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Blockchain is a new layer for settlement and ownership that is programmable, open, and inherently global, unleashing new forms of entrepreneurship, creativity, and infrastructure. Today, the growth rate of monthly active addresses in cryptocurrency is nearly on par with the growth rate of internet users, the trading volume of stablecoins is surpassing that of traditional fiat currencies, and legislation and regulation are finally catching up, with crypto companies being acquired or going public.

As regulation becomes clearer and competitive pressures mount, along with significant improvements in business outcomes brought by blockchain and the maturity of blockchain technology, traditional finance (TradFi) is urgently needing to embrace blockchain technology as a core infrastructure. Financial institutions are rediscovering the potential of blockchain as a transparent and secure value transfer tool, which can provide traditional financial institutions with a "ticket to the future" and uncover new sources of growth.

As a result, executive teams in traditional finance are no longer asking "if" or "when," but are starting to ask "how" to make blockchain essential to their business. This question is driving a wave of exploration, resource allocation, and organizational restructuring in traditional finance. As various institutions begin to make real investments in this area, several key considerations arise, primarily revolving around the following two themes:

• The business case for blockchain-enabled strategies
• The technological foundations for implementing the strategy

This guide aims to help answer these questions. It is not a comprehensive overview of all use cases or protocols, but rather a guide from zero to one, outlining key early choices, sharing emerging patterns, and helping businesses understand how to build blockchain as core infrastructure rather than symbolic hype.

Since banks, asset management companies, and fintech firms (including the increasingly well-known PayFi) differ in their interactions with end users, limitations of traditional infrastructure, and regulatory requirements, we divide the following sections to help these industries gain a solid and actionable understanding of how blockchain can be applied in their fields and the conditions needed to go from 0 to actual products.

Banks

Banks may seem modern, but the software they run is outdated—primarily COBOL, a programming language that dates back to the 1960s. While this language is old, it can integrate systems that comply with banking regulations. When customers click on beautifully designed web pages or mobile applications, these front ends merely convert their clicks into instructions for COBOL programs from decades ago. Blockchain can serve as a way to upgrade these systems without compromising regulatory integrity.

By building or integrating blockchain, banks can shed the "website-style bookstore" label of the internet and shift towards a model more akin to Amazon, with modern databases and better interoperability standards. Tokenized assets, whether stablecoins, deposits, or securities, could play a central role in future capital markets. Adopting the right systems to avoid being replaced by this transformation is just the beginning. Banks must truly take control of this change.

On the retail side, banks are exploring ways to allow customers to access Bitcoin and other digital assets through their affiliated brokers as part of the overall customer experience, either through exchange-traded products (ETPs) indirectly or directly after the SEC accounting standard SAB 121 (which effectively prevented U.S. banks from participating in digital custody) is repealed. However, on the institutional/back-end side, there are greater opportunities and utilities, with three emerging use cases: tokenized deposits, reassessing settlement infrastructure, and collateral liquidity.

Use Cases

Tokenized deposits represent a fundamental shift in how commercial banks manage and operate funds. Tokenized deposits are far from a speculative concept; they have already been implemented, such as JPMorgan's JPMD token and Citibank's cash token service. These are not synthetic stablecoins or digital assets backed by the treasury; they are backed by real fiat currency held in commercial bank accounts and represent a 1:1 ratio of regulated assets that can be traded across private or public blockchains.

Tokenizing deposits can reduce settlement delays for cross-border payments, cash management, trade financing, and other businesses from days to minutes or seconds. Banks will reap lower operational costs, fewer reconciliations, and higher capital efficiency.

Banks are also actively reassessing their settlement infrastructure. Some tier-one banks are participating in distributed ledger settlement trials (often in collaboration with central banks or blockchain-native participants) to address the inefficiencies of the "T+2" system. For example, Matter Labs, the parent company of zkSync (Ethereum Layer 2), is working with global banks to provide near-real-time settlement for cross-border payments and intraday repurchase agreement (repo) markets. This business helps improve capital efficiency, enhance liquidity utilization, and reduce operational costs.

