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Author: Ryan Yoon, Source: Tiger Research
Summary of key points
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Solve the problem of mismatch between blockchain and institutions: The complete transparency and decentralization of traditional blockchains conflict with the requirements of financial institutions for privacy, regulatory compliance and control, limiting their applications to stay in the pilot stage.
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Implement a selective transparent architecture: The “public licensing” model is combined with Daml smart contracts to allow transaction-level privacy controls, meet Basel regulatory standards, and support institutional-level workflows through a framework of rights and obligations.
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Achieve a true organizational scale: With more than 400 institutions, more than $6 trillion in tokenized assets, process 3 million transactions per day, and since its launch in 2024, major players including Bank of America have conducted 7×24-hour on-chain Treasury transactions.
1. Between blockchain ideal and reality
From the very beginning, blockchain technology has been built around two core principles: 1) Completely transparent, all transactions are publicly visible; 2) Decentralized, the system runs without central control.Although these ideals have shaped the early development of blockchain, reality has deviated significantly.
In the early stages, early adopters develop services around transparency and decentralization.But adoption is limited to niche communities.As wider participation becomes necessary, it is obviously impractical to replace existing systems entirely with blockchain infrastructure.
For financial institutions, the challenge is even more severe.Complete transparency means that trading strategies and company financial data may be exposed.Decentralization conflicts with control and management needs.
Therefore, the basic ideal of blockchain conflicts with the agency’s requirements for privacy, supervision, regulatory compliance and scalability.Institutions recognize clear benefits—such as real-time settlement and capital efficiency—but most remain in the pilot phase.
However, sustained growth cannot depend on a small number of idealistic supporters.Institutional adoption and broader market expansion require a method of prioritizing actual needs over philosophical purity.
2. Canton Network: A Pragmatic Way
Canton NetworkrkThe emergence is to resolve the tension between blockchain ideals and institutional reality.Unlike early blockchains that rely on absolute models, it introduces flexibility that allows institutions to choose the management of information and controls.
This approach reflects the actual needs of financial institutions.Some information must be completely transparent to regulators, but blocked from competitors.Customer privacy must be protected while still being able to conduct internal audits.Traditional blockchains use fully disclosed or completely opaque binary models that cannot meet these nuanced requirements.
Canton Network differentiates through the Canton protocol, which enables institutions to meet regulatory requirements and manage risks while retaining the real-time settlement and capital efficiency advantages of blockchain.This makes it an infrastructure to support the transition from pilot projects to adoption at large scale institutions.
At its core, the Canton protocol supports independent control of applications and transactions, enables configurable privacy through a unique “stakeholder proof” consensus model, and enables interoperability between independently operated systems.
2.1. Organization-level workflow design
This is achieved through Daml,Daml is a functional programming language designed specifically for safe and efficient automation of multi-party financial workflows.By leveraging Daml, Canton Network provides an alternative to existing smart contract frameworks such as Ethereum’s Solidity, providing an architecture tailored to institutional use cases.
Daml builds contracts around rights and obligations, which are directly consistent with the nature of financial transactions.Each financial agreement can be broken down into a transfer of rights and a set of obligations.
For example, in a lease contract, the tenant has the right to occupy the apartment but is obliged to pay maintenance fees; while the landlord has the right to collect a deposit but is obliged to provide the right to use the property.Daml accurately encodes such relationships in an executable form.
Daml and Canton work together to connect different systems into an automated single workflow through smart contract-level atomic combinatoriality.In this model, all interdependent steps either succeed or fail together, ensuring the integrity of the transaction.
A real estate transaction can illustrate this: Once the buyer deposits funds, the loan review will begin automatically; after approval, the transfer of ownership continues.Each stage is bound by clearly stipulated rights and obligations, and the entire process is considered an indivisible transaction.If any step fails, the system will return to its original state.
It is also important that the flexibility and controllability of the system.The contract may be modified with the consent of both parties to adapt to unexpected changes, such as regulatory changes or court decisions.
By leveraging Daml, Canton Network provides the operating conditions that an organization needs: a clear definition of rights and obligations, a workflow that fits practices, and built-in adaptability and governance mechanisms.This allows organizations to meet compliance and privacy requirements without sacrificing efficiency.
2.2. Supervision and Privacy
The main obstacle to financial institutions’ adoption of blockchain is regulation, which is closely related to data privacy and operational controls.One of the most important obstacles is the Basel Agreement, an international standard developed by the Basel Bank Regulatory Commission, a subsidiary of the Bank for International Settlements.Although not legally binding, these standards are usually implemented through national legislation and thus have practical effect.
According to Basel rules, unsecured assets issued on public blockchains belong to “group 2” with a risk weight of up to 1250%.In fact, this means holding 1.25 billion won of regulatory capital to a blockchain asset worth 1.25 billion won, making large-scale use uneconomical.
Canton Network solves this problem with the “public licensing” architecture.Just as the internet is open but restricts access to sensitive platforms such as banking websites, Canton combines openness with granular access control.
This is achieved through the aforementioned sub-transaction level privacy function.Only parties directly involved in the transaction can view and record specific data related to it, while other participants can only see what they need to know.For example, in a bond payment transaction, a bank can only view the cash transfer part, while a securities custodian can only view the securities transfer part.
Daml smart contracts allow fine-grained control of data access and operations, ensuring that tokenized traditional assets are eligible for “group 1” risk exposure, thus avoiding punitive capital expenses.The same mechanism also supports selective disclosure to auditors, thereby enabling supervision without compromising confidentiality.
