Disclosure: The opinions expressed here are solely those of the author and do not reflect the views of crypto.news’ editorial team.
The crypto industry faces a significant infrastructure issue that often goes unaddressed: we are constructing financial systems on blockchains that were not designed for such purposes, prompting a need to reevaluate blockchain architecture.
Summary
- General-purpose blockchains struggle with financial applications. Sequential execution leads to bottlenecks; financial transactions require parallel processing for effective scaling.
- Composability enhances ecosystem value. Shared foundational infrastructure allows protocols to build upon each other, decreasing fragmentation and fostering capital-efficient, yield-generating products.
- Institutional acceptance requires robust infrastructure, not just features. Compliance modules, KYC, and auditing on decentralized systems are essential for genuine institutional engagement.
I recognized this right away when we began developing Momentum. Many protocols launch as standalone products—a DEX, a lending market, or a staking solution—viewing each as a distinct tool rather than as components of an interconnected system. This segregation uncovers a deeper architectural issue. The underlying blockchain framework simply wasn’t designed to meet financial requirements: parallel processing at scale, composable building blocks, and reliable infrastructure for other protocols to leverage.
This issue is not just theoretical. It manifests in transaction failures during high demand, inefficiencies in liquidity markets, and an ecosystem where each protocol works in isolation rather than synergistically.
The real constraint: Blockchains weren’t designed for finance
When selecting a platform for our DEX, my choice was clear, though many found it surprising. The common question was: Why not Ethereum (ETH)? The answer highlights my perspective on infrastructure.
Consider the fundamental contrast between Ethereum’s and Sui’s transaction processing. Ethereum employs a sequential execution model, necessitating that every transaction be processed in order, leading to bottlenecks under stress. This wasn’t a flaw in Ethereum’s design; it was not its intended application. Ethereum was conceived as a general-purpose computing platform.
Finance needs a different approach. Most financial transactions are independent. When Alice swaps tokens and Bob stakes assets, these actions are not interdependent. Sequential processing creates unnecessary congestion. Hence, parallel processing is not merely an enhancement; it is structurally essential.
Sui was purpose-built with parallel execution and an object-centric design utilizing the Move programming language. This architectural decision goes beyond speed—it enables an entirely new category of scalable financial products to emerge.
The results arrived sooner than anticipated. Within six months, our DEX grew from zero to $500M in liquidity and $1.1B in daily trading volume, achieving $22B in cumulative trading volume while welcoming 2.1 million users without significant congestion. Processing such volume without transaction failures is not just a marketing triumph; it underscores fundamental architectural strength. Attempting to reach those figures on a sequentially-executing blockchain would illustrate why architecture is crucial.
Why infrastructure composability matters more than individual products
I’ve discerned a more subtle issue: financial products should act as composable building blocks rather than isolated silos.
An effectively designed financial infrastructure layer should enable other protocols to build upon shared foundational elements. If each protocol must create its treasury management, staking solution, and liquidity infrastructure, the ecosystem will fragment. Developers waste time solving the same issues instead of innovating new solutions. I’ve witnessed this scenario unfold repeatedly across various chains.
This is where many protocols falter. They may excel in creating one product, but then the surrounding ecosystem solidifies. Each new protocol essentially begins from scratch.
When developing our protocol, we intentionally opted to do more than create a DEX. We constructed foundational primitives that other protocols would logically choose to utilize instead of rebuilding them. MSafe, our treasury management solution, now safeguards hundreds of millions across the Move ecosystem—not via enforced adoption, but because it effectively addresses a genuine problem better than the alternatives.
More protocols utilizing shared infrastructure leads to increased integration points, greater composability, and enhanced system value for all. This only succeeds if the foundational elements are genuinely effective. Concentrated liquidity market-making technology aligned with incentives achieves capital efficiency unmatchable by traditional AMMs, while liquid staking producing yield-bearing receipt tokens generates simultaneously productive collateral. Reliable multi-signature treasury management diminishes friction for protocol governance.
These are not merely conveniences; they’re essential for fostering an ecosystem that compounds value rather than fragments. This precisely enables Momentum to offer infrastructure that other protocols rationally prefer to build upon rather than reconstructing their solutions.
The institutional capital problem is infrastructure, not features
Crypto has historically faced challenges regarding institutional adoption. The common rationale points to regulatory ambiguity or user experience issues. The actual bottleneck is often simpler: institutions cannot engage with decentralized infrastructure lacking compliance capabilities.
This should not push for centralization; it advocates for the creation of robust layers atop decentralized infrastructure. By offering permissioned compliance as an optional module, allowing institutional users to verify their identities and trade with full regulatory transparency while keeping the base infrastructure permissionless, we address this issue without compromise.
Institutions are unlikely to commit substantial capital to systems that cannot guarantee regulatory auditing, KYC verification, or compliance documentation. These are not mere features; they are structural necessities for institutional involvement. This is not a matter of gatekeeping but rather an acknowledgment of reality.
The actual argument
My assertion, independent of any specific protocol, is that blockchains designed for general computation cannot effectively function as financial infrastructure. Finance necessitates an architecture explicitly designed for parallel processing, composable building blocks, and institutional compliance. Protocols will gravitate toward blockchains possessing these characteristics—not due to trends, but because the economic advantages of operating on superior infrastructure are irrefutable.
This is not a statement that “Sui is superior to Ethereum.” Ethereum can and should continue to evolve. Layer-2 solutions are valid approaches. This argument emphasizes that financial systems require distinct architectural foundations distinct from general-purpose computing platforms.
The corollary is less apparent: if a blockchain is specifically designed for finance and achieves significant uptake, it becomes the logical basis for financial innovation. Not through marketing, but because other protocols rationally select to build there.
The pressing question for the sector is not which chain “prevails.” It is whether we are prepared to recognize that a one-size-fits-all blockchain architecture was never suitable and that specialized infrastructure yields superior financial results.
That understanding transforms everything regarding how protocols ought to be built and where they should be deployed. It has shifted my perspective on Momentum, and it should influence your considerations on future developments.
