ARK rebuts a16z claim on TradFi, DeFi and permissioned chains

Lorenzo Valente, director of research at ARK Invest, challenged a16z crypto’s view that banks and asset managers will adopt permissioned blockchain systems instead of public decentralized finance. Valente posted his response on X on Wednesday, referencing growth in tokenized assets on Ethereum and other open networks.

A day earlier, a16z crypto argued that traditional financial firms are unlikely to embrace DeFi broadly and will instead build institutionally controlled, permissioned systems that use blockchain features such as tokenization and atomic settlement. The firm described a model where programmable financial infrastructure borrows certain blockchain primitives while remaining governed by existing institutions.

Valente countered that public blockchains have outperformed private blockchain efforts and highlighted increasing issuance and activity of tokenized assets on open networks. He identified crypto-native firms, including Circle and Coinbase, as better positioned than incumbent banks to develop services and layer products on public chains.

Jesus Rodriguez, co-founder of Sentora, also pushed back on a16z’s thesis. He suggested that institutions could adopt DeFi protocols as underlying rails while adding enterprise-level controls for compliance, custody and governance to meet regulatory and operational needs.

Permissioned blockchains limit who can validate transactions and are typically governed by institutions, a design proponents say aligns with existing compliance frameworks. Decentralized finance runs on public, permissionless chains where open protocols enable automated trading, tokenization and instant programmatic exchanges without centralized intermediaries.

Neither ARK nor a16z offered a specific timeline for widespread adoption by traditional finance. The debate highlights divergent expectations about whether incumbent firms will build controlled, permissioned systems or whether open networks plus added enterprise controls will be used to meet institutional requirements.