Blockchains are a new settlement and ownership layer, one that’s programmable, open, and global by default, unlocking new forms of entrepreneurship, creativity, and infrastructure. Growth in monthly active crypto addresses is generally tracking the internet’s growth to a billion users, stablecoin transaction volume is outpacing traditional fiat volume, legislation and regulation are finally catching up, and crypto companies are getting acquired or going public.

This confluence of regulatory clarity and competitive pressure — along with the clear improvements to business outcomes that blockchains offer and blockchains’ technological maturity — has created a sense of urgency across traditional finance (TradFi) to embrace the technologies as core infrastructure. Financial incumbents are rediscovering blockchains as tools for transparent, secure value transfer that can future-proof TradFi institutions and unlock new sources of growth.

Executive teams are asking a new question: not if, or when, but how now to make blockchains matter to their business. That question is driving a wave of exploration, resource allocation, and organizational realignment. As institutions begin placing real bets in this space, key considerations arise, converging around two themes:

1. The business case for a blockchain-enabled strategy, and
2. The technical building blocks that will bring strategy to life.

This playbook is one way to help answer those questions. It’s not a comprehensive survey of every use case or protocol. Instead, it’s a guide for moving from zero to one, laying out the critical early choices, sharing emerging patterns, and helping frame blockchains not as symbolic hype, but as core infrastructure — one that, when used well, can future-proof TradFi institutions and unlock new sources of growth.

Because banks, asset managers, and fintechs (including what’s increasingly known as PayFi) differ in how they interact with end users, legacy infrastructure constraints, and regulatory requirements, we’ve organized the sections below to give leaders in those industries a grounded, actionable understanding of how blockchains can be applied in their world and what it takes to go from whiteboard to working product.

Banks

Banks appear modern but run on ancient software — mostly COBOL, a programming language from the 1960s, which, while old, holds together systems that are compliant with banking regulations. While customers click slick web pages or tap on mobile apps, those front ends just translate their clicks into commands for decades-old COBOL programs. Blockchains can be a way to upgrade these systems without compromising regulatory integrity.

By integrating and building on blockchains, banks can take themselves out of the “book store with a website” era of the internet and move to a model that looks more like Amazon: modern databases and better interoperability standards. Tokenized assets — whether stablecoins, deposits, or securities — will likely play a central role in future capital markets. Adopting the right systems to avoid being displaced by this shift is just a starting point. Banks really have to own the shift.

On the retail side, banks are exploring ways to give their clients exposure to crypto via access to bitcoin and other digital assets through their affiliated broker-dealers as part of the total client experience, whether indirectly through ETPs or, eventually, directly given the repeal of the SEC’s accounting rule SAB 121 (which had effectively blocked U.S. banks from participating in digital custody). But there’s greater opportunity and utility on the institutional/back office side, which has three emerging use cases: tokenized deposits, reevaluating settlement infrastructure, and collateral mobility.

Use cases

Tokenized deposits represent a foundational shift in how commercial bank money can move and function. Far from being a speculative concept, tokenized deposits (and similarly deposit tokens) are already live, with JPMorgan’s JPMD token and projects like Citi’s Token Services for Cash. These are not synthetic stablecoins or a digital asset backed by treasuries — they’re backed by real fiat money, held in commercial bank accounts, represented 1:1 as regulated tokens that can be transacted across private or public-permissioned blockchains (more on this below).

Tokenizing deposits can reduce settlement latency from days to minutes or seconds for cross-border payments, treasury management, trade finance, and more. Banks benefit from lower operational overhead, reduced reconciliation, and greater capital efficiency.

Banks are also actively reevaluating settlement infrastructure. Several Tier 1 banks are participating in distributed ledger settlement trials — often in collaboration with central banks or blockchain-native players — to address the inefficiencies of “T+2” systems. For example, Matter Labs, the parent company of zkSync (an Ethereum Layer 2 or L2 that optimizes Ethereum’s performance by processing transactions offchain), is partnering with global banks to showcase near-real-time settlement in cross-border payments and intraday repurchase agreement (repo) markets. The business impact includes improved capital efficiency, better liquidity usage, and reduced operational overhead.

