Global Institutions Deepen Ethereum L2 Integration for RWAs, Payments, and Digital Assets

Executive Summary

Over 50 non-crypto companies, spanning from prominent financial institutions to global fashion and entertainment brands, are actively developing products and services related to Non-Fungible Tokens (NFTs), Real-World Assets (RWAs), Web3 developer tooling, and Layer 2 (L2) solutions on Ethereum and its scaling networks. This widespread corporate engagement underscores a significant shift towards leveraging blockchain technology for diverse, tangible applications, moving beyond speculative trading to establish new financial and consumer paradigms. Key initiatives include SWIFT's development of a blockchain payment system on Linea, Deutsche Bank's tokenization platform on zkSync, and BlackRock's continued support for its tokenized money market fund.

Institutional Adoption Drives Ethereum Layer 2 Ecosystem Growth

Financial institutions are increasingly integrating with Ethereum's Layer 2 ecosystem to enhance efficiency and introduce novel products. SWIFT, the global interbank messaging network, is building its blockchain payment settlement platform on Consensys's Linea L2. This initiative involves over 30 traditional finance (TradFi) institutions, including Bank of America, Citi, JPMorgan Chase, and Toronto-Dominion Bank, aiming to create a 24/7 real-time crypto payments system. Linea, a scaling-focused L2 leveraging zk-EVM rollup technology, processes approximately 1.5 transactions per second at one-fifteenth the cost of mainnet Ethereum fees and currently holds $2.27 billion in total value locked. SWIFT's entry could significantly impact global payments, which it handles at an estimated $150 trillion annually.

Further demonstrating this trend, institutions like Robinhood have launched tokenized stocks and Exchange Traded Funds (ETFs) on Arbitrum for European users, marking the first on-chain issuance of U.S.-listed equities by a major brokerage. Deutsche Bank is developing a tokenization platform on zkSync as part of Project Dama 2, aiming to provide asset managers with tools for issuing regulated tokenized funds and stablecoins. This project, which integrates Memento Blockchain and Matter Labs technology with Axelar Network for interoperability, is designed to address compliance challenges for financial institutions using public blockchains, with a minimum viable product expected by 2025. BlackRock continues to support its BUIDL tokenized money market fund on Ethereum, facilitating seamless USDC redemptions and on-chain yield opportunities.

Global Brands Embrace Web3 Entertainment and Digital Collectibles

Beyond traditional finance, global consumer brands are also leveraging Ethereum L2s for innovative Web3 experiences. South Korea's Lotte Group announced at CES 2025 its partnership with Arbitrum to power its Lotte Caliverse, a high-tech 3D virtual world. Built with Epic Games' Unreal Engine 5, the Caliverse integrates shopping, gaming, and entertainment, allowing users to browse digital stores for brands like Givenchy and MCM, attend virtual concerts, and engage in interactive gameplay. Arbitrum's selection is attributed to its speed and scalability, offering 250ms block times essential for high-performance virtual environments.

In the automotive sector, Automobili Lamborghini has chosen Coinbase's Base L2 for its latest Web3 foray. The brand is hosting mints for collectibles depicting its Revuelto supercar as part of Fast ForWorld, a digital collectibles project developed with Animoca Brands' Motorverse. Base has emerged as a leading L2 in transaction throughput, DeFi total value locked (TVL), and active users, accounting for 61% of combined L2 users and one-third of combined L2 transactions based on recent data.

Deconstructing Financial Mechanics and Strategic Imperatives

The strategic shift toward Ethereum L2s is underpinned by several financial mechanics and business imperatives. The market for Real-World Asset (RWA) tokenization is projected to reach between $2 trillion and $30 trillion by 2030, driven by the digitization of assets like real estate, bonds, and money-market funds. Tokenized U.S. Treasuries and money-market funds have already surpassed $7 billion in value, reflecting demand for faster settlement and enhanced liquidity. Tokenization offers enhanced liquidity, allowing 24/7 trading, operational efficiency through smart contract automation, and portfolio diversification.

