Public companies now hold over 1 million Bitcoin, signaling growing institutional interest in crypto assets. Yet, performance limitations in blockchain technology create significant barriers to wider adoption. Annabelle Huang, co-founder of Altius Labs, emphasizes that these bottlenecks must be addressed for institutions to fully engