Original text from a 16 z

Compiled by Odaily Planet Daily Golem ( @web3_golem )

Blockchain is a new settlement and ownership layer that is programmable, open, and inherently global, unleashing new forms of entrepreneurship, creativity, and infrastructure. Today, the number of monthly active cryptocurrency addresses is growing at nearly the same rate as internet users, stablecoin trading volume is surpassing traditional fiat currency trading volume, legislation and regulation are finally catching up, and crypto companies are being acquired or going public.

Gradual regulatory clarity, coupled with competitive pressures, the significant improvements in business outcomes brought about by blockchain, and the increasing maturity of blockchain technology have made it imperative for traditional finance (TradFi) to embrace blockchain technology as core infrastructure. Financial institutions are rediscovering the potential of blockchain as a transparent and secure tool for value transfer, offering traditional financial institutions a gateway to the future and unlocking new sources of growth.

As a result, executive teams in traditional finance are no longer asking "if" or "when," but rather "how" to make blockchain essential to their businesses. This question is driving a wave of exploration, resource allocation, and organizational restructuring within traditional finance. As institutions begin to make real investments in this space, key considerations are emerging, centering around two themes:

• The business case for blockchain-enabled strategies
• The technical foundation for putting strategy into practice

This guide aims to help answer these questions. It is not a comprehensive overview of all use cases or protocols, but rather a zero-to-one guide that identifies key early choices and shares emerging patterns to help businesses build blockchain as core infrastructure rather than token hype.

Because banks, asset managers, and fintech companies (including the increasingly well-known PayFi) differ in how they interact with end users, the limitations of legacy infrastructure, and regulatory requirements, we have divided the following sections to help these industries gain a solid and actionable understanding of how blockchain can be applied in their fields and what it takes to go from zero to a real product.

bank

Banks may appear modern, but they run on ancient software—primarily COBOL, a programming language from the 1960s. This ancient language, however, is capable of stitching together systems that comply with banking regulations. When customers click on a sleek webpage or tap on a mobile app, these front-ends simply translate their clicks into instructions written in a decades-old COBOL program. Blockchain could be a way to upgrade these systems without compromising regulatory integrity.

By building on or integrating blockchain, banks can shed their image as internet "website-based bookstores" and move towards a model more like Amazon, with modern databases and improved interoperability standards. Tokenized assets—whether stablecoins, deposits, or securities—are likely to play a central role in future capital markets. Implementing the right systems to avoid being displaced by this shift is only the beginning. Banks must truly own this transformation.

On the retail side, banks are exploring ways to give clients access to Bitcoin and other digital assets through their affiliated brokers as part of the overall customer experience, either indirectly through exchange-traded products (ETPs), or directly following the repeal of SEC accounting rule SAB 121 (which effectively prevented US banks from engaging in digital custody). However, on the institutional/back-office side, the opportunity and utility are much greater, with three emerging use cases: tokenized deposits, re-evaluating settlement infrastructure, and collateral liquidity.

Use Cases

Tokenized deposits represent a fundamental shift in how commercial banks manage and operate their funds. Far from a speculative concept, tokenized deposits are already being implemented, with projects like JPMorgan Chase's JPMD token and Citigroup's Cash Token Service. These aren't synthetic stablecoins or treasury-backed digital assets; they are backed by real fiat currency, held in commercial bank accounts, and regulated on a 1:1 basis, tradable across private and public blockchains.

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

Banks are also actively reassessing their settlement infrastructure. Some tier-one banks are participating in distributed ledger settlement trials (often in partnership 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's Layer 2), is collaborating with global banks to provide near-real-time settlement for cross-border payments and intraday repurchase agreements (repo) markets. This service offers the potential to improve capital efficiency, liquidity utilization, and reduce operational overhead.

