cut from every transaction. What public chains are now competing for is this rental position, only the tools for collecting rent have changed from licenses and century-old reputations to cryptography and tokens.

“The Wolf of Wall Street” has already conducted a very straightforward “dissection” of the rental business: no one knows whether assets will rise or fall; traders are always playing a paper game, but those providing services receive cash in hand.

From a god’s-eye perspective, this is not a choice between two companies but a structural shift for the entire industry.

Binance launched Crypto-as-a-Service last September, allowing licensed institutions to use its matching, custody, and compliance back-end while retaining their own brand and customers. JPMorgan‘s deposit token JPMD began migrating to the institutional permissioned chain Canton Network this year. No one wants to be the next retail-facing exchange; everyone is scrambling for back-end, white-label, custody, and clearing settlement layers. The regulatory shift has issued a passport for this migration; the GENIUS Act has landed, the MiCA transition period has ended, and the SEC has issued its first official statement on tokenized securities, turning licenses from a burden into a moat.

Sui and LayerZero’s choice to launch infrastructure that directly uses the chain as the settlement layer for all financial products at this moment may not be a coincidence but rather a precursor to what the U.S. will do next.

What will happen next has already been previewed by the internet.

In the 1990s, engineers laying TCP/IP were the heroes of that era; today, no one remembers those letters while scrolling through short videos. GPS was once cutting-edge technology at the Pentagon; today, it is just a default blue dot in ride-hailing apps. Cloud computing was a radical bet in 2006; today, it is called “water, electricity, and gas.” The most successful moment for technology is precisely when no one talks about it anymore. The technology that truly changes the world ultimately becomes invisible.

On the day when financial infrastructure is truly built, users will not know which chain their U.S. treasury token is settled on, just as today no one cares which server in DTCC handles stock settlements. Bank wealth managers will not explain Sui’s object model to clients, just as no broker will explain the hedging rules of central counterparties to clients. The names of public chains will disappear from the public eye, but their ledgers will sink beneath every transaction, like riverbeds submerged under river water. The ultimate fate of public chains is not the world computer but the world clearinghouse, and it is a clearinghouse that no one looks at.

This is probably the ultimate fate of the water sellers. Most names from the California Gold Rush have been forgotten, but some became wealthy selling water, some selling shovels, and some turned canvas pants into a business that has lasted for two hundred years.

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