Why Wall Street is moving onchain and how Canton is different

Wall Street has flirted with blockchains for years, but most experiments never left the pilot phase. Canton Network is one of the rare exceptions: it’s already being used by names like Goldman Sachs, DTCC, Nasdaq, Visa, and Societe Generale to build real financial infrastructure onchain.

Instead of trying to be another general-purpose smart contract chain like Ethereum or Solana, Canton is built specifically for regulated finance. Its design focuses on privacy, legal control over assets, and a governance model that large institutions can actually sign off on.

What Canton is (and isn’t)

Canton is not trying to be a public, permissionless chain for everything. It’s designed as a base layer for capital markets, clearing, collateral, and other “boring” but massive TradFi use cases.

The core idea: Canton is a “network of networks” rather than one big monolithic blockchain. Each individual network is called a “canton” (inspired by Switzerland’s cantons). Every canton can have its own rules, permissions, and privacy settings, but they can still transact with each other atomically.

So instead of one global ledger where every node sees everything, Canton lets you spin up many specialized ledgers that can still interoperate when needed.

How the network of networks model works

To understand Canton’s architecture, imagine two separate cantons:

• One canton for payments and stablecoins

• Another canton for US equities

If you want to do a delivery-versus-payment (DvP) trade — moving equities in one direction and stablecoins in the other — Canton coordinates this across both cantons in a single atomic transaction.

This coordination is handled by a public infrastructure layer called the “global synchronizer.” It doesn’t see the contents of transactions; it just ensures that all legs across different cantons either succeed together or fail together.

This design has two big consequences:

• Horizontal scalability – You’re not bottlenecked by one global sequencer or validator set processing everything.

• Jurisdictional flexibility – Each canton can comply with local laws (for example, data residency rules) without forcing the whole network to follow the same constraints.

Issuer sovereignty: why control matters for institutions

One of Canton’s core differentiators is “issuer sovereignty” — the idea that the legal owner or issuer of an asset must have full control over it, without being at the mercy of anonymous validators or a security council.

On most public chains, the same actors (validators) both:

• Coordinate transactions

• Store and validate the ledger’s data

This means that with enough control over validators — say, a 51% attack or a powerful security council — the ledger can be forked or altered. We’ve already seen examples: major chains have reversed or frozen funds, and some rollups have small councils that can unilaterally change state.

For a clearing house or large bank, that’s unacceptable. They need “perfection of security” — a legal term meaning they have full, uncontested control over pledged collateral or assets. If third parties with no legal relationship to them can change the ledger, they can’t treat that ledger as their official books and records.

How Canton separates coordination from data

Canton solves this by splitting roles:

• Super validators (global synchronizer) coordinate transactions across cantons but never see or store the underlying data.

• Validators / nodes for each canton store and validate the actual transaction data for that canton.

The global synchronizer is “blind” — more like an internet service provider routing packets than a traditional blockchain validator. Even if 51% of super validators colluded or were hacked, they couldn’t rewrite anyone’s books and records because they don’t hold the data.

The data lives with the institutions themselves, on their own nodes, under their own legal and operational control. That’s what gives issuers and market infrastructures the confidence to treat onchain records as the official source of truth.

Why privacy is built into the architecture, not bolted on

Most public blockchains were designed for transparency: data is replicated to every node. Privacy solutions are usually layered on top via encryption or zero-knowledge proofs (ZK).

Canton takes the opposite approach: privacy is a first-class design constraint. Data is not broadcast to everyone by default. Only the parties that need to see a transaction see it.

This matters because many regulations don’t just care whether data is encrypted — they care where it physically resides and who holds it. For example:

• In Switzerland, data domicile laws say financial data (encrypted or not) can’t leave the country in physical form.

• In the US, HIPAA rules restrict how medical data can be shared, even if it’s encrypted.

If your base-layer design is “replicate everything everywhere,” you’re already out of compliance in many jurisdictions. Canton’s canton-by-canton model lets institutions keep data local and private while still participating in a shared network.

Why zero-knowledge alone isn’t enough for regulated finance

Zero-knowledge proofs are one of the most hyped privacy tools in crypto. They can prove that a statement is true (for example, “this user is KYC’d”) without revealing the underlying data.

But in regulated finance, that’s often not enough. If a fund onboards a client, it’s the fund — not the ZK system — that’s legally responsible. If there’s a bug or exploit (like the recent Zcash Orchard issue that allowed undetected minting), the regulator won’t accept “the ZK proof said it was fine” as a defense.

Similarly, a clearing house can’t accept collateral it can’t actually see and verify, especially in stress events. Institutions need direct visibility and auditability, not just cryptographic assurances.

That’s why Canton uses privacy at the data-routing and permissioning level first, and sees ZK as a complementary tool rather than the core trust anchor.

Tokenization theater vs real onchain capital markets

“Tokenization” is one of the industry’s favorite buzzwords, but most tokenization today is what Yuval Rooz calls “tokenization theater.”

In many projects, the onchain token is just an IOU pointing to an offchain ledger. The real books and records — the legally binding record of who owns what — still live in a traditional database at a custodian, bank, or issuer.

That means:

• You’re adding another layer of counterparty risk (you must trust the tokenizer to be honest and solvent).

• You haven’t actually solved reconciliation problems, because onchain and offchain records can still diverge.

By contrast, Ethereum “works” for ETH because the chain is the books and records for ETH. There’s no offchain ledger of real ETH somewhere else. When you deposit ETH into Aave, the onchain pledge is final and complete.