Blockchain and tokens can also enhance banks' ability to transfer assets quickly and efficiently across business units, geographies, and counterparties, known as collateral liquidity. The U.S. Depository Trust & Clearing Corporation (DTCC), which provides clearing, settlement, and custody services for traditional U.S. markets, recently launched a Smart NAV pilot project aimed at modernizing collateral liquidity through the tokenization of net asset value data. This pilot project demonstrates the transformation of collateral into liquid programmable currency, which not only upgrades bank operations but also supports their broader future strategy. Enhanced collateral liquidity allows banks to lower capital buffers, access a broader liquidity pool, and a more streamlined balance sheet makes them more competitive in capital markets.

To achieve all these use cases (tokenized deposits, reassessing settlement infrastructure, and collateral liquidity), banks must first make a key decision: whether to use a private/permitted blockchain or a public blockchain network.

Choosing a Blockchain

While banks were previously prohibited from accessing public blockchain networks, recent guidance from banking regulators, including the Office of the Comptroller of the Currency (OCC), has opened up more possibilities. The integration of R3 Corda with Solana is an example of this, allowing the permissioned network on Corda to settle assets directly on Solana.

For the use case of tokenized deposits, while there are many ways to choose a blockchain, building products on a decentralized public blockchain can offer several advantages:

• It provides a neutral developer platform where anyone can contribute, enhancing trust and expanding the ecosystem supporting company products;
• Since anyone can contribute code, product iteration can be accelerated through the use, adaptation, and combination of others' modules (i.e., composability);
• It enhances platform trust. The best developers are most interested in building on decentralized blockchains because the rules on these blockchains do not change suddenly, ensuring their products can remain profitable.

In contrast, centralized blockchains (where owners can change rules or censor certain applications) and non-programmable blockchains cannot benefit from composability.

Although the current speed of blockchains is slower than centralized internet services, their performance has significantly improved over the past few years. Layer 2 rollups on Ethereum (various types of off-chain scaling solutions), such as Coinbase's Base, and faster Layer 1 blockchains like Aptos, Solana, and Sui, have achieved transaction costs below 1 cent and latencies of less than 1 second.

Degree of Decentralization

Banks must also consider the appropriate degree of decentralization based on their specific use cases. The Ethereum blockchain protocol and community prioritize ensuring that anyone on Earth can independently verify every transaction on the chain. Meanwhile, Solana relaxes this requirement by increasing the hardware needed for validation while significantly enhancing blockchain performance.

Even in the realm of public chains, banks should consider the extent of centralization influence. For example, if the total number of validators in the network is relatively small, and the foundation controlling the network holds a relatively large proportion of validators, then the chain will be subject to centralization influence, making its degree of decentralization superficial. Similarly, if entities associated with the public chain (such as foundations) hold a large number of tokens, they may use these tokens to influence or control network decisions.

Privacy Considerations

Privacy and confidentiality are key considerations for any bank-related transaction. The rise and use of zero-knowledge proofs can help protect sensitive financial data, even on public chains. These systems work by proving that they know specific information required by institutions without revealing the actual content of that information. For example, proving that someone is over 21 years old without knowing their date of birth or place of birth.

Zero-knowledge-based protocols (such as zkSync) can be used to enable private transactions on the chain. To maintain compliance, banks also need to be able to view and roll back transactions as needed. At this point, a "view key" (developed by Aleo, a confidential L1 key) can protect privacy while still allowing regulators and auditors to view transactions as needed.

Solana's token expansion offers compliance features that allow for confidentiality. Avalanche's Layer 1 can enforce any verification logic encoded through smart contracts.

