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Yuval Rooz is the bluntest commentator on the smart contract industry If you say that you’re the future plumbing of global finance, then you should be the cash flow guy.
These networks have been valued by people based on what they say they’ll become.’ Rooz, CEO of Digital Asset and co-founder of the Canton Network, said ‘We are very much in touch with this network because we think it is worth more than any other company that has given us so much value to them. And, when you see the actual business they’re doing, there’s a huge disconnect. ” , ‘I’m sure it is worth reading.
This is a privacy-based blockchain architecture called the Canton Network, which attempts to connect financial institutions and their tokenized assets across interoperable, permissioned apps.
There is no single chain, it’s not the issue. In a conversation with CoinDesk, Rooz said “There were many smart contract networks designed for retail speculation and token trading (not for regulated, institutional financial workflows).
When you look at metrics such as sustained economic throughput, recurring revenue and real-world asset activity, there is often a difference between valuation and actual financial use. The design philosophy of privacy, compliance and interoperability is very different for building infrastructure that can be used to build the infrastructure for global institutions,” he said.
He isn’t anti-crypto,’ said Rooz, who worked at DRW and Citadel before founding Canton. He contrasted assets such as bitcoin BTC$67,694 with assets like. 16 “Marketplace of value or digital gold” and smart contract platforms that promise to transform financial infrastructure.
Rooz said ‘Gold and silver are worth it because the market gives them gold. “Bitcoin is an asset class,’ he said. Nevertheless, smart contract networks sell themselves as the future of financial rails. financial institutions, if that’s the pitch and that is what they are doing with them at scale. ” , ‘I’m sure it is worth reading.
In his view, most aren’t.
If you’re processing very small amounts of value on your network, how does the market give you a $10 or $11 billion valuation? He said ‘Big-cap chains that have limited real world financial throughput. It’s a memecoin at the end of the day,’ . But it’s not the problem it said it would solve, and that’d be a question for . – ’.
A speculative design flaw
The gap is partly from token design, Rooz claimed, and was partially due to the use of . The issuance model of bitcoin was copied by many networks, minting tokens to reward validators (although bitcoin is an asset secured by miners), not a platform that can be used for financial applications hosting.
He said ‘Bitcoin is an asset class, not a platform. People who secure the asset class get paid,’ . But that’s the blunder, and everyone copied that model for smart contract chains. Paraphrast.
Similarly, on many networks new tokens are issued mostly to validators regardless of whether the chain is creating meaningful economic activity. When use is very thin, inflation dilutes holders hold the holder of inflation and little value accumulates back to the token.
On the other hand, Rooz said Canton’s token is designed to reflect the dollar utility of the network itself. No priority or front-running fees are charged and all transactions burns tokens, with no priority or any expense associated with the transaction. When use is increasing in dollar terms, more tokens are left out of circulation if usage increases.
But if you think the network’s USD utility will keep increasing, more tokens will be out of circulation and the price should go up,” he said.
Canton also has a “mint curve” with new tokens issued at regular intervals. But that doesn’t mean only validators are allowed to use those tokens, just as . They’re distributed to users and apps that charge the network on their own.
“Compensating builders should be merit-based,” Rooz said. “Can you bring customers? Can you generate fees? That’s how you get paid.”
Hyperliquid is a model that appeals to investors the trading platform makes money and uses it to buy back tokens, he said. price when you do buybacks,’ . And, he said, that’s a much more convincing reason to hold.
In other words, value must flow.
Founded by CAnton in December, the company Digital Asset said that it had acquired strategic investment from four big mainstream financial investors. The round was attended by investors who were BNY, a financial services company with $57 trillion in client assets, exchange operator Nasdaq, financial intelligence firm S&P Global and iCapital, Fintech firm supported by BlackRock, Blackstone and JP Morgan.
Bloomberg recently began publishing data related to activity on Canton, and the Depository Trust & Clearing Corporation (DTCC), industry-owned clearing and settlement market infrastructure, said in December that it had chosen the network as its tokenization partner “in order to demonstrate growing institutional traction.”
The limits of TVL
Rooz is equally skeptical of total value locked (TVL) as a headline metric.
“TVL is a very bad metric in isolation,” he said. “What matters is usage.”
Canton’s design emphasizes configurable privacy for institutional participants, and in turn much of the network activity is not publicly broadcast. Hence, traditional DeFi-style dashboards have been left unfinished.
Because transactions can remain confidential, “we rely on participants to publish information about what they’re doing onchain,” Rooz said.
In addition, a number of data points are emerging. In Canton, Rooz said Broadridge, an investment bank provider that provides financial infrastructure services for the region of Capton, processes about $400 billion in repo transactions per day. The network’s equivalent volumes are similar to those of other projects that have a on them, he said.
Network now generates up to $2-$ from the network, . Rooz said ‘I want to double that, with plans for 5 million and $3 million in daily fees.
Rooz said ‘If any profit that it makes is used to buy back stock and performance keeps going up, the share price should go up.’ A company bylaws saying “if you have this money on your books” were in place for an investment or business, then they will be buying back stocks”. The same should be done with a decentralized network,’ . look at money,’ . Look for growth,” . ” , ‘I’m sure it is worth reading.
A coming reckoning
The broader market, he said, is starting to apply that lens.
Rooz said ‘When the market is good, money becomes memes and speculative tokens when it’s going to be. investor much more demanding when the market turns around,’ said . The , “It’s a great deal of fun.”
During recent downturns, he noted that many altcoins who sold themselves as smart contract platforms have been “reviscerated”. Meanwhile, tokens associated with revenue-generating platforms have been rewarded better.
For Rooz, this signals a shift toward what he calls a more “rational economic structure.”
“Crypto has defied the laws of gravity for some time,” he said. “But eventually gravity wins.”
Stablecoins and product-market fit
Even stablecoins, often hailed as crypto’s breakout use case, haven’t fully crossed the chasm in Rooz’s view.
he said ‘Stablecoins haven’t been the product-market fit to date. When more than half of usage is not crypto-related, you can say stablecoins are fit for product-market fit. Paraphrast.
But today he said, “a lot of stablecoin demand is driven by crypto trading and onchain speculation.” Few activity is still dominated by real-world payment payments or noncrypto financial applications.
The strategy of Canton, who aims to deepen into the traditional finance industry, is real-world assets and collateral onchained. The network announced recently that it is pursuing gold related projects and plans to add more non-crypto collateral integrations.
The goal is straightforward: move beyond crypto-native assets and into mainstream financial workflows.
Financial companies should be using them for financial applications if smart contract chains are the next set of financial rails,’ said Nasz. This is the value oftake, activity and usage; take upro. Paraphrasingr ’It is.
As for where Canton’s token price goes from here?
“If you’re chasing token price, you’re chasing the wrong thing. Focus on utility. Focus on building real financial infrastructure.”
The rest, he suggested, is gravity.
The Canton coin (CC) was trading around $0 in the exchange for Capton coin. When was the publication time for 1538? The token has increased about 2% year-to-date, better than wider crypto markets. The token currently has a market cap of around $6 billion.
Read more: From Wall Street to Web3: This is crypto’s year of integration, Silicon Valley Bank says
Thanks for reading Canton’s Yuval Rooz says smart contract blockchains face a reckoning over value gap