Companies like SWIFT and Deutsche Bank are prioritizing regulatory compliance and scalable infrastructure to bridge traditional finance with blockchain, addressing challenges such as transacting with sanctioned entities. The choice of zk-EVM rollups by Linea and zkSync highlights a focus on cryptographic proofs for security and efficiency. The Dencun hardfork in 2024 significantly reduced L2 transaction costs by up to 98%, shifting transaction demand from Ethereum's Layer 1 (L1) to L2s and reshaping the network's economic model. Stripe's $1.1 billion acquisition of Bridge further underscores the growing importance of stablecoins in facilitating instant, low-cost global payments, with the total stablecoin market cap surpassing $200 billion and projected to exceed $400 billion by 2025.

Broader Market Implications and Regulatory Landscape

These developments signify a bullish outlook for the Web3 ecosystem and Ethereum's role as a foundational layer for institutional digital assets. The increasing involvement of established financial institutions and global brands provides strong validation for blockchain technology's potential beyond speculative use cases, pointing towards mainstream adoption for real-world applications. The U.S. Securities and Exchange Commission (SEC) is developing plans to allow blockchain-based versions of stocks, or tokenized stocks, to trade on approved cryptocurrency exchanges, signaling a paradigm shift in financial markets. This move, poised to enhance market efficiency and democratize access, necessitates a robust regulatory framework that ensures investor protection and market integrity, akin to traditional securities.

However, the rapid growth of L2s also presents challenges, particularly concerning the centralization of sequencers. This concentration of power in leading L2s like Arbitrum, Base, and Optimism introduces systemic risks such as transaction censorship, security breaches, and liveness failures, which could undermine Ethereum's decentralized ethos. These risks are increasingly scrutinized, with 78% of global institutional investors having formal crypto risk management frameworks emphasizing decentralization. Regulatory clarity from initiatives like the EU's Markets in Crypto-Assets (MiCA) regulation, operational by January 2025, sets a standard for addressing these concerns. While L2s have dramatically improved scalability, addressing sequencer centralization remains critical for maintaining institutional trust and ensuring the long-term integrity of the Ethereum network.

source:

[1] What Big Companies Are Building on Ethereum | Galaxy (https://www.galaxy.com/insights/research/big- ...)[2] Joe Lubin confirms SWIFT is using Linea to build its new payments system - Cointelegraph (https://vertexaisearch.cloud.google.com/groun ...)[3] Ethereum's Institutional Adoption Surges 6% as Robinhood, Deutsche Bank, BlackRock Expand Tokenized Assets - AInvest (https://vertexaisearch.cloud.google.com/groun ...)

Related News

Oct 04 2025, 19:16

DAOs Embrace Futarchy Governance: MetaDAO Expands on Solana, Ethereum Foundations Initiate Experiments