Many of these features also apply to stablecoins. Stablecoins are one of the most popular blockchain applications today and have become one of the cheapest ways to transfer dollars. In addition to lowering fees, they also offer permissionless programmability and scalability, allowing anyone to integrate globally available fast funds into their products while building new fintech functionalities. After the GENIUS Act, banks need transparency in stablecoin transactions and reserves, with companies like Bastion and Anchorage achieving transparency in transactions and reserves.

Custody Decisions

When considering custody strategies (who will manage and store crypto assets), most banks seek partners rather than self-custodying cryptocurrencies. Some custody banks, such as State Street, are offering their own cryptocurrency custody services.

However, if partnering with a custody institution, banks should consider its licenses and certifications, security posture, and other operational practices.

In terms of licenses and certifications, custody institutions should comply with regulatory frameworks, such as bank or trust charters (federal or state), virtual currency business licenses, state-level trading licenses, and SOC 2 compliance certifications. For example, Coinbase operates its custody business under a New York trust charter, Fidelity operates its custody business through Fidelity Digital Assets; Anchorage operates its custody business under a federal OCC charter.

In terms of security, custody institutions should also have strong cryptographic technology; hardware security modules (HSM) to prevent unauthorized access, extraction, or tampering; and multi-party computation (MPC) processes that split private keys among multiple parties to enhance security. These measures help prevent hacking and operational failures.

In terms of operations, custody institutions should also adopt other best practices, including asset segregation to ensure protection in the event of client asset bankruptcy; a transparent reserve proof mechanism that allows users and regulators to verify that reserves match liabilities; and regular third-party audits to detect fraud, errors, or security vulnerabilities. For example, Anchorage uses biometric multi-factor authentication and geographically distributed key sharding to enhance governance. Finally, custody institutions should establish clear disaster recovery plans to ensure business continuity.

What role do wallets play in custody decisions? Banks are increasingly recognizing that crypto wallet integration is a strategic necessity to remain competitive with auxiliary providers such as neobanks and centralized exchanges. For institutional clients (such as hedge funds, asset management companies, or corporations), wallets are positioned as enterprise-grade custody, trading, and settlement tools. For retail clients (such as small businesses or individuals), wallets are largely confused as an embedded feature that allows access to digital assets. In both cases, wallets are not merely simple storage solutions; they enable secure and compliant access to assets such as stablecoins or tokenized treasuries through private keys.

“Custodial wallets” and “self-custody wallets” represent two extremes in terms of control, security, and responsibility. Custodial wallets are managed by third-party service providers who hold the keys on behalf of users, while users manage their own keys through self-custody wallets. For banks aiming to meet various needs, understanding the differences between the two is crucial—from the highly compliant needs of institutional clients to the desire for autonomy among mature clients, and the convenience preferences of retail clients. Custodial providers like Coinbase and Anchorage have already integrated wallet products to meet the needs of institutional clients, while companies like Dynamic and Phantom offer complementary products to help modernize banking applications.

Asset Management Companies

For asset management companies, blockchain can expand distribution channels, automate fund operations, and tap into on-chain liquidity.

Tokenized funds and real-world assets (RWAs) provide new packaging methods that make asset management products more accessible and combinable, especially for global investors who increasingly expect 24/7 access, instant settlement, and programmable trading. At the same time, on-chain infrastructure can simplify back-office workflows from net asset value calculations to equity structure management, resulting in lower costs, faster time-to-market, and a more differentiated product suite, advantages that will continue to compound in a competitive market.

Asset management companies have been focused on enhancing the distribution and liquidity of products that attract capital from digital-native audiences. By introducing tokenized equity classes on public chains, asset management companies can reach new investor groups without affecting their traditional transfer agent identity. This hybrid model can explore new markets, characteristics, and functionalities unique to blockchain while maintaining compliance.