Blockchain and tokens can also enhance banks' ability to quickly and efficiently transfer assets across business units, geographies, and counterparties—a process known as collateral liquidity. The Depository Trust & Clearing Corporation (DTCC), which provides clearing, settlement, and custody services for traditional US markets, recently launched a Smart Net Asset Value (Smart NAV) pilot program aimed at modernizing collateral liquidity by tokenizing net asset value data. This pilot demonstrates how transforming collateral into liquid, programmable money not only improves banks' operations but also supports their broader future strategies. Enhanced collateral liquidity enables banks to reduce capital buffers, access broader liquidity pools, and maintain leaner balance sheets, making them more competitive in the capital markets.

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

Select blockchain

While banks were previously prohibited from accessing public blockchain networks, recent guidance from banking regulators, including the U.S. Office of the Comptroller of the Currency (OCC), has opened up new possibilities. This is exemplified by R3’s integration of Corda with Solana, which will enable permissioned networks on Corda to settle assets directly onto Solana.

Taking tokenized deposits as an example, while there are many ways to choose a blockchain, building a product on a decentralized public blockchain offers several advantages:

• It provides a neutral developer platform to which anyone can contribute, thereby strengthening trust and expanding the ecosystem supporting a company's products;
• Since anyone can contribute code, product iteration can be accelerated by using, adapting, and combining other people's modules (i.e., composability);
• It strengthens the trust in the platform. The best developers are most interested in building on decentralized blockchains because the rules on these blockchains cannot change suddenly, which ensures that their products can continue to be profitable.

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

While blockchains are currently slower than centralized internet services, their performance has improved significantly over the past few years. Layer 2 rollups (various off-chain scaling solutions) on Ethereum, such as Coinbase’s Base, and even faster Layer 1 blockchains like Aptos, Solana, and Sui have achieved transaction costs of less than a cent and latency of less than a second.

Degree of decentralization

Banks must also consider the appropriate level of decentralization for their specific use cases. The Ethereum blockchain protocol and community prioritize ensuring that anyone on the planet can independently verify every transaction on the chain. Meanwhile, Solana relaxes this requirement by increasing the hardware required for verification, while also significantly improving blockchain performance.

Even within the public blockchain space, banks should consider the extent of centralization. For example, if the total number of validators in a network is relatively small, but the network's foundation controls a relatively large proportion of validators, the chain will be subject to centralization, making its decentralization appear superficial. Similarly, if entities associated with a public chain (such as a foundation) 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 banking-related transaction. The rise and use of zero-knowledge proofs can help protect sensitive financial data, even on public blockchains. These systems work by proving knowledge of specific information an institution requires without revealing the specific information itself. For example, proving someone is over 21 years old without knowing their date or place of birth.

Zero-knowledge-based protocols, such as zkSync, can be used to enable private on-chain transactions. To maintain regulatory compliance, banks also need to be able to review and revert transactions as needed. This is where "view keys" (developed by Aleo, a secret L1 key) can protect privacy while still allowing regulators and auditors to review transactions as needed.

Solana’s token extensions provide compliance features, allowing for confidentiality, while Avalanche’s Layer 1 can enforce any verification logic encoded in smart contracts.

Many of these features also apply to stablecoins. Stablecoins are one of the most popular blockchain applications today, having become one of the cheapest ways to transfer US dollars. In addition to reducing fees, they offer permissionless programmability and scalability, allowing anyone to use stablecoins to integrate fast, globally accessible funds into their products while building new fintech features. Following the GENIUS Act, banks are required to provide transparency into stablecoin transactions and reserves, and companies like Bastion and Anchorage have achieved this transparency.

Custody Decisions

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

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

In terms of licensing and certification, custodians should adhere to a regulatory framework, such as a bank or trust charter (federal or state), a virtual currency business license, a state-level exchange license, and certifications like SOC 2 compliance. For example, Coinbase operates its custody business through a New York trust charter, Fidelity operates its custody business through Fidelity Digital Asset Services, and Anchorage operates its custody business through a federal OCC charter.

In terms of security, custodians should also have strong cryptographic technology; hardware security modules (HSMs) to prevent unauthorized access, extraction, or tampering; and multi-party computation (MPC) processes to split private keys among multiple parties for increased security. These measures help prevent hacker attacks and operational failures.