Blockchains and tokens can also enhance banks’ ability to quickly and efficiently move assets across business units, geographies, and counterparties — what’s known as collateral mobility. The Depository Trust and Clearing Corporation (DTCC), which provides clearing, settlement, and custody in traditional U.S. markets, recently launched their Smart NAV pilot, aimed at modernizing collateral mobility through tokenizing Net Asset Value data. The pilot showcased how collateral can behave more like liquid, programmable money — not just an operational upgrade for banks but an upgrade that can support their broader strategy. Improved collateral mobility allows banks to lower capital buffers, access broader pools of liquidity, and compete more aggressively in capital markets with a leaner balance sheet.

For all of these use cases — tokenized deposits, reevaluating settlement infrastructure, and collateral mobility — banks will have to make key decisions, starting with whether to use a private/permissioned blockchain or public blockchain networks.

Picking a blockchain

While banks were previously prevented from touching public blockchain networks, recent guidance from banking regulators including the Office of the Comptroller of the Currency (OCC) have opened up the possibilities. Partnerships such as R3 Corda’s integration with Solana highlight this. The partnership will enable permissioned networks on Corda to settle assets directly onto Solana.

Using tokenized deposits as the use case, we’ll discuss the early choices related to taking a product to market, from picking a blockchain to level of decentralization and more. While there are many ways to think about picking a blockchain, building on a decentralized public blockchain offers several product benefits.

• It provides a neutral developer platform that anyone can contribute to, increasing trust and extending the ecosystem supporting your product.
• Because anyone can contribute, it speeds product iteration through the ability to use, adapt, and combine others’ building blocks (aka composability).
• It increases platform trust. The best developers are most interested in building on decentralized chains that won’t suddenly change the rules on them, because it ensures their products will continue to be good businesses.

By contrast, centralized public blockchains, where the owners can change the rules or censor certain applications, and non-programmable blockchains, don’t benefit from composability.

While blockchains are currently slower than centralized internet services, their performance has increased drastically over the past few years. L2 rollups (offchain scaling solutions of varying flavors) on Ethereum, like Coinbase’s Base, and faster Layer 1 (L1) blockchains, like Aptos, Solana and Sui, have made it possible to send transactions for under a cent with less than a second of latency.

Level of decentralization

Banks must also consider the appropriate level of decentralization for their specific use case. The Ethereum blockchain protocol and community prioritizes making sure anyone on earth can independently validate each transaction on the chain. Solana, meanwhile, relaxed that requirement by increasing the hardware required for validation, but they also drastically increased the performance of the chain.

Banks should also contemplate the degree of centralized influence, even when it comes to public blockchains. For example, if the total number of validators in the network is relatively small and that network’s foundation controls a relatively large percent of the validator set, then that chain would experience significant centralized influence, making it less decentralized than it may seem. Similarly, if an entity associated with the public network (like a foundation or labs entity) holds a significant amount of tokens, they could use those tokens to influence or control decisions about the network.

Privacy considerations

Privacy and confidentiality are critical considerations for any bank-related transaction, partly by law. The rise and use of zero-knowledge proofs can help shield sensitive financial data even on public blockchains. These systems work by proving they know a specific piece of information that the institution needs without revealing the contents of the specific information itself — for instance, that a person is over 21, but not their birthdate or birthplace.

Zero knowledge–based protocols (such as zkSync) can be used to enable private onchain transactions. To maintain compliance with regulations, banks need to also be able to view and roll back transactions as needed. This is where a “view key” (developed by Aleo, a confidential L1) maintains privacy but still allows regulators and auditors to view transactions as needed.

Solana’s token extensions offer compliance features that allow for confidential features. Avalanche L1s have the unique capability to enforce any validation logic that can be encoded via smart contracts.

Many of these features apply to stablecoins as well. One of the most popular blockchain-based applications today, stablecoins are already one of the cheapest ways to send a dollar. But besides cutting fees, they’re also permissionlessly programmable and extensible — so any one can integrate globally available, fast money into their product using stablecoin rails while also building new fintech features. Post-GENIUS Act, banks need transparency in both transactions and reserves for stablecoins. Companies such as Bastion and Anchorage enable both transaction and reserve transparency.