Blockchain Innovation Trends

The asset management scale of tokenized U.S. Treasuries and money market funds has grown from zero to tens of billions of dollars, such as BlackRock's BUIDL (BlackRock U.S. Dollar Institutional Digital Liquidity Fund) and Franklin Templeton's BENJI (representing shares of Franklin's on-chain U.S. Government Money Fund). These tools function similarly to yield-bearing stablecoins but come with institutional-grade compliance and support.

As a result, asset management companies can offer greater flexibility through asset segmentation and programmability, thereby serving digital-native investors.

On-chain distribution platforms are becoming increasingly sophisticated. Asset management companies are increasingly collaborating with blockchain-native issuers and custodians (such as Anchorage, Coinbase, Fireblocks, and Securitize) to achieve the tokenization of fund shares, automate investor investments, and expand their coverage across geographies and investor categories.

On-chain transfer agents can natively manage KYC/AML, investor whitelisting, transfer restrictions, and equity structure tables through smart contracts, thereby reducing the legal and operational costs of fund structures. Custodians ensure the secure custody, transferability, and compliance of tokenized fund shares, increasing distribution options while meeting internal risk and audit standards.

Issuers aim to instantiate their funds as DeFi assets and gain on-chain liquidity to expand their total addressable market (TAM) and increase their assets under management (AUM). By launching tokenized funds on protocols like Morpho Blue or integrating with Uniswap v4, asset management companies can tap into new liquidity. BlackRock's BUIDL fund was added as a yield collateral option on Morpho Blue in mid-2024, marking the first time products from traditional asset management companies achieved composability in DeFi. Recently, Apollo also integrated its tokenized private credit fund (ACRED) into Morpho Blue, introducing a new yield enhancement strategy that cannot be realized in the off-chain world.

The ultimate result of collaborating with DeFi is that asset management companies can shift from expensive and slow fund distribution models to direct wallet access, while creating new yield opportunities and capital efficiency for investors.

When issuing tokenized real-world assets (RWAs), asset management companies are largely no longer entangled in choosing between permissioned networks or public chains. In fact, they are clearly leaning towards adopting public chains and multi-chain strategies for broader distribution of their products.

For example, Franklin Templeton's tokenized money market fund (represented by the BENJI token) is distributed across blockchain platforms such as Aptos, Arbitrum, Avalanche, Base, Ethereum, Polygon, Solana, and Stellar. By collaborating with well-known public chains, the liquidity of these products has also been enhanced, benefiting from their respective blockchain ecosystem partners, including centralized exchanges, market makers, and DeFi protocols. Companies like LayerZero facilitate seamless cross-chain connectivity and settlement.

Tokenization of Real-World Assets (RWAs)

The trend we observe is the tokenization of financial assets (such as government securities, private sector securities, and stocks), rather than physical assets like real estate or gold (although these assets can also be tokenized and have been tokenized).

In the context of tokenizing traditional funds (such as money market funds backed by U.S. Treasuries or similar stable assets), the distinction between “wrapped tokens” and “native tokens” is crucial. The difference lies in how tokens represent ownership, where the primary record of shares is maintained, and the degree of integration with the blockchain. Both models advance tokenization by connecting traditional assets with blockchain, but wrapped tokens prioritize compatibility with traditional systems, while native tokens are committed to achieving full on-chain conversion. To illustrate the difference between wrapped tokens and native tokens, the following two examples are provided.

• BUIDL is a wrapped token. It tokenizes shares of a traditional money market fund that invests in cash, U.S. Treasuries, and repurchase agreements. The ERC-20 BUIDL token digitally represents these shares for on-chain circulation, but the underlying fund operates as a regulated off-chain entity under U.S. securities law. Ownership is whitelisted for qualified institutional investors and is processed for minting/redemption through Securitize and BNY Mellon as custodians.
• BENJI is a native token representing shares in the U.S. Government Money Fund (FOBXX), which invests in U.S. government securities and has a size of $750 million. Here, the blockchain serves as the official record-keeping system for processing transactions and recording ownership, making BENJI a native token rather than a wrapper. Investors can subscribe by converting USDC through the Benji Investments application or institutional portal, with the token supporting direct on-chain P2P transfers.