On the operational side, custodians should also adopt other best practices, including asset segregation to ensure customer assets are protected in the event of bankruptcy; transparent proof-of-reserve mechanisms that enable users and regulators to verify that reserves match liabilities; and regular third-party audits to detect fraud, errors, or security breaches. For example, Anchorage uses biometric multi-factor authentication and geographically distributed key sharding to strengthen governance. Finally, custodians should have clear disaster recovery plans in place to ensure business continuity.

What role do wallets play in custody decisions? Banks increasingly recognize that crypto wallet integration is a strategic necessity to remain competitive with ancillary providers like neobanks and centralized exchanges. For institutional clients (such as hedge funds, asset managers, 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 more than simple storage solutions; they enable secure and compliant access to assets like stablecoins or tokenized treasuries through private keys.

"Hosted wallets" and "self-hosted wallets" represent two extremes in terms of control, security, and responsibility. A hosted wallet is managed by a third-party service provider that holds keys on the user's behalf, while a self-hosted wallet allows the user to manage their own keys. Understanding the difference between the two is crucial for banks aiming to meet a wide range of needs—from the highly compliant demands of institutional clients, to the desire for autonomy among sophisticated clients, to the convenience preferences of retail investors. Custody providers like Coinbase and Anchorage have 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 firms, blockchain can expand distribution channels, automate fund operations, and tap into on-chain liquidity.

Tokenized funds and real-world assets (RWAs) offer new ways to package assets, making asset management products more accessible and composable, especially for global investors who increasingly expect 24/7 access, instant settlement, and programmable trading. Meanwhile, on-chain infrastructure can streamline back-office workflows, from net asset value calculations to cap table management. This leads to lower costs, faster time to market, and a more differentiated product suite—advantages that continue to compound in a highly competitive market.

Asset managers are constantly striving to improve the distribution and liquidity of products that best attract capital from digitally native audiences. By introducing tokenized share classes on public blockchains, asset managers can reach new investor groups without sacrificing their traditional transfer agent role. This hybrid model maintains regulatory compliance while tapping into new markets, features, and capabilities unique to blockchain.

Blockchain innovation trends

Tokenized U.S. Treasury and money market funds, such as BlackRock’s BUIDL (BlackRock USD Institutional Digital Liquidity Fund) and Franklin Templeton’s BENJI (representing shares of the Franklin Chain U.S. Government Money Market Fund), have grown from zero to tens of billions of dollars in assets under management. These instruments function similarly to yield-generating stablecoins, but with institutional-grade compliance and backing.

As a result, asset managers are able to serve digitally native investors by offering greater flexibility through asset segmentation and programmability.

On-chain distribution platforms are becoming increasingly sophisticated. Asset managers are increasingly partnering with blockchain-native issuers and custodians (such as Anchorage, Coinbase, Fireblocks, and Securitize) to tokenize fund units, automate investor investments, and expand their reach across geographies and investor categories.

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

Issuers want to instantiate their funds as DeFi assets and access on-chain liquidity to expand their total addressable market (TAM) and increase their assets under management (AUM). Asset managers can tap into new liquidity by listing tokenized funds on protocols like Morpho Blue or integrating with Uniswap v4. BlackRock's BUIDL fund was added as a yield collateral option on Morpho Blue in mid-2024, marking the first time a traditional asset manager's products became composable in DeFi. Recently, Apollo also integrated its tokenized private credit fund (ACRED) into Morpho Blue, introducing a new yield enhancement strategy that was not possible in the off-chain world.

The ultimate result of collaborating with DeFi is that asset managers can move from a costly and slow fund distribution model to direct wallet access, while creating new yield opportunities and capital efficiencies for investors.