Custody decisions

When considering a strategy for custody — who is managing and storing the crypto assets — most banks look to partner instead of custodying their own crypto. Some custodian banks, such as State Street, are looking to offer their own crypto custody services.

But if partnering with a custodian, banks should consider its: licenses and certifications, security posture, and other operational practices.

For licenses and certifications, custodians should adhere to a regulatory framework with things like a banking or trust charter (federal or state), virtual currency business license, state-level transmitter licenses, as well as certifications such as SOC 2 compliance. For example, Coinbase operates its custody business via a NY Trust Charter, as does Fidelity through Fidelity Digital Asset Services; and Anchorage operates its custody business via a federal OCC charter.

For security, custodians should also have robust encryption; hardware security modules (HSMs), which prevent unauthorized access, extraction, or tampering; and multi-party computation (MPC) processes, which split private keys across multiple parties for greater security. These measures help to protect against hacks and operational failures.

For their operations, custodians should also employ other best practices including asset segregation to ensure client assets are protected in the event of insolvency; transparent proof-of-reserves, which allows users and regulators to verify that reserves match liabilities; and regular third-party audits to fraud, errors, or security breaches. For instance, Anchorage uses biometric multi-factor authentication and geographically distributed key sharding for enhanced governance. Finally, custodians should have clear disaster recovery plans to ensure business continuity.

Where do wallets come into custody decisions? Banks increasingly recognize that crypto wallet integrations are a strategic necessity to stay competitive with auxiliary providers like neobanks and centralized exchanges. For institutional customers — like hedge funds, asset managers, or corporations — wallets are positioned as enterprise-grade tools for custody, trading, and settlement. For retail customers — like small businesses or individuals — wallets are largely obfuscated as an embedded feature enabling access to digital assets. In both cases, wallets aren’t just simple storage solutions; they enable secure, compliant access to assets like stablecoins or tokenized treasuries via private keys.

“Custodial wallets” and “self-custody wallets” represent two ends of the spectrum in terms of control, security, and responsibility. Custodial wallets are managed by a third party service which holds keys on the users behalf, as opposed to the user managing their own keys through self-custody. Understanding the difference is crucial for banks aiming to meet varying demands — from the compliance-heavy needs of institutional customers to the autonomy-seeking desires of sophisticated customers to the convenience-seeking preferences of mainstream retail customers. Custody providers like Coinbase and Anchorage have integrated wallet offerings suited to address institutional needs, while companies like Dynamic and Phantom have complementary offerings that help modernize banking apps.

Asset managers

For asset managers, blockchains can expand distribution, automate fund operations, and tap into onchain liquidity.

Tokenized funds and real-world assets (RWAs) offer new wrappers that make asset-management products more accessible and composable — particularly to a global investor base that increasingly expects 24/7 access, instant settlement, and programmable trading. At the same time, onchain rails can dramatically simplify back-office workflows, from NAV calculations to cap table management. The result? Lower costs, faster time to market, and a more differentiated product suite — advantages that compound in competitive markets.

Asset managers have been focused on increasing distribution and liquidity for the products that most immediately attract capital from a digitally native audience. By listing tokenized share classes on public blockchains, asset managers can reach new classes of investors. And they can do so without compromising their traditional transfer-agent recordkeeping. This hybrid model preserves regulatory compliance while tapping into new markets, features, and functions that are unique to blockchains.

Blockchain innovation trends

Tokenized U.S. Treasuries and money market funds have grown from nearly zero to tens of billions in AUM across products like BlackRock’s BUIDL (BlackRock USD Institutional Digital Liquidity Fund) and Franklin Templeton’s BENJI (represents shares of the Franklin OnChain U.S. Government Money Fund). These instruments function like yield-bearing stablecoins, but with institutional-grade compliance and backing.

As a result, asset managers are able to serve a digitally native investor by delivering more flexibility through fractionalization and programmability (e.g., auto-rebalancing baskets or yield tranches).

