Control without fragmentation: The future of institutional blockchain

TradFi vs DeFi: the challenge of control

Every time I hear about the gap between traditional finance (TradFi) and decentralised finance (DeFi), I think about three themes: control, privacy, and governance. I have discussed privacy and governance in my previous blogs, but the key question here is: how do we retain control over operations and workflows, considering the complexity of transactions, Merkle trees, cryptography, and the value at risk?

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The banking analogy

To illustrate, let’s consider internet banking. There are two primary roles:

• The banker, who must act as custodian of value and ensure a seamless experience.
• The user, who should be able to access products easily and communicate their intent in a way the system can understand.

Imagine Bob sending £1,000 to his grandmother Alice. If both accounts are at the same bank, the transfer is simple: debit Bob, credit Alice. If they use different banks, the process becomes longer and involves approvals, debits, interbank messages, credits, and settlement accounting.

Now compare this to blockchain networks, where direct transfers across multiple systems often lead to fragmentation of liquidity. The parallels are clear.

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The Rayls approach

At Rayls, this challenge is in our DNA. We aim to simplify the process for banks: a dashboard where they can see where value resides, while end users enjoy a DeFi-like experience without friction.

Our goal is to give financial institutions the option to retain traditional workflows, while enhancing them with blockchain technology.

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Introducing the Rayls Privacy Node

The Rayls Privacy Node provides institutions with their own private command centre for navigating the complexity of networks and ledgers. Once installed, on-premises or in the cloud, the Privacy Node empowers institutions to:

• Operate solely on their internal ledger, maintaining full control over assets, tokens, compliance rules, and transactions.
• Connect with other financial institutions via a Private Network, enabling controlled collaboration.
• Selectively share asset-backed securities with a broader audience on the Rayls Public Chain.

When connected to other networks, the Privacy Node not only allows visibility of assets, transactions, and operational flows across ledgers, but also enables institutions to initiate those flows directly.

Use Cases: from private ledgers to public markets

1. Tokenised Deposits for Real-Time Settlement

A large retail bank issues tokenised deposits on its internal ledger through the Rayls Privacy Node. Instead of the traditional T+2 settlement cycle, interbank transfers occur in real time, with full compliance rules enforced on-chain. The bank retains custody and governance, while customers benefit from faster, cheaper transfers.

Problem solved: slow settlement and reconciliation delays.
Benefit: reduced operational risk and improved liquidity management.

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2. CBDC Transfers in a Permissioned Network

A consortium of central banks connects their Rayls Privacy Nodes in a permissioned Rayls Private Network to experiment with cross-border CBDC transfers. Each institution maintains full control of its own ledger and compliance requirements, while enabling interoperable transactions across jurisdictions.

Problem solved: siloed CBDC pilots that cannot interoperate.
Benefit: controlled privacy, faster cross-border payments, and collaborative innovation without sacrificing sovereignty.

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3. Private issuance and distribution of yield-bearing financial assets

A regional bank tokenises a portfolio of credit receivables and loans within the Privacy Node, representing them as asset-backed securities (ABS) on the Rayls Public Chain. Using its Privacy Node, the bank manages compliance workflows internally, but leverages the public chain to access a broader investor base.

Problem solved: limited liquidity for traditional ABS products.
Benefit: compliance and privacy are maintained, while public-chain interoperability creates new opportunities for funding and distribution.

The Dawn of a new Financial Era - Governance, visibility, and control

The Privacy Node gives institutions governance over their digital assets, ensuring they know how and when custody assets are being used. Beyond operational control, it also supports the generation of valuable statistics and insights into product flows - data that can be leveraged further, potentially enhanced by AI-driven analytics.

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Conclusion: control without fragmentation

The Rayls Privacy Node creates a structure where everything is segregated for control but not fragmented. Flexibility, interoperability, and composability ensure that institutions can innovate securely, bridging the gap between TradFi and DeFi without losing oversight.

The financial industry is at an inflection point. Institutions that master interoperability, privacy, and governance will define the next era of finance. The Rayls Privacy Node is not just infrastructure - it is a pathway to bridge TradFi and DeFi with confidence.

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