An op-ed by Cameron Nili, Banking and Capital Markets Lead at LayerZero Labs
I spent nearly a decade in traditional finance (affectionately called TradFi) before moving to the protocol level at @LayerZero_Core. I’ve sat across the table from the same institutions now grappling with strategic questions, one of which, in my view, is now solved.
When I say the debate between permissioned and permissionless blockchain is settled, it comes from watching TradFi run the full experiment, from the late 2010s to now.
Permissionless used to be a bad word
The world I come from treated the term permissionless as a bad word—it represented undue risk and all the negative headlines that came with DeFi and crypto at the time. So, the industry bet big on consortiums—walled gardens powered by permissioned systems, or networks that required explicit permission to transact and/or view transactions.
Permissionless means that participation in the network should be accessible to anyone and everyone.
The logic was solid: get enough major players behind a fence and network effects would follow. Only in rare circumstances did this strategy work—namely with very few Tier-1 banks who had intrinsic global network effects that pre-dated these new systems. For everyone else, this was largely a failed experiment.
For years, markets have relied on a patchwork of legacy systems to trade and settle assets. While tokenization promised a fix, it initially just created new “digital liquidity islands.” The solution isn’t another island. It’s universal rails. What we need is Better Money Technology.
The Blueprint for Value: An Open Base Layer
The modern internet offers the best blueprint for how this ends. TCP/IP (what gave rise to HTTP, etc.) didn’t ask permission. It gave the world a common standard for transmitting information. The openness of the base layer is precisely what made the explosion at the application layer possible.
When you send an email from Yahoo Japan to Gmail USA, do you ever wonder how rich text and media transfer seamlessly across providers, languages, and borders? That's thanks to open protocols—TCP/IP for delivery, SMTP and MIME for messaging—that no single company owns or controls. And yet, layered on top of those open rails, providers like Gmail enforce authentication standards like SPF and DKIM to keep out spam and bad actors. Permissioned rules, running on permissionless infrastructure
Check your spam folder if you don’t believe me.
The same principle applies to the base layer of next-gen financial infrastructure.
The architectural reasoning is simple: You can build permissioned systems on top of permissionless ones—but you cannot do the reverse.
Start with a closed system and you inherit those constraints forever. Start with an open one and you can build anything on top of it—including the compliance, access controls, and regulatory logic that institutions require. Effectively, build as many closed systems as you’d like on an open system. This argument has been made before, but institutions are only now internalizing its implications.
While this may feel like a philosophical point, it's actually an architectural one. Institutions that get this wrong will find themselves re-platforming in five years while their competitors are scaling.
This isn’t a dismissal of the work institutions have done building their own "bank chains". That experimentation proved that institutions can operate onchain and that compliance and blockchain are not mutually exclusive. While these bank chains will always play a role in modern finance, they naturally have a ceiling unless the necessary liquidity mesh is established and customers don’t complain.
The question is no longer whether blockchain works inside an institution. It’s whether those institutions can connect to the world.
As seen recently in the launch of the @FCATalyst 's DVN, institutions are beginning to engage permissionless infrastructure while retaining application specific security. Platforms such as @OndoFinance similarly demonstrate that security and governance can sit at the application layer rather than the network perimeter.
Compliance doesn’t require a closed network. It requires a token with embedded permissions and certain privacy elements.
Regulated securities can have compliance logic baked directly into the asset itself—governing who can hold it, deploy it, and transfer it. The permissionless rails carry the asset. The permissioned rules travel with it. It has never been a binary choice. Just like a spam email, your provider can protect you from suspicious assets via their own rules.
Zero and the institutional base layer question
Just as TCP/IP created a universal standard for information, interoperability standards emerged to make value transfer more seamless across chains and asset classes. LayerZero’s OFT and OApp standards are part of that effort to reduce fragmentation rather than reinforce it. But a standard needs a home built to handle the rigor of global markets.
Zero, LayerZero’s new blockchain, is translating this architectural view into infrastructure. With collaborators like Citadel Securities, DTCC, ICE, Google Cloud, and Global Trading Exchange (GTE) and new advisors like ARK Invest’s Cathie Wood and Caroline Butler (formerly of BNY Mellon), Zero is positioned to deliver sub-second finality and settlement at institutional scale—without sacrificing the principles that makes it universally accessible.
The stated aim is to support internet-scale throughput, fast finality, and unique “Zones” purpose built for trading, exchange, and payments while maintaining interoperability with public and private networks.
For a bank with an existing chain, the choice is no longer public vs. private. It is how existing systems connect to shared settlement layers, whether as a spoke, a hub or somewhere in between.
Permissionless at the base does not mean permissionless everywhere. It means open infrastructure with controls applied where necessary. Not a consortium perimeter, but interoperable rails capable of supporting a genuinely global marketplace.
The Decade Ahead
The experiment with closed systems ran its course and we know the role they'll play. The institutions that recognize what comes next will define financial infrastructure for the next decade.
Permissionlessness at the base layer–this is the way.
About the author
Cameron Nili leads Banking and Capital Markets at LayerZero Labs, working at the intersection of traditional finance and decentralized infrastructure. Before joining the protocol level, he spent nearly a decade advising Tier-1 institutions on tokenization and emerging technologies with EY and Accenture. He also served as an Executive Fellow for Digital Assets & Capital Markets at the World Economic Forum.