On-chain distribution platforms are becoming more sophisticated. Asset managers are increasingly working with blockchain-native issuers and custodians — like Anchorage, Coinbase, Fireblocks, and Securitize — to tokenize fund shares, automate investor onboarding, and expand their reach across geographies and investor classes.

Onchain transfer agents can manage KYC/AML, investor whitelists, transfer restrictions, and cap tables natively via smart contracts — reducing legal and operational overhead for fund structures.

Leading custodians ensure tokenized fund shares are securely custodied, transferable, and compliant — increasing options for greater distribution optionality while also meeting internal risk and audit standards.

Issuers want to instantiate their funds as decentralized finance (DeFi) primitives and access onchain liquidity, to expand their total addressable market (TAM) and increase their assets under management (AUM). By listing tokenized funds on protocols like Morpho Blue or integrating with Uniswap v4, asset managers can tap new liquidity. Marking the first time a traditional asset manager’s product became composable within DeFi, BlackRock’s BUIDL fund was added as a yield-bearing collateral option on Morpho Blue in mid-2024. More recently, Apollo also integrated its tokenized private credit fund (ACRED) into Morpho Blue, introducing a new yield enhancing strategy not possible in an offchain world.

The net result of partnering with DeFi is that asset managers can evolve from expensive and slow fund distribution to direct-to-wallet access all while creating new yield opportunities and capital efficiency for investors.

In issuing a tokenized real-world asset (RWA), asset managers have largely moved past the conversation of permissioned vs. public networks. In fact, they are clearly incentivized toward a public, multichain strategy to achieve broader distribution of their products.

For example, Franklin Templeton’s tokenized money market fund (represented via the BENJI token) is distributed across Aptos, Arbitrum, Avalanche, Base, Ethereum, Polygon, Solana, and Stellar. By partnering with well-known public networks, the liquidity profile of these products also improves from the blockchains’ respective ecosystem partners — including centralized exchanges, market makers, and DeFi protocols. By facilitating seamless omnichain connectivity and settlement, companies like LayerZero enable these multi-chain strategies.

Tokenizing real world assets (RWA)

The trend we’ve observed is the tokenization of financial assets — like government securities, private-sector securities, and equities; and not real assets like real estate or gold (although those could be tokenized as well and have been).

In the context of tokenized traditional funds — like money market funds backed by U.S. Treasuries or similar stable assets — the distinction between a “wrapped token” and a “native token” is important. The distinction revolves around how the token represents ownership, where the primary record of shares is maintained, and the degree of integration with the blockchain. Both models advance tokenization by bridging traditional assets with blockchain, but wrapped tokens prioritize compatibility with legacy systems, while native tokens push for full onchain transformation. To illustrate the difference between a wrapped vs. native token, here are two examples.

• BUIDL is a wrapped token. It tokenizes shares of a traditional money market fund invested in cash, U.S. Treasury bills, and repurchase agreements. The ERC-20 BUIDL tokens represent these shares digitally for onchain circulation, but the underlying fund operates as a regulated offchain entity under U.S. securities laws. Ownership is whitelisted for qualified institutional investors, with minting/redemption handled through Securitize and BNY Mellon as custodian.
• BENJI is a native token representing shares in the Franklin OnChain U.S. Government Money Fund (FOBXX), a $750 million fund invested in U.S. government securities. Here, the blockchain acts as the official system of record for processing transactions and recording ownership — making BENJI native rather than a wrapper. Investors can subscribe via USDC conversion through the Benji Investments app or institutional portal, with tokens enabling direct P2P transfers onchain.

As part of issuing tokenized funds, asset managers likely need a digital transfer agent that adapts the traditional transfer agent functions to a blockchain environment. Many work with Securitize, which helps with the issuance and transfer of the tokenized funds while maintaining accurate and compliant books and records. These digital transfer agents don’t just enable more efficiencies through smart contracts, they also open the aperture of what’s possible for a traditional asset. For example, Apollo’s ACRED (a wrapped token providing access to Apollo’s offchain Diversified Credit Fund) is enabled with DeFi integrations that optimize its lending and yield profiles. Here, Securitize facilitates the creation of sACRED (an ERC-4626-compliant version of ACRED) and investors can use Morpho (a decentralized lending protocol) to engage in leveraged looping strategies.