Therefore, Canton solves the key trade-offs that restrict early blockchains.Full transparency of public chains can undermine confidentiality, while full opacity of private chains can hinder interoperability.By providing selective transparency, Canton enables organizations to comply with regulations and protect privacy simultaneously.
2.3. Performance of financial system scale
To be feasible in the capital market, the operating scale must match the existing financial infrastructure.The daily trading volume of Forex alone exceeded $7.5 trillion, and the total trading volume of stocks, bonds and derivatives reached hundreds of trillions of dollars.Therefore, institutions need a blockchain system that can match existing performance benchmarks, remain stable during peak periods and support continuous operation of 7×24 hours.
Canton Network solves this need through the “Network of Network” architecture.Unlike traditional blockchains that operate as a single, monolithic system, Canton is structured similar to a transportation network, with multiple subnets connected to each other to balance loads and ensure resilience.
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Participant node: A node representing an institution, only verify its own transactions, and can safely carry multiple parties.
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CSPs: Regional infrastructure providers that connect participant nodes and provide services that meet local regulatory requirements.
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vCSP: A global synchronization layer that provides a public backbone network for cross-application and cross-region settlement. The first production instance is currently operated by more than 30 major institutions.
This layered design functions similar to that of urban transportation systems.Participant nodes are similar to buildings, CSPs act as regional road networks, and vCSP act as highways connecting areas.Nodes can be connected to multiple CSPs, and if a path is congested, transactions can be rerouted and capacity is expanded by adding new CSPs.
Cross-border transactions between Samsung and Apple illustrate this process.
Samsung’s nodes are connected to the Korean CSP holding digital won, while Apple’s nodes are connected to the US CSP holding digital dollars.Both are also connected to global vCSP.When Apple places an order, the smart contract deposits $100,000 in its escrow account.Once Samsung confirms the shipment, the funds in the escrow account will be automatically released to Samsung.The entire process is completed in minutes, while traditional international wire transfers usually take two to three days.
Here, South Korea CSP verifies Samsung’s Korean won activity, US CSP verifies Apple’s dollar activity, and vCSP ensures atomic settlement between the two networks.Meanwhile, other CSPs can handle unrelated transactions (for example, LG-Sony or Google-Microsoft transactions), thus doubling system throughput.As CSPs operate independently, overall capacity expands with the increase in the number of providers.
This parallelization method supports concurrent execution across synchronous domains.Currently, Canton processes more than 4 transactions per second and has recorded over 3.5 million Canton Coin-related events in one day.Digital Asset and its institutional partners have successfully executed on-chain U.S. Treasury deals and repurchases, demonstrating continuous settlement capabilities even on weekends.
3. Build the Canton ecosystem
Canton Network solves the classic “Chicken or Egg” problem in blockchain adoption, that is, there will be no service without users, and users without service will not join.It achieves this through a unique incentive and distribution model.
At its core is Canton Coin, the network’s native digital currency.Unlike many blockchain project tokens that are pre-mined distributed to founders or venture capitalists, Canton Coins’ allocation is based entirely on contributions to the network.No pre-allocation is made to venture capital or foundations.Participants can earn tokens only by providing tangible value—whether it is operating infrastructure, developing applications, or conducting transactions—.In fact, distribution is similar to paying wages for completed work.
The second feature is the destruction and casting balance mechanism.Transaction fees paid by users are destroyed, supply is permanently reduced, while new tokens are minted to contributors as rewards.This creates a balance between scarcity driven by usage and distribution driven by contribution.
Reward distribution also evolves over time.In the early stages, higher rewards are allocated to the super validators responsible for building network infrastructure.As the system stabilizes, the reward share shifts to developers who build applications and services.This is similar to the development of a new city, with initial investment focusing on roads and utilities, followed by a growth in retail and service providers.
4. Canton Network’s Way to Go
Since its official launch in July 2024, Canton Network has shown strong growth momentum by demonstrating its real value to financial institutions (rather than just technological milestones).
This progress is reflected in financing.In June 2025, Canton was led by DRW Trading and Tradeweb, raising $135 million and gaining extensive participation from major traditional financial companies.These institutions are not only investors, but also active contributors to services and operations development.
The value of the assets processed is even more amazing.Tokenized assets on Canton exceed $6 trillion, larger than most countries’ GDP.The network also processes more than $280 billion in U.S. Treasury repurchase transactions per day.
Specific application cases are emerging.August 12, 2025,Bank of America, Circle, Citadel Securities, DTCC, Societe Generale and Tradeweb execute the first weekend on-chain financing transaction involving U.S. Treasury bonds and USDC, marking the emergence of the 7×24-hour capital market.
Stablecoin settlement is another attractive area.Circle integrates USDC with Canton, emphasizing the role of privacy controls, while Paxos joins as a validator.The institution emphasizes the ability to keep transaction details confidential in inter-company payments while meeting regulatory requirements.
Looking to the future,More wider adoption is expected, especially in RWA tokenization.Real estate, commodities and art will likely follow closely, boosting liquidity to a level far exceeding the currently tokenized $6 trillion.
In the long run, Canton points to a global capital market that operates 24/7 without being restricted by time zones or national borders.This shift is highlighted by Nasdaq’s application to support developments such as tokenized equity.
Therefore, Canton position itself as an infrastructure optimized for the current transformation—connecting the advantages of blockchain and the requirements of institutions.Its trajectory will depend on how it continues to effectively balance ideals and real needs.