Asset managers have largely moved beyond the choice of permissioned or public blockchain networks when issuing tokenized real-world assets (RWAs). In fact, they are clearly favoring public and multi-chain strategies to achieve wider 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 partnering with prominent public blockchains, these products have enhanced their liquidity, benefiting from their respective blockchain ecosystem partners, including centralized exchanges, market makers, and DeFi protocols. Seamless cross-chain connectivity and settlement are facilitated through companies like LayerZero.

Real World Asset (RWA) Tokenization

The trend we are observing is towards the tokenization of financial assets (e.g. government securities, private sector securities, and equities); rather than physical assets like real estate or gold (although these can be tokenized as well and have been).

In the context of tokenizing traditional funds (such as money market funds backed by U.S. Treasuries or similar stablecoins), the distinction between "wrapped tokens" and "native tokens" is crucial. The differences lie in how the token represents ownership, where the primary record of shares is maintained, and the level of blockchain integration. Both models advance tokenization by connecting traditional assets to the blockchain, but wrapped tokens prioritize compatibility with traditional systems, while native tokens strive for full on-chain conversion. To illustrate the distinction between wrapped and native tokens, two examples are provided below.

• BUIDL is a wrapped token that tokenizes shares of a traditional money market fund that invests in cash, U.S. Treasuries, and repurchase agreements. ERC-20 BUIDL tokens digitally represent these shares and circulate on-chain, while the underlying fund operates as a regulated off-chain entity under U.S. securities laws. Ownership is whitelisted for qualified institutional investors, and minting/redemption is handled through Securitize and Bank of New York Mellon as custodians.
• BENJI is a native token representing shares in the US Government Money Fund (FOBXX), a fund that invests $750 million in US government securities. The blockchain serves as the official record system for processing transactions and recording ownership, making BENJI a native token rather than a wrapper. Investors can subscribe to BENJI by converting USDC through the Benji Investments app or institutional portal, and the token supports direct peer-to-peer transfers on-chain.

As part of issuing tokenized funds, asset managers may require a digital transfer agent (DA) that adapts traditional transfer agent functionality to a blockchain environment. Many asset managers partner with Securitize, which helps issue and transfer tokenized funds while maintaining accurate and compliant books and records. These DAs not only improve efficiency through smart contracts but also open up new possibilities for traditional assets. For example, Apollo's ACRED (a wrapped token providing access to Apollo's off-chain diversified credit funds) optimizes its lending and yield profile through DeFi integration. Securitize facilitated the creation of sACRED (an ERC-4626-compliant version of ACRED), allowing investors to leverage revolving lending strategies using Morpho.

While wrapped tokens require a hybrid system to reconcile on-chain operations with off-chain records, other tokens can go a step further and utilize an on-chain transfer agent for the native token. Franklin Templeton worked closely with regulators to develop its proprietary, internal on-chain transfer agent, which allows for instant settlement and 24/7 transfers for BENJI. Other examples include Opening Bell, a collaboration between Superstate and Solana, which also has an internal on-chain transfer agent that enables 24/7 transfers.

What role do wallets play in this? Asset managers shouldn’t treat wallets—how clients access their products—as a secondary consideration. Even if they choose to “outsource” issuance and distribution to transfer agents and custodian providers, asset managers need to carefully select and integrate wallets, as these choices will impact everything from investor adoption to regulatory compliance.

Asset managers often use Wallet-as-a-Service (WaaS) to create investor wallets for them. These wallets are typically custodial, so the service automatically enforces Know Your Customer (KYC) and transfer agent restrictions. However, even if the transfer agent "owns" the wallet, asset managers still need to embed these APIs into their investor portals, necessitating the selection of a partner whose SDK and compliance modules align with their product roadmap.

Another key consideration for tokenized funds is fund operations. Asset managers need to determine the degree to which they will automate net asset value (NAV) calculations, such as using smart contracts for intraday transparency or relying on off-chain audits to derive the final daily NAV. This decision will depend on the type of token, the type of underlying asset, and the regulatory compliance requirements for the specific fund type. Redemptions are another key consideration, as tokenized funds allow for faster exits than traditional systems but have inherent limitations in liquidity management. In both cases, asset managers often rely on their transfer agents for advice or integration with key providers such as oracles, wallets, and custodians.