While wrapped tokens require a hybrid system to reconcile onchain actions with offchain records, others are able to take it one step further with onchain transfer agents for native tokens. Franklin Templeton developed its own proprietary, in-house onchain transfer agent in close collaboration with regulators, allowing for instant settlement and 24/7 transfers of BENJI. Other examples include Opening Bell, a collaboration between Superstate and Solana, who also have an in-house, onchain transfer agent that allows for 24/7 transfers.

Where do wallets fit? Asset Managers shouldn’t treat wallets — how customers access their products — as an afterthought. Even if they choose to “outsource” issuance and distribution to transfer agents and custody providers, asset managers need to be careful about how they choose and integrate wallets. Those choices will shape everything from investor adoption to regulatory compliance.

It’s common for asset managers to use a wallet-as-a-service that will spin-up investor wallets for them. These wallets are often custodial/hosted, so the service automatically enforces KYC and transfer-agent restrictions. But even if the transfer agent “owns” the wallet, the asset managers still need to embed those APIs into their investor portals — selecting partners whose software development kits and compliance modules map to their product roadmap.

Other key considerations for tokenized funds fall under fund operations. Asset managers will need to decide on levels of automation with respect to net asset value (NAV) calculations, like using smart contracts for intra-day transparency versus offchain audits for final daily NAV. A decision like this will depend on the type of token, type of underlying assets, and specific fund type compliance requirements. Redemptions are another key consideration, since tokenized funds allow for faster exits than legacy systems but with built-in limitations for liquidity management. In both cases, asset managers tend to rely on their transfer agent to either advise on or integrate with key providers like oracles, wallets, and custodians.

As previously mentioned in the Custody Decisions section, consider the regulatory status of the custodian selected. Qualified Custodians are required under the SEC’s Custody Rule, which requires them to safeguard client assets.

Fintechs

Financial technology companies, especially those operating in payments and consumer finance (aka “PayFi”), are using blockchains to build faster, cheaper, and more globally scalable services. In a crowded market where speed to innovation is critical, blockchains provide out-of-the-box infrastructure for identity, payments, credit, and custody — often with far fewer intermediaries.

Fintechs aren’t trying to replicate the existing system — they’re trying to leapfrog it. This makes blockchain especially compelling for cross-border use cases, embedded finance, and programmable money applications. Examples include Revolut’s virtual cards that allow users to spend cryptocurrencies on everyday purchases; or Stripe’s Stablecoin Financial Accounts, which allows business users to hold account balances in stablecoins in 101 countries.

For these companies, blockchains are not about infrastructure improvements or efficiency; they’re about building something that couldn’t exist before.

Tokenization lets fintechs embed real-time, 24/7 global payments directly onchain while also unlocking new fee-based services around issuance, conversion, and money movement. Programmable tokens enable native features like staking, lending, and liquidity provisioning within their apps, deepening user engagement and creating diversified revenue streams. All of this helps retain existing customers and win new ones in an increasingly digital world.

We see key trends emerging around stablecoins, tokenization, and verticalization.

Three key trends

Stablecoin payment integration is modernizing payment rails, offering 24/7/365 transaction settlement unlike traditional payment networks that are limited by banking hours, batch processing and jurisdictions. By bypassing legacy card networks and intermediaries, stablecoin rails dramatically reduce interchange, FX, and processing fees — especially in peer-to-peer and B2B use cases.

With smart contracts, companies can open up new monetization models by embedding things like conditions, refunds, royalties and payment splits directly into the transaction layer. This has the potential to transform companies like Stripe and PayPal from aggregators of bank rails into platform-native issuers and processors of programmable cash.

Global remittance remains plagued by high fees, long delays, and opaque FX spreads. Fintechs are turning to blockchain settlement to rewire how cross-border value moves. Using stablecoins (e.g., USDC on Solana or Ethereum, or USDT on Bitcoin), companies can drastically reduce remittance fees and settlement times. For example, both Revolut and Nubank have partnered with Lightspark to enable real-time, cross-border payments on Bitcoin’s Lightning Network.

