One of the reasons I got into crypto is because I believed it could become the next generation of financial infrastructure and change the world in a positive way.
Not just new rails. New ownership. For the first time in history, the average person could own a piece of the financial infrastructure they depend on — not just use it. That idea still excites me more than almost anything else in this space.
But we have a problem. And I think it's time to be honest about it.
The Next Financial Infrastructure — Or Just a High-Stakes Casino?
If we put Bitcoin aside, most smart contract L1s — and I'll use L1s as shorthand throughout, but I mean L2s too — were pitched as the "next financial rails." Freedom from bad intermediaries. Financial sovereignty. Infrastructure for the world.
One way to measure whether a financial system is working is to ask three questions: Does it run reliably? Does it deliver stated utility? Is its value grounded in basic economics?
On the first question, L1s have genuinely impressed. The uptime, the scale — that's real.
On the second, the picture is murkier. Products launched. Protocols shipped. But when you take a step back, most L1s are, for the most part, high-stakes casinos without the "next-gen financial infrastructure" they promised. I've gone deep on the technical reasons elsewhere — on podcasts, on X — but the simplest version is this: there is no meaningful institutional adoption on most chains. Where institutional assets exist onchain, they're using L1s as a distribution channel, not running a business on them.
QUICK NOTE: There are exceptions to what I wrote above. There are real builders who are trying to build good financial products that strive to create the next financial upgrade.
Which brings us to the third question: value.
The Fee Illusion
Hunter wrote the following today: https://x.com/HHorsley/status/2057251328951456228
I usually agree with @HHorsley, but I think he is missing a critical point (beyond the fact he didn't include $CC fees in his post) in his post. Something worth examining carefully. When you look at "fees" on most networks, you need to ask: what is someone actually paying for?
Many networks have priority fees (MEV). These fees aren't burned. They go directly to validators to jump the queue. In most cases, the people paying these fees are arbitrageurs executing risk-free trades. They're not paying for utility. They're paying to extract value from the network.
When you strip out priority fees and look at true utility fees and therefore how much was burned from the total supply, the numbers are sobering. Most top chains have burned significantly less than 5% of total supply after years in production. And when you calculate valuation multiples against true fees, you get numbers in the thousands. No company in the world, no matter how exciting, no matter how fast-growing, trades anywhere close to that multiple. So why does crypto?
Because We've Been Selling Stories to Retail
That's the honest answer.
Retail investors have been carrying the weight of network valuations that have no real utility underneath them. They've been the demand. The speculation. The liquidity. A lot of individuals got very rich from this model. But it is not a foundation for the next financial infrastructure. And it isn't fair to the people who believed the pitch.
If we want to build something real, we need a valuation framework grounded in actual utility — not narrative.
A Different Approach: Burn/Mint Equilibrium
When we built Canton, we designed a mechanism at the protocol level to make the network track utility rather than speculation. It's called Burn Mint Equilibrium (BME).
Here's how it works.
Fees on Canton are denominated in dollars. At the moment of a transaction, the number of $CC tokens required equals the dollar fee divided by the current $CC price. This means the two variables that drive burn are: dollar utility on the network, and the price of $CC.
Two examples make this concrete.
Speculation without utility growth: The network burns $10,000 in fees in block one. $CC is at $0.10, so 100,000 tokens are burned. Someone then buys $CC aggressively and doubles the price to $0.20 — but utility hasn't changed. In block two, the same $10,000 of fees only requires 50,000 tokens. The mint curve hasn't moved. The network is now more dilutive. Speculation without utility punishes the network. As it should.
Utility growth without speculation: Same starting point — $10,000 in fees, $CC at $0.10, 100,000 tokens burned. Now utility doubles in block two. $20,000 in fees at $0.10 requires 200,000 tokens burned. The mint curve is fixed. The network is now less dilutive. Utility growth rewards holders.
The equilibrium point is where burn equals mint. If utility keeps growing while price holds steady, the network eventually turns deflationary — and at that point, price should adjust upward to restore equilibrium. The mechanism forces price to follow utility, not the other way around.
This is what a value framework grounded in basic economics looks like.
Why Institutional Adoption Is the Unlock — For Everyone
Here's where it comes full circle. They offer Scale & Consistency.
If we can bring real institutional utility to Canton — and when you look at who we've already started working with, you can see where this is going — we create a natural flywheel. Institutions need $CC to pay for transactions. They buy it to use it. That demand is grounded in real economic activity, not stories.
And when that flywheel turns, something changes for retail. To put it in perspecitve, @CantonNetwork have been in production for just under two years and it already burnt more than 8% of the supply.
Retail investors stop being the ones carrying the network. They become the beneficiaries of it. The owners of infrastructure that institutions depend on. That was the original promise of crypto — and it's the one worth keeping.
That's why we push so hard at @digitalasset to bring institutional players onto Canton. Not to make the network look impressive on paper. But because institutional adoption, done right, is what finally makes this work for everyone else.
There's more to do — bringing burn to subnets, getting critical partners into production. But the direction is clear. And I'm genuinely excited about where it leads.