As mentioned in the "Custody Decision" section above, when choosing a custodian, you need to consider its regulatory status. Under the SEC's Custody Rule, custodians must be licensed and responsible for safeguarding client assets.

Fintech companies

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

Fintech companies aren't trying to replicate existing systems; they're trying to transcend them. This makes blockchain particularly compelling for cross-border use cases, embedded finance, and programmable money applications. For example, Revolut's virtual card allows users to use cryptocurrencies for everyday purchases, while Stripe's stablecoin financial account allows business users to hold stablecoin balances in 101 countries.

For these companies, blockchain isn’t about improving infrastructure or increasing efficiency, but about building things that weren’t possible before.

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

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

Three key trends

Stablecoin payment integrations are revolutionizing payment rails, offering 24/7/365 transaction settlement, unlike traditional payment networks that are constrained by banking hours, batch processing, and jurisdictional constraints. By bypassing traditional card networks and intermediaries, stablecoin payment rails significantly reduce transaction, foreign exchange, and processing fees—particularly in peer-to-peer and B2B use cases.

Smart contracts can open up 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 banking channels to platform-native programmable cash issuers and processors.

Global remittances remain plagued by high fees, long delays, and opaque foreign exchange spreads. Fintech companies are turning to blockchain settlements to reshape how value flows across borders. Using stablecoins, businesses can significantly 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 storing value in wallets and tokenized assets rather than transacting through banking channels, fintech companies gain greater control and speed, especially in regions with unreliable banking systems. For players like Revolut and Robinhood, this positions them as global money mobility platforms, rather than just neobank wrappers or trading apps. For global payroll providers like Deel and Papaya Global, paying employees in cryptocurrencies or stablecoins is becoming an increasingly popular option due to the instantaneous nature of payments.

Crypto-native fintech companies are building the underlying technology, launching their own blockchains (L1 or L2), or acquiring companies that can reduce their reliance on third-party providers. Using Coinbase’s Base, Kraken’s Ink, and Uniswap’s Unichain (all built on the OP Stack) is like going from owning an app on Apple’s iOS to owning an entire mobile operating system and all its platform benefits.

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, while also allowing for customized performance, whitelisting, KYC modules, etc., which is crucial for regulated use cases and enterprise customers.

By launching a dedicated payment chain on the Ethereum L2 blockchain, Optimism, through its OP Stack, can help fintech companies move from a closed market to a more diversified and open market for financial innovation. As a result, other developers and companies will contribute to its growth while generating network revenue.

As a first step, many fintech companies begin by offering a basic set of services, including buying, selling, sending, receiving, and holding cryptocurrencies for a small number of tokens, and then gradually add other services such as yield and lending. SoFi recently announced plans to reopen cryptocurrency trading after exiting the sector in 2023 due to regulatory restrictions. One advantage of offering cryptocurrency trading is that, as mentioned above, it allows SoFi clients to participate in global remittances, but there are other possibilities, such as linking it to its core lending business and using on-chain lending to improve terms and transparency.

Building a proprietary blockchain

Many cryptocurrency-native “fintechs” (Coinbase, Uniswap, World) have built their own blockchains to tailor their infrastructure to their specific products and users, reduce costs, increase decentralization, and capture more value within their ecosystems.

For example, with Unichain, Uniswap can consolidate liquidity, reduce fragmentation, and make DeFi faster and more efficient. This same verticalization strategy could be valuable for fintech companies looking to enhance user experience and internalize more value (as evidenced by Robinhood's announcement of building its own L2). For payment companies, a proprietary, self-owned blockchain could be the underlying infrastructure for improving user experience (e.g., one that abstracts or hides the crypto-native user experience) and allows for a greater focus on products like stablecoins and regulatory compliance.

Here are some key considerations for building a proprietary blockchain, along with the trade-offs for varying levels of complexity.