By holding value in wallets and tokenized assets rather than routed through bank rails, fintechs gain greater control and speed, especially in corridors with unreliable banking systems. For players like Revolut and Robinhood, this positions them as global money movement platforms, not just a neobank wrapper or trading app. For global payroll providers such as Deel and Papaya Global, offering employee payout in crypto or stablecoins is an increasingly popular option as it allows for instant payout.

Crypto-native fintechs are building down the stack, launching their own blockchains (L1s or L2s) or acquiring companies that reduce dependency on third-party providers. Using Coinbase’s Base, Kraken’s Ink, and Uniswap’s Unichain — all built on the OP Stack — is akin to going from an app on Apple iOS to owning the mobile operating system with all the platform leverage it entails.

By launching their own L2, a fintech like Stripe, SoFi, or PayPal, could capture value at the protocol level to complement their frontend products. First-party chains also allow for tailored performance, whitelisting, KYC modules, and so on — key for regulated use cases and enterprise clients.

Launching a “payments” specific chain on Optimism, an Ethereum L2 blockchain, via their OP Stack — a modular, open-source software framework — could help move a fintech from a walled garden to a more diverse, open marketplace of financial innovation. As a consequence, other developers and companies would contribute to its growth while generating network revenue.

As a first step, many fintechs start by offering a basic set of services, including crypto buy/sell/send/receive/hold for a small set of tokens, and can gradually layer on other services like yield and lending. SoFi recently announced its plans to reenable crypto trading, following its departure from the space in 2023 due to regulatory constraints. One of the benefits of offering crypto trading is that SoFi allows its customers to participate in global remittance, as discussed above, but other possibilities await — for example, a tie-in to their main lending business but using onchain lending (similar to Morpho’s bitcoin-backed lending partnership with Coinbase) to improve terms and transparency.

Building proprietary blockchains

A number of crypto-native “fintechs” — Coinbase, Uniswap, World — have built their own blockchains to customize infrastructure for their specific products and users, reduce costs, enhance decentralization, and capture more value within their ecosystems. With Unichain, for example, Uniswap can consolidate liquidity, reduce fragmentation, and make DeFi faster and more efficient. The same verticalization strategy could make sense for fintechs (as we’ve seen with Robinhood’s recent L2 announcement) who desire to enhance user experiences while internalizing more value. For a payments company, a proprietary, owned chain would likely be UX-first infrastructure — such as one that abstracts or hides the crypto-native user experience) — with a greater focus on offerings like stablecoins and features like compliance.

Here are some key considerations on building proprietary blockchains, with different tradeoffs at different levels of complexity.

An L1 is the heaviest lift, most complicated to build, and benefits the least from the network effects of any partnership. However, an L1 also would give a fintech company the greatest control over the scalability, privacy, and user experience. For example, a company like Stripe might embed native privacy features to comply with global regulations or customize the consensus mechanism for ultra-low latency in high-volume merchant payouts.

One of the core challenges in building a new L1 is bootstrapping the economic security of the chain — attracting a large amount of staking capital to secure the network. EigenLayer democratizes access to high-quality security. By shifting the paradigm from isolated, capital-heavy L1s to a shared, efficient model, such services help accelerate innovation and lower failure rates in blockchain development.

An L2 is often a really nice middle ground, because it allows the fintech company to operate with a single sequencer and provide some level of control. A sequencer collects incoming user transactions and decides the order in which they should be processed and then submitted to the L1 for final verification and storage. A single sequencer design leads to faster development and can deliver more control over operations to ensure reliability, fast performance, and the ability to capture revenue. It’s also much easier to create an L2 on Ethereum by working with rollup-as-a-service (RaaS) providers, or established L2 federations like Optimism’s Superchain, which offer shared infrastructure, standards, and community resources.

A company like PayPal could build a “payments superchain” on the OP Stack to optimize their PYUSD stablecoin for real-time use cases like in-app Venmo transfers. They could also enable seamless bridging of PYUSD across Optimism’s Superchain ecosystem, initially using a centralized sequencer for predictable fees (e.g., under $0.01/tx) but while still inheriting Ethereum’s security. Moreover, they might elect to work with a RaaS provider like Alchemy (and their partner Syndicate) to deploy quickly — potentially in weeks vs months or years for an L1.