As part of issuing tokenized funds, asset management companies may need a digital transfer agent to adapt traditional transfer agent functions to the blockchain environment. Many asset management companies collaborate with Securitize, which helps issue and transfer tokenized funds while maintaining accurate and compliant books and records. These digital transfer agents not only improve efficiency through smart contracts but also open up new possibilities for traditional assets. For example, Apollo's ACRED (a wrapped token that accesses Apollo's off-chain diversified credit fund) has optimized its loan and yield situation through DeFi integration. Here, Securitize facilitated the creation of sACRED (an ACRED version compliant with ERC-4626 standards), allowing investors to use Morpho for leveraged looping lending strategies.

While wrapped tokens require hybrid systems to coordinate on-chain operations with off-chain records, other tokens can go further by using native tokens with on-chain transfer agents. Franklin Templeton has closely collaborated with regulators to develop its proprietary internal on-chain transfer agent, allowing for instant settlement and 24/7 transfers of BENJI. Other examples include Opening Bell, launched in collaboration with Superstate and Solana, which also has an internal on-chain transfer agent for 24/7 transfers.

What role do wallets play in this? Asset management companies should not view wallets (the way clients access their products) as a secondary consideration. Even if they choose to “outsource” issuance and distribution to transfer agents and custodial providers, asset management companies need to carefully select and integrate wallets, as these choices will impact various aspects such as investor adoption and regulatory compliance.

Asset management companies typically use Wallet-as-a-Service to create investor wallets. These wallets are usually custodial, so the service automatically executes KYC and transfer agent restrictions. But even if the transfer agent “owns” the wallet, asset management companies still need to embed these APIs into their investor portals, necessitating the selection of partners whose software development kits and compliance modules align with their product roadmaps.

Another key consideration for tokenized funds is fund operations. Asset management companies need to determine the level of automation for net asset value (NAV) calculations, such as whether to achieve intraday transparency using smart contracts or to obtain the final daily NAV through off-chain audits. This decision will depend on the type of token, the type of underlying asset, and the compliance requirements of the specific fund type. Redemption is another critical consideration, as tokenized funds allow for faster exits than traditional systems, but there are inherent limitations in liquidity management. In both cases, asset management companies often rely on their transfer agents for advice or integration with key providers such as oracles, wallets, and custodians.

As mentioned in the “Custody Decisions” section, the regulatory status of the custody institution must be considered when selecting a custodian. According to the SEC's Custody Rule, custodians must be qualified and responsible for safeguarding client assets.

Fintech Companies

Fintech companies, especially those engaged in payments and consumer finance (also known as “PayFi”), are leveraging blockchain to build faster, cheaper, and more globally scalable services. In a competitive market where innovation speed is crucial, blockchain provides out-of-the-box infrastructure for identity verification, payments, credit, and custody, often requiring far fewer intermediaries.

Fintech companies are not trying to replicate existing systems but rather to surpass them. This makes blockchain particularly appealing in areas such as cross-border use cases, embedded finance, and programmable currency applications. For example, Revolut's virtual card allows users to shop daily using cryptocurrencies; Stripe's stablecoin financial accounts enable business users to hold stablecoin account balances in 101 countries.

For these companies, the significance of blockchain lies not in improving infrastructure or increasing efficiency, but in building things that were previously impossible.

Tokenization enables fintech companies to embed real-time, 24/7 global payments directly on-chain while unlocking new fee-based services around issuance, exchange, and capital flow. Programmable tokens enable native features such as staking, lending, and liquidity provisioning within their applications, thereby deepening user engagement and creating diversified revenue streams. All of this helps retain existing customers and attract new ones in an increasingly diverse market environment.

Key trends are emerging around stablecoins, tokenization, and verticalization.