Canton’s goal is to bring that same property — the ledger as the single source of truth — to real-world assets (RWAs). That means no shadow ledger offchain. The asset exists natively onchain, and the legal documentation recognizes the chain as the official record.

This is a very different vision from most RWA experiments today, and it’s a key reason Canton is often mentioned alongside other serious RWA infrastructure plays in discussions about how “all the money is coming onchain.” For more context on that broader trend, see how XRP, Solana, Hedera, Canton and Chainlink are moving real-world value onchain.

What Canton enables that TradFi can’t do today

Some of Canton’s value is “faster and cheaper,” but the more interesting parts are things that are practically impossible with today’s fragmented, slow infrastructure.

1. Real-time treasury optimization

Large global companies often sit on huge piles of idle cash — sometimes billions — spread across entities and jurisdictions. They use treasury management systems to guess where money will be needed and keep buffers in place because moving funds or switching into yield products (like money market funds) usually takes T+1 or T+2.

With tokenized deposits and tokenized money market funds on Canton, firms can move from cash to yield-bearing instruments and back in real time, 24/7. That means:

• Less idle cash sitting in non-yielding accounts

• More of the treasury earning yield without sacrificing liquidity

For a company with $1 billion in operational cash, this could mean an extra $30–35 million a year in revenue with no change to the underlying business — just better rails.

2. Dramatically more efficient collateral and margin

In derivatives, prime brokerage, and clearing, the amount of margin you must post depends not only on portfolio size and volatility, but also on how often collateral can be adjusted.

The longer the time between margin calls or settlements, the more risk builds up — and the more collateral you must lock up. That relationship grows non-linearly (roughly with the square root of time), so shrinking the time window can have an outsized impact.

With Canton, institutions can move towards near real-time margining across multiple venues and counterparties. Analysis with sophisticated trading firms suggests that if most of their counterparties supported real-time margining on Canton, they could see a 40–60% uplift in balance sheet efficiency.

In practical terms: a trading firm generating $1 billion in revenue today with a given balance sheet might be able to generate $1.4–1.6 billion using the same capital, just by running on better collateral rails.

Guardrails vs DeFi-style yield games

For anyone who lived through the 2022 contagion — Celsius, Three Arrows, BlockFi, and the rest — talk of “better yield” can sound like a red flag. But Canton’s approach is very different from DeFi yield farming.

In DeFi, many high yields came from:

• Made-up assets with no connection to real cash flows

• Massive leverage (“looping”) on volatile collateral

• Opaque risk that retail users didn’t understand

Canton isn’t trying to reinvent finance or create new speculative yield out of thin air. It’s trying to run existing markets — like the $13 trillion-a-day repo market — on better rails. The goal is not to turn $13 trillion into $50 trillion; it’s to make the existing $13 trillion flow more efficiently, shaving basis points of cost and unlocking idle capital.

That’s a fundamentally different risk profile from the leveraged DeFi experiments that blew up in 2022.

Governance: what happens if the founding company disappears?

Canton’s technology was created by Digital Asset, but the network is not controlled by a single company.

Key points about governance:

• There are around 50 super validators running the global synchronizer, including DTCC, Nasdaq, Visa, SBI, DRW, Tradeweb, Broadridge, and others.

• The entire codebase is open source and controlled by an independent foundation, not by Digital Asset.

• Digital Asset does not chair the foundation. For example, Euroclear and DTCC chair the foundation, Tradeweb chairs the technical committee, and another institution chairs the tokenomics committee.

Digital Asset is one voice among many. It still has significant influence as the original developer, but it cannot unilaterally change the rules or seize control. If Digital Asset disappeared tomorrow, the network and its governance structure are designed to continue without it.

Canton’s token model and burn mechanics

Unlike many crypto projects, Canton’s token economics are deliberately conservative:

• No pre-mine for founders

• No free VC token allocations or penny-priced token warrants as part of equity rounds

• Founders and employees are not compensated with token allocations; any exposure they have comes from buying on the open market

Investors in Digital Asset’s $355 million funding round received equity in the company, not tokens. If they hold tokens, they acquired them separately, at market prices.

On the network side, there are no MEV-style priority fees. To transact on Canton, you must burn tokens — that’s the core fee mechanism. As a result, a meaningful share of the total supply has already been removed from circulation.

According to Rooz, in less than two years of production:

• Roughly 8–9% of the total supply has already been burned

This is a much higher burn ratio than most major L1s, where only a small percentage of total supply has been burned despite years of activity. The thesis is simple: if institutional volumes grow on Canton, demand for transactions (and thus burns) should grow with them, steadily reducing supply.

This burn-based model is conceptually similar to what has attracted attention to other protocols that tie token value directly to real economic activity and fee flows. For a broader look at how markets are starting to price in fundamentals like this, you can also check out this analysis of Ethereum’s long-term value drivers.

Why Canton matters for crypto

Canton is not trying to replace Bitcoin as sovereign money or compete with Ethereum as a general-purpose smart contract platform. Its ambition is narrower but potentially enormous: become the native rail for real-world capital markets activity.

If it succeeds, the implications are big for both TradFi and crypto:

• Institutions get privacy, legal control, and governance they can live with.

• Onchain assets become the actual books and records, not just marketing wrappers.

• Token value is tied to real, large-scale economic flows rather than purely speculative narratives.

For crypto natives, Canton may look “boring” compared to the latest memecoin or experimental DeFi protocol. But it’s precisely in those boring, quadrillion-dollar markets — collateral, clearing, repo, treasury — where blockchains can quietly have the biggest impact.