Executive Summary Decentralized Autonomous Organizations (DAOs) are increasingly exploring Futarchy, a governance model that leverages prediction markets for decision-making. This trend is significantly influenced by the validation of prediction markets, particularly following the substantial trading activity seen on platforms like Polymarket. Solana's MetaDAO is emerging as a primary facilitator for at-scale Futarchy implementation, while initiatives from the Optimism and Uniswap Foundations indicate a growing interest within the Ethereum ecosystem. The Event in Detail MetaDAO, launched in November 2023 on Solana, has become a central platform for operationalizing Futarchy. It has facilitated 62 Futarchies across nine DAOs, with 19 completed post-election. Notable Solana-based DAOs such as Jito, Marinade, and Sanctum have integrated MetaDAO for their governance. Sanctum, for instance, adopted MetaDAO as its primary platform, settling four decisions through Futarchy votes and attracting 1,648 unique voters for those proposals, a higher distinct voter count than Lido and Ethereum Name Service (ENS) achieved in 2024. A new launchpad from MetaDAO aims to simplify the creation of Futarchy DAOs, potentially addressing capital formation and trust issues for new projects. Beyond Solana, the Uniswap Foundation and Optimism Foundation have partnered through a joint grant to Butter to pilot Futarchy implementations on Ethereum and Layer 2s. Optimism launched a specific 21-day on-chain governance experiment in March 2025, distributing 500,000 OP tokens as incentives. Participants used simulated tokens, OP-PLAY, to predict Total Value Locked (TVL) growth for projects receiving OP incentives, with the top five projects receiving grants. This experiment highlighted challenges, as selected projects like Rocket Pool and SuperForm underperformed in actual TVL growth, partly due to the use of USD-denominated metrics susceptible to ETH price volatility. High user friction, requiring six on-chain interactions per bet, and information asymmetry, contributed to reduced participation and accuracy. Experts ("Badge Holders") exhibited the lowest win rates. Meanwhile, the broader prediction market landscape has shown volatility. Polymarket, after experiencing a surge in trading volume to $2.6 billion in November 2024, largely driven by the U.S. election, saw a significant decline. Trading volume plummeted to $515 million in January 2025, from $1.9 billion in December, with open interest falling 77% from November 2024 to January 2025. Market Implications The increasing adoption of Futarchy signals a potential shift in how decentralized organizations make decisions and allocate resources. The explicit reliance on market mechanisms for governance, rather than traditional voting, could lead to more efficient and resilient DAOs if successfully implemented. The "Futarchy as a Service" model offered by MetaDAO could lower barriers for new DAOs to adopt this governance structure from inception. However, the Optimism experiment demonstrated critical challenges. The use of USD-denominated metrics for TVL, subject to underlying asset price volatility, skewed results and led to inaccurate predictions. High user friction directly impacted participation rates, indicating that practical implementation requires simplified interfaces and fewer on-chain interactions. The low win rates among experts suggest that even informed participants struggle under suboptimal market designs. These findings indicate that while Futarchy offers a promising theoretical framework, its effectiveness is highly contingent on robust metric design, reduced user friction, and clear, unbiased information flows. The post-election decline in Polymarket's activity underscores the reliance of current prediction markets on high-profile events for sustained engagement and liquidity, raising questions about long-term sustainability for more routine governance decisions. Expert Commentary Proponents of Futarchy, such as those associated with MetaDAO, emphasize its built-in mechanisms to mitigate market manipulation. Participants place actual capital at risk, which naturally limits speculative behavior. The system also incentivizes large holders to diversify their holdings, potentially fostering a more balanced decision-making process. Concerns regarding market crashes or bubbles within Futarchy systems are acknowledged, with comparisons drawn to "market perturbations" in traditional governance. The key differentiator is the capital-at-risk component, which acts as a self-correcting mechanism: participants with consistently poor trading performance will exhaust their capital, leading to more responsible engagement. Futarchy is also seen as advantageous for leveraging expert knowledge. It does not require universal participation, as a few informed participants with "compelling and competing information" can effectively price a market. This focus on the quality of participants over quantity is particularly beneficial for complex or technical decisions within DAOs. Broader Context The rise of Futarchy is occurring within a larger trend of growth in the Web3 prediction market ecosystem, which expanded from $4.43 billion in 2024 to $6.11 billion in 2025, projecting a compound annual growth rate (CAGR) of 37.8%. This growth indicates a shift in prediction markets from speculative tools to potential foundational infrastructure for institutional decision-making. Polymarket's acquisition of QCEX, a CFTC-licensed derivatives exchange, highlights a move towards regulatory compliance, attracting institutional capital. However, the future evolution of Futarchy and prediction markets hinges on resolving regulatory ambiguities, strengthening governance models against bias and manipulation, and continually refining mechanisms to ensure that the "collective wisdom" of the market translates into optimal decentralized governance outcomes. Future developments may involve more sophisticated metrics beyond simple token price and safeguards against harmful decisions, potentially through "futures contracts for bad decisions."

Oct 04 2025, 19:13

US Pro-Crypto Shift, Ethereum Internal Strife, and Solana Memecoin Surge Drive Divergent Market Trends

