The emerging blockchain dilemma: a chicken and egg problem.

In short, nascent blockchains require institutional custody platforms to adopt their networks for institutional adoption to occur, but said platforms only integrate new networks with institutional adoption (or a strong expectation that institutional adoption will occur).

In a bit more detail:

My sense is that most nascent blockchains require a level of institutional interest in order for sustained adoption to occur. Retail usage is ultra-important, but institutions are the ones that generally make the big-ticket investments in infrastructure, consistent volumes, etc that take a new network from being a fad to a real ecosystem.

Yet, the way in which custody infrastructure is composed makes swift institutional adoption of new blockchains improbable.

The trouble is that, in order to attract institutional interest; institutions MUST have a way in which they can securely hold their investments in an emerging network. Herein, lies a core area in which budding networks seem to historically underweight.

Generally, institutions (VCs, family offices, hedge funds, etc) are unlikely to allocate capital to an emerging network if there's no way in which to custody assets in a manner that is suited for institutions. Frankly, this logic makes sense → the last thing an asset manager wants is to explain to their investors how they lost all of their $$ because of a poor custody setup. While, these managers seek returns; at the end of the day they care most about keeping their jobs, and losing assets because you didn’t have proper security measures in place = being fired.

The reason that custody platforms don’t just support new networks out of the gate is that these platforms must manually implement support for each specific network meaning that said platforms will only add support for a new network if customer demand warrants it.

Since a new network usually doesn't yet have customer demand, such networks are in a "no mans land" wherein the only way to attain swift support on custody platforms and consequently speedy institutional adoption is to have VERY significant excitement pre-launch as custody platforms will have a strong sense that there will be customer demand for a particular network.

Yet, for networks that don't have huge followings pre-launch they're often stuck in between a rock and a hard place.

They can't attain institutional adoption because they don't have the custody infrastructure needed for adoption and the custody platforms don't want to build out the infrastructure since there is no institutional adoption.

I think the solution looks like programs offered by custody platforms like Tholos, that offer new networks an easy way to offer institutional custody from day one with an upfront investment that is returned over time based off of that network’s success.

Sure, there is an initial investment needed on behalf of the network, but my (biased) view is that this is one of the better things to allocate capital towards (making it easier for institutions to adopt your network).

The emerging blockchain dilemma: a chicken and egg problem.

In short, nascent blockchains require institutional custody platforms to adopt their networks for institutional adoption to occur, but said platforms only integrate new networks with institutional adoption (or a strong expectation that institutional adoption will occur).

In a bit more detail:

My sense is that most nascent blockchains require a level of institutional interest in order for sustained adoption to occur. Retail usage is ultra-important, but institutions are the ones that generally make the big-ticket investments in infrastructure, consistent volumes, etc that take a new network from being a fad to a real ecosystem.

Yet, the way in which custody infrastructure is composed makes swift institutional adoption of new blockchains improbable.

The trouble is that, in order to attract institutional interest; institutions MUST have a way in which they can securely hold their investments in an emerging network. Herein, lies a core area in which budding networks seem to historically underweight.

Generally, institutions (VCs, family offices, hedge funds, etc) are unlikely to allocate capital to an emerging network if there's no way in which to custody assets in a manner that is suited for institutions. Frankly, this logic makes sense → the last thing an asset manager wants is to explain to their investors how they lost all of their $$ because of a poor custody setup. While, these managers seek returns; at the end of the day they care most about keeping their jobs, and losing assets because you didn’t have proper security measures in place = being fired.

The reason that custody platforms don’t just support new networks out of the gate is that these platforms must manually implement support for each specific network meaning that said platforms will only add support for a new network if customer demand warrants it.

Since a new network usually doesn't yet have customer demand, such networks are in a "no mans land" wherein the only way to attain swift support on custody platforms and consequently speedy institutional adoption is to have VERY significant excitement pre-launch as custody platforms will have a strong sense that there will be customer demand for a particular network.

Yet, for networks that don't have huge followings pre-launch they're often stuck in between a rock and a hard place.

They can't attain institutional adoption because they don't have the custody infrastructure needed for adoption and the custody platforms don't want to build out the infrastructure since there is no institutional adoption.

I think the solution looks like programs offered by custody platforms like Tholos, that offer new networks an easy way to offer institutional custody from day one with an upfront investment that is returned over time based off of that network’s success.

Sure, there is an initial investment needed on behalf of the network, but my (biased) view is that this is one of the better things to allocate capital towards (making it easier for institutions to adopt your network).