Three Key Trends

Stablecoin payment integration is revolutionizing payment channels, providing 24/7/365 transaction settlement, which is starkly different from traditional payment networks constrained by bank operating hours, batch processing, and jurisdictional limitations. By bypassing traditional card networks and intermediaries, stablecoin payment channels significantly reduce transaction, foreign exchange, and processing fees—especially in peer-to-peer and B2B use cases.

With smart contracts, businesses can open new revenue models by embedding 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 channels into platform-native programmable cash issuers and processors.

Global remittances continue to be plagued by high fees, long delays, and opaque foreign exchange spreads. Fintech companies are turning to blockchain settlement to reshape the flow of cross-border value. By using stablecoins, businesses can significantly reduce remittance costs and settlement times. For example, both Revolut and Nubank have partnered with Lightspark to enable real-time cross-border payments on the Bitcoin Lightning Network.

By storing value in wallets and tokenized assets rather than transacting through bank channels, fintech companies gain greater control and speed, especially in regions where the banking system is unreliable. For participants like Revolut and Robinhood, this positions them as global capital flow platforms rather than just repackaged neobanks or trading applications. For global payroll service providers like Deel and Papaya Global, paying employees in cryptocurrencies or stablecoins is increasingly becoming a popular choice, as it allows for instant payments.

Crypto-native fintech companies are building underlying technologies, launching their own blockchains (L1 or L2), or acquiring companies that can reduce reliance on third-party providers. The use of Coinbase's Base, Kraken's Ink, and Uniswap's Unichain (all built on OP Stack) is akin to transitioning from applications on Apple's iOS to owning the entire mobile operating system and all its platform advantages.

By launching their own L2, fintech companies like Stripe, SoFi, or PayPal can capture value at the protocol level to complement their front-end products. It also allows for customized features such as whitelisting and KYC modules, which are crucial for regulated use cases and enterprise clients.

Through its OP Stack, launching a dedicated "payments" chain on the Ethereum L2 blockchain Optimism can help fintech companies transition from closed markets to more diverse and open financial innovation markets. As a result, other developers and companies will contribute to their growth while creating network revenue.

As a first step, many fintech companies initially offer a basic set of services, including buying/selling/sending/receiving/holding a small amount of tokens, and then gradually add services like yield and lending. SoFi recently announced plans to reopen cryptocurrency trading after exiting the space in 2023 due to regulatory restrictions. One of the advantages of offering cryptocurrency trading is, as mentioned, that SoFi allows its customers to participate in global remittances, but there are also other possibilities, such as linking it to its primary lending business and using on-chain lending to improve terms and transparency.

Building Proprietary Blockchains

Many crypto-native "fintech companies" (Coinbase, Uniswap, World) have built their own blockchains to customize infrastructure according to their specific products and users, reduce costs, enhance decentralization, and capture more value within their ecosystems.

For example, with Unichain, Uniswap can integrate liquidity, reduce fragmentation, and make DeFi faster and more efficient. The same verticalization strategy may make sense for fintech companies looking to enhance user experience and internalize more value (as Robinhood announced it would build its own L2). For payment companies, proprietary, self-owned blockchains are likely to serve as the infrastructure for improving user experience (for example, abstracting or hiding the crypto-native user experience) and focusing more on products like stablecoins and compliance features.

Here are some key considerations for building proprietary blockchains, weighing the pros and cons of varying complexities.

L1 is the most burdensome, complex to build, and benefits the least from any network effects of partnerships. However, L1 also allows fintech companies the greatest control over scalability, privacy, and user experience. For example, companies like Stripe may embed native privacy features to comply with global regulations or customize consensus mechanisms to achieve ultra-low latency for high-volume merchant payments.

One of the core challenges of building a new L1 is guiding the economic security of the chain and attracting substantial staking capital to secure the network. EigenLayer democratizes access to high-quality security by shifting the model from isolated, capital-intensive L1s to a shared, efficient model, helping accelerate innovation in blockchain development and reduce failure rates.