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

One of the core challenges of building new Layer 1s is bootstrapping the economic security of the chain and attracting significant staked capital to secure the network. EigenLayer democratizes access to high-quality security. By shifting from a siloed, capital-intensive Layer 1 model to a shared, efficient one, such services help accelerate innovation and reduce failure rates in blockchain development.

L2 is often a good compromise, as it allows fintech companies to operate with a single sorter and provides a degree of control. The sorter collects incoming user transactions and determines the order in which they should be processed before submitting them to L1 for final verification and storage. A single sorter design speeds up development and provides greater control over operations, ensuring reliability, fast performance, and revenue generation. Creating L2 on Ethereum is also easier by partnering with a rollup-as-a-service (RaaS) provider or an established L2 consortium like Optimism's Superchain, which offers shared infrastructure, standards, and community resources.

Companies like PayPal could build a "payments superchain" on the OP Stack to optimize its PYUSD stablecoin for real-time use cases like in-app transfers with Venmo. They could also seamlessly bridge PYUSD to Optimism's Superchain ecosystem, initially using a centralized orderer to achieve predictable fees (e.g., less than $0.01 per transaction) while still inheriting the security of Ethereum. Furthermore, they could choose to partner with a RaaS provider like Alchemy (and its partner Syndicate) for rapid deployment (perhaps in weeks), rather than the months or years required for Layer 1.

The simplest approach is to deploy smart contracts on an existing blockchain, an approach already being explored by companies like PayPal. Blockchains like Solana, with their established scale, user base, and unique assets, are particularly attractive to fintech companies looking to build on existing Layer 1s.

Permission-Based vs. Permissionless

To what extent should a fintech company’s application and/or blockchain be permissionless? Blockchain’s superpower lies in composability, the ability to combine and remix protocols so that the whole is greater than the sum of its parts.

If an application or blockchain is permissioned, composability becomes more difficult, and you're less likely to see new and interesting applications emerge. For example, PayPal's choice of building a permissionless blockchain not only aligns with the broader trend toward open ecosystems in fintech, but also enables PayPal to leverage its competitive advantages for profitability. By inheriting PayPal's compliance layer, developers around the world have a better chance of attracting users to their applications; more users lead to more network activity, which in turn generates more value for PayPal.

Unlike L1 blockchains (e.g., Ethereum), L2 offloads most of the work to the sorter, enabling higher throughput while still inheriting the security properties of L1. As mentioned above, sorters represent an important point of “control,” and single-sorter Rollups like Soneium offer an interesting development path where operators can influence transaction latency and block specific transactions.

Building on a modular framework, such as the OP Stack, not only increases revenue but also expands the utility of other core products. For example, PayPal and its PYUSD stablecoin, owning L2 not only generates sorter revenue but also aligns the chain's economics with PYUSD. As the initial sorter operator, PayPal can collect a portion of transaction fees (also known as "gas fees"), similar to how Coinbase's OP Stack L2 platform, Base, profits from its sorter. By modifying OP Stack's gas to be paid in PYUSD, PayPal can offer "free" transactions to existing PayPal users and improve the speed of use cases like Venmo transfers and cross-border remittances. Similarly, PayPal can incentivize developer activity by offering low or zero fees, then charge a modest premium for integrations like the PayPal Wallet API or compliance oracles.

Summarize

Banks, asset managers, and fintech companies have questions about using blockchain. Given how rapidly the cryptocurrency world is evolving, how should they understand the technology and the opportunities it presents? Here are our key lessons learned:

• Start with customer segmentation and tailor solutions. Not all customers are the same. Institutional investors require highly compliant custody settings, while retail investors typically prioritize user-friendly, self-custodial options for daily access.
• Treat security and compliance as non-negotiables . Almost all counterparties, whether regulators or customers, expect this from you.
• Leverage partnerships to increase expertise and speed . Instead of building everything yourself, collaborate with domain experts and partners to reduce time to market and create new revenue opportunities with innovative solutions.

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