Executive Summary The cryptocurrency market has experienced significant shifts driven by converging regulatory, developmental, and speculative forces. The new US administration has signaled a definitive pro-crypto stance through executive actions and key appointments, aiming to establish regulatory clarity and encourage innovation. Concurrently, the Ethereum ecosystem is navigating substantial internal divisions and strategic debates, leading to market underperformance relative to its peers. Meanwhile, the Solana network witnessed an extraordinary surge in activity, largely fueled by memecoin launches, which tested its infrastructure while demonstrating its capacity for high transaction volumes. The Event in Detail: US Regulatory Shift President Donald J. Trump signed an executive order titled "Strengthening American Leadership in Digital Financial Technology," which promotes self-custody, mining, and uncensored transactions. This order explicitly revokes the previous administration's crypto executive order and prohibits federal agencies from undertaking actions to establish central bank digital currencies (CBDCs). A Presidential Working Group on Digital Asset Markets has been established to develop a federal regulatory framework for digital assets, including stablecoins, and to evaluate a strategic national digital assets stockpile. Key pro-crypto appointments reflect this policy shift. Caroline Pham was named Acting Chair of the CFTC, Travis Hill as Acting Chair of the FDIC, and Mark Uyeda as Acting Chairman of the SEC. Notably, Hester Peirce is leading a new SEC crypto task force aimed at creating a "sensible regulatory path." Further solidifying this new direction, the SEC rescinded Staff Accounting Bulletin (SAB) No. 121. This rule previously required institutions to record client crypto assets as liabilities, creating operational and financial hurdles for banks offering custody services. Its rescission removes a significant barrier, paving the way for greater financial integration of cryptocurrencies by major banking institutions. This policy reversal is expected to accelerate institutional engagement in the digital asset sector, fostering a more robust and regulated market environment. The Event in Detail: Ethereum's Internal Divisions The Ethereum community is facing an "existential crisis," as highlighted by the "Mirror" report commissioned by the Ethereum Foundation from research group WE3. The report, based on over 60 interviews, identified eight distinct factions within the community and a lack of consensus on Ethereum's core identity and long-term vision. This internal strife is seen as a critical challenge to the protocol's future evolution and competitive standing. Governance concerns have emerged, with discussions around potential conflicts of interest among insiders influencing protocol development. The Ethereum Foundation itself has undertaken structural changes, including committing 50,000 ETH, approximately $165 million, to DeFi protocols to replenish its treasury, which had reportedly shrunk by 39% over the past three years. These efforts aim to address internal struggles and policy adjustments. Despite these efforts, ETH has consistently underperformed against BTC and SOL for approximately three years. The report also points to a "layer 2 conundrum," where the proliferation of Layer 2 (L2) solutions captures the value of block space, potentially contributing to "negative momentum" in the ETH price. Recent leadership changes saw Hsiao-Wei Wang and Tomasz Stańczak appointed as co-executive directors, with Aya Miyaguchi transitioning to president, in an attempt to enhance technical expertise and community engagement. The Event in Detail: Solana's Memecoin Surge The Solana network experienced unprecedented activity, largely driven by the launch of $TRUMP and $MELANIA memecoins by the Trump family. The $TRUMP memecoin surged from under $10 to a peak of $74.59. The subsequent launch of the $MELANIA token triggered a sharp reaction, causing $TRUMP to plummet by 50% at its lowest point, shedding $5 billion in market capitalization within 40 minutes. This memecoin activity propelled Solana to record-breaking decentralized exchange (DEX) volumes, reaching $28.2 billion and $39.2 billion on January 19th and 20th, respectively. This peak day exceeded the previous all-time daily high across all blockchains combined, with over 10% of Solana's all-time cumulative volume occurring within the seven days surrounding the $TRUMP launch. By September 2025, Solana's DEXs recorded $1.21 trillion in cumulative volume, outpacing Ethereum ($400 billion) and BNB ($761 billion) combined, achieving over 50% DEX market share. The surge, while demonstrating Solana's high transaction processing capacity (65,000 TPS) and sub-penny fees, also stressed the network. The Jito block engine API experienced degraded performance for over three hours, median priority fees jumped 5000x, non-vote transaction count fell 66%, and compute units per block fell 50%. Market Implications The shift in U.S. regulatory policy under the new administration is poised to significantly accelerate institutional capital flow and innovation within the country's digital asset sector. The rescission of SAB 121 explicitly removes a key financial impediment for traditional banks, fostering clearer pathways for corporate adoption of crypto-related services. This move positions the U.S. to potentially attract substantial investment and development in Web3 technologies, offering a more predictable operating environment compared to previous enforcement-heavy approaches. Conversely, the internal debates and underperformance within the Ethereum ecosystem introduce considerable uncertainty for its future market positioning and investor sentiment. While leadership aims to balance scalability and decentralization, the "layer 2 conundrum" suggests that Ethereum's core asset, ETH, may continue to struggle against competitors like Solana without a clear resolution to its economic and governance challenges. Continued underperformance could lead to a further erosion of market share, particularly as other Layer 1s demonstrate superior transaction efficiency and lower costs. Solana's experience with memecoin-driven activity underscores the dual nature of virality in the crypto market. While such events can generate immense network activity and revenue, as evidenced by its record DEX volumes and growing institutional interest—public companies now hold 5.9 million SOL in corporate treasuries—they also expose infrastructure vulnerabilities. The technical strain experienced during the Trump memecoin launches highlights the need for robust scaling solutions, even for high-throughput chains. Despite challenges like validator centralization and high user churn, Solana's ability to handle massive speculative volume positions it as a significant competitor in the Layer 1 landscape, appealing to users and institutions prioritizing speed and cost-efficiency. Broader Context The divergence in performance and sentiment across these major crypto narratives signals an evolving market structure. Regulatory tailwinds in the U.S. may foster a more mature and integrated financial ecosystem for digital assets, potentially drawing traditional finance deeper into crypto. Simultaneously, the internal struggles of a foundational blockchain like Ethereum and the spectacular, yet volatile, rise of memecoin activity on platforms like Solana illustrate the complex interplay of technological development, community governance, and speculative retail interest that continues to define the broader Web3 landscape.