The easiest path is deploying smart contracts on an existing blockchain, which companies like PayPal have pursued already. Chains like Solana with established scale, user bases, and unique assets are particularly attractive for fintech companies looking to launch on an existing L1.

Permissioned versus permissionless

How permissionless should a fintech’s application and/or chain be? The superpower of blockchains is composability, the ability to combine and remix protocols together in service of making a whole greater than the sum of its parts.

If an application or chain is permissioned, then composability becomes much harder, and you’re much less likely to see novel and interesting applications develop emergently. In the PayPal example, electing to build a permissionless chain is not just aligned with broader fintech trends toward open ecosystems but also allows PayPal to monetize its competitive moat. Global developers would have a better chance of attracting users to their applications by inheriting PayPal’s compliance layers; more users drives more network activity drives more value capture for PayPal.

Unlike L1 blockchains (like Ethereum), where validators handle consensus and ordering directly, L2s offload much of this work to the sequencer to achieve higher throughput while still inheriting the L1’s security properties (and benefits). As mentioned above, the sequencer represents a significant “control” point, and single sequencer rollups like Soneium offer an interesting path forward whereby the operator can impact the latency of transactions and discourage specific transactions.

Building on a modular framework (like the OP Stack) would not only drive incremental revenue but also extend the utility of other core products. In the case of PayPal and its PYUSD stablecoin, an owned L2 would not just generate sequencer revenue but also tie the chain’s economics to PYUSD. As the initial sequencer operator, PayPal could capture a portion of transaction fees (also referred to as “gas fees”) similar to how Base, Coinbase’s OP Stack L2, earns from its sequencer. By modifying the OP Stack’s gas payment to accept PYUSD, PayPal could offer “free” transactions to existing PayPal users (e.g., abstracting fees) and increase the velocity of use cases like Venmo transfers and cross-border remittances. Similarly, PayPal could stimulate developer activity by offering low or zero-cost fees but then charge a moderate premium for integrations like PayPal wallet APIs or compliance oracles.

Banks, asset managers, and fintechs have questions about using blockchains: Given how quickly the world of crypto is moving, how can they understand the technology and the opportunities it offers? Here are our broad lessons:

• Start with client segmentation to tailor solutions. Not all clients are the same — institutional players demand compliance-heavy, custodial setups, while retail users generally prioritize user-friendly, self-custodial options for everyday access.
• Treat security and compliance as non-negotiables. Virtually all counterparties, be it regulators or clients, will expect you to.
• Leverage partnerships for expertise and speed. You don’t need to build everything in house. Collaborate with subject matter experts and partners to decrease time-to-market and tap innovative solutions to deliver new revenue opportunities.

Blockchains can — and should — be core infrastructure that will future proof TradFi institutions while leading them to new markets, new users, and new revenue.

Acknowledgements: The authors would like to thank Sonal Chokshi, Tim Sullivan, Chris Dixon, Ali Yahya, Arianna Simpson, Anthony Albanese, Eddy Lazzarin, Sam Broner, Liz Harkavy, Christian Crowley, Michele Korver, and David Sverdlov for their assistance, comments and suggestions.

Pyrs Carvolth is a Business Development Lead on the a16z crypto go-to-market team, helping grow the a16z corporate network and supporting a16z crypto portfolio companies. He previously led web3 at DraftKings and worked in cash equities and derivatives at Jefferies.

Maggie Hsu is the Head of Go-to-Market for a16z crypto. She previously led go-to-market for Amazon Managed Blockchain at Amazon Web Services, and before that led business development for AirSwap, a decentralized exchange. Maggie has held executive positions at Zappos.com and Hilton Worldwide. She was also a consultant at McKinsey and Company.

Guy Wuollet is a partner on the a16z crypto investment team. He focuses on investing across crypto at all layers of the stack. Prior to joining a16z, Guy worked on independent research in concert with Protocol Labs. His work focused on building decentralized networking protocols and upgrading Internet infrastructure.

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the current or enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.

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