Coinbase Sees Consolidation in Corporate Blockchains: 'M&A-Type Process' Looms

Corporate blockchains are proliferating, but their long-term viability is uncertain. According to Coinbase CEO Brian Armstrong, this boom will eventually lead to a massive shakeout, with many networks either consolidating or abandoning their infrastructure.

The proliferation of corporate chains has raised concerns that regulated companies may shift financial activity away from permissionless networks, which powered crypto's growth. However, Armstrong views the situation differently. He expects these new launches to fragment liquidity and users before network effects force weaker platforms to combine or retreat.

Currently, there are 110 Ethereum scaling projects, including 22 rollups, seven validiums, and optimiums, and 81 other systems. Only 24 of these networks were processing more than two user operations per second as of July 31. This indicates that deploying a chain is easier than attracting lasting liquidity and users.

Armstrong compared the proliferation of corporate chains to the stablecoin market, where numerous companies introduced dollar-linked tokens but activity concentrated around Tether and USDC. He noted that some specialized chains may remain independent, while others could eventually decide that the cost of maintaining separate infrastructure exceeds the value of controlling it.