L2 is often a very good compromise because it allows fintech companies to operate with a single sequencer while providing a certain degree of control. The sequencer collects incoming user transactions, determines their processing order, and then submits them to L1 for final validation and storage. A single sequencer design can speed up development and better control operations, ensuring reliability, fast performance, and revenue generation. Creating L2 on Ethereum is also easier by collaborating with rollup-as-a-service (RaaS) providers or established L2 alliances like Optimism's Superchain, which offer shared infrastructure, standards, and community resources.

Companies like PayPal can build a "payment superchain" on OP Stack to optimize their PYUSD stablecoin, enabling it for real-time use cases like in-app transfers on Venmo. They can also achieve seamless bridging of PYUSD with the Optimism Superchain ecosystem, initially using centralized sequencers to achieve predictable fees (e.g., less than $0.01 per transaction) while still inheriting Ethereum's security. Additionally, they can choose to collaborate with RaaS providers like Alchemy (and its partner Syndicate) for rapid deployment (potentially in just a few weeks), whereas L1 would require months or years.

The simplest approach is to deploy smart contracts on existing blockchains, a method that companies like PayPal are already experimenting with. Blockchains like Solana, which have mature scale, user bases, and unique assets, are particularly attractive for fintech companies looking to launch on existing L1s.

Permissioned vs. Permissionless

To what extent should fintech companies' applications and/or blockchains be permissionless? The superpower of blockchain lies in composability, the ability to combine and remix protocols, making the whole greater than the sum of its parts.

If an application or blockchain is permissioned, then composability becomes more difficult, and you are less likely to see novel and interesting applications emerge. Take PayPal as an example; choosing to build a permissionless blockchain not only aligns with the broader trend of open ecosystems in fintech but also allows PayPal to leverage its competitive advantages for profitability. By inheriting PayPal's compliance layer, global developers will have a better chance of attracting users to their applications; more users will lead to more network activity, thereby bringing more value capture to PayPal.

Unlike L1 blockchains (like Ethereum), L2 shifts most of the work to the sequencer to achieve higher throughput while still inheriting L1's security properties. As mentioned, the sequencer represents an important "control" point, and single-sequencer rollups like Soneium provide an interesting development path where operators can influence transaction latency and block specific transactions.

Building on a modular framework (like OP Stack) not only increases revenue but also expands the utility of other core products. For example, with PayPal and its PYUSD stablecoin, having L2 can generate sequencer revenue while linking the chain's economic benefits to PYUSD. As the initial sequencer operator, PayPal can charge a portion of transaction fees (also known as "Gas fees"), similar to how Coinbase's OP Stack L2 platform Base profits from its sequencer. By modifying OP Stack's Gas to be paid in PYUSD, PayPal can offer "free" transactions to existing PayPal users and speed up use cases like Venmo transfers and cross-border remittances. Similarly, PayPal can stimulate developer activity by offering low-cost or zero-fee options, subsequently charging a modest premium for integrations like the PayPal Wallet API or compliance oracles.

Summary

Banks, asset management companies, and fintech companies have questions about using blockchain, given the rapid development of the cryptocurrency world. How should they understand this technology and the opportunities it presents? Here are the key takeaways we have summarized:

• Start with customer segmentation and customize solutions. Not all customers are the same; institutional investors require highly compliant custody setups, while retail clients often prioritize user-friendly, self-custody daily access options.
• View security and compliance as non-negotiable. Almost all counterparties, whether regulators or clients, expect you to do so.
• Leverage partnerships to enhance expertise and speed. You don’t have to build everything yourself; collaborating with domain experts and partners can shorten time to market and create new revenue opportunities through innovative solutions.

Blockchain can and should become core infrastructure, providing future-proof assurances for traditional financial (TradFi) institutions while leading them to explore new markets, new users, and new revenue streams.

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