Oct 04 2025, 19:00

BlackRock Recommends Bitcoin Allocation, Driving Institutional Interest Amidst Key Crypto Developments

Executive Summary BlackRock, the world's largest asset manager with $11.5 trillion in assets under management, recently recommended a 1-2% Bitcoin allocation for multi-asset portfolios, a move that could significantly influence institutional investment in cryptocurrencies. Concurrently, major NFT projects like Pudgy Penguins and Milady Makers introduced fungible tokens, aiming to expand their ecosystems and offer new value propositions. Meanwhile, Solana implemented the Agave 2.0 upgrade to enhance network performance and stability. These developments occur as discussions around Google's Willow quantum chip reiterate that current quantum computing advancements do not pose an immediate threat to blockchain security. The Event in Detail BlackRock's Bitcoin Allocation Recommendation BlackRock's report suggests a "reasonable range for a bitcoin exposure" of 1% to 2% within multi-asset portfolios. Bloomberg Senior ETF Analyst Eric Balchunas highlighted this recommendation. BlackRock's IBIT exchange-traded fund, the largest spot Bitcoin ETF, holds over $50 billion in assets under management and recently surpassed its gold ETF in total net assets. The BlackRock Global Allocation Fund increased its IBIT holdings by 38.4% in Q2, reaching 1,000,808 shares valued at $66.4 million as of July 31. Its IBIT allocation now represents 0.4% of the fund's $17.1 billion assets under management, a 62.5% increase from Q1. This shows a methodical approach towards the recommended 1-2% target. NFT Projects Launch Fungible Tokens Pudgy Penguins launched the $PENGU fungible token on Solana, which has contributed to the collection becoming the second-largest NFT collection by market capitalization. This strategy leverages NFTs, gaming, and social engagement to bridge collectibles and fungible tokens. Milady Makers introduced the $CULT token via its Remilia Corporation, reaching a market valuation of $500 million shortly after its high-profile airdrop. The updated white paper for $CULT outlines development through 2027 and indicates an increase in supply by a factor of 10. The initial airdrop distributed $270 million worth of tokens to approximately 10,994 holders on Ethereum, with notable recipients including Stani Kulechov of Aave and Tom Schmidt of Dragonfly Capital. Despite the token launch, the floor price of Milady Maker NFTs declined by approximately 25% in the preceding week. Solana Network Upgrades Solana's Agave 2.0 upgrade introduced partitioned epoch rewards on the mainnet in epoch 707. This change distributes stake rewards across multiple blocks, mitigating performance bottlenecks and resulting in smoother network operation. Additionally, Timely Vote Credits (TVC), implemented in November 2024, incentivize prompt validator voting and discourage delays. Since approximately epoch 700 in November 2024, skipped slot rates have dramatically declined from 2%-5% to near zero for optimized validators, indicating significant performance improvements. Quantum Computing and Blockchain Security Google's Willow, a new 105-qubit quantum chip, has demonstrated the ability to solve complex problems in under five minutes that would take traditional supercomputers billions of years. Despite this advancement, experts, including AVA Labs founder Emin Gün Sirer, maintain that quantum computing poses no immediate threat to Bitcoin's security. The current consensus is that quantum computers are still 10-20 years away from being able to crack modern cryptographic encryption. Bitcoin transactions utilize a two-way hash function that keeps public keys hidden until a transaction is initiated, making funds at rest "quantum-resistant." Quantum risks emerge only during the brief 5-30 minute window when a transaction exposes a public key, allowing insufficient time for current quantum attacks. Market Implications BlackRock's endorsement of a 1-2% Bitcoin allocation could catalyze significant institutional capital inflows, potentially reaching $1 trillion. This recommendation, coupled with the success of BlackRock's IBIT ETF and the Global Allocation Fund's increased exposure, underscores a growing mainstream acceptance of Bitcoin as a legitimate asset class. Such institutional validation is expected to contribute to a gradual dampening of Bitcoin's volatility over time. The introduction of fungible tokens by prominent NFT projects like Pudgy Penguins and Milady Makers signifies an evolution in the NFT market. These tokens broaden market appeal beyond pure speculation, offering additional rewards and integration within wider Web3 ecosystems. The success of $PENGU in elevating Pudgy Penguins' market capitalization demonstrates a new model for value capture and innovation within the NFT space. The contrasting impact on Milady Makers' NFT floor price suggests that token launches require careful strategic alignment with the core collection's value proposition. Solana's network upgrades, particularly partitioned epoch rewards and Timely Vote Credits, enhance its scalability, efficiency, and user experience. These technical improvements are critical for supporting Solana's growth as a major blockchain platform, attracting developers and users, and bolstering its competitive position in the decentralized application ecosystem. While Google's Willow chip represents a notable leap in quantum computing, the prevailing expert opinion is that blockchain security remains uncompromised for the foreseeable future. However, this advancement serves as a persistent reminder for ongoing research and development into quantum-resistant cryptography (PQC). The blockchain industry continues to prepare for future quantum challenges by considering upgrades to cryptographic systems and exploring new PQC standards to maintain long-term resilience. Vanguard's consideration of offering access to crypto ETFs, a significant departure from its previous anti-crypto stance, highlights the increasing pressure on traditional financial institutions to adapt to growing client demand and the success of digital assets. This potential shift, influenced by BlackRock's success and a leadership change at Vanguard, could unlock substantial capital flows into existing crypto ETFs and further accelerate mainstream adoption. Expert Commentary BlackRock's classification of a 1-2% Bitcoin allocation as "reasonable" within multi-asset portfolios indicates a strategic endorsement from a leading global asset manager. Regarding quantum computing, AVA Labs founder Emin Gün Sirer stated that while quantum computing's potential is impressive, the technology currently operates on a linear scale, meaning the window for a quantum attack on Bitcoin is still very small. Experts also note that quantum computers are still 10-20 years away from being able to crack current crypto encryption. Broader Context The increasing institutional interest in Bitcoin, exemplified by BlackRock's recommendation and its Global Allocation Fund's growing IBIT holdings, signifies a broader trend of digital asset integration into traditional financial portfolios. This trend is further underscored by Vanguard's reevaluation of its crypto ETF policy, suggesting a systemic shift towards recognizing cryptocurrencies as legitimate investment opportunities. The evolution of NFT projects through fungible token launches, such as Pudgy Penguins' $PENGU and Milady Makers' $CULT, showcases the dynamic innovation within the Web3 ecosystem. This strategy aims to create more utility, engagement, and diverse revenue streams beyond simple digital collectibles, fostering a more interconnected and value-driven digital asset landscape. The continuous advancements in blockchain technology, as demonstrated by Solana's Agave 2.0 upgrade, are crucial for supporting the scalability and efficiency required for widespread adoption of decentralized applications and services. These improvements are essential for the long-term viability and competitiveness of blockchain platforms. While quantum computing currently poses no immediate threat to blockchain security, the ongoing progress in quantum technology necessitates proactive research and development in post-quantum cryptography. This ensures that the cryptographic foundations of digital assets remain secure against future advancements, safeguarding the integrity of the blockchain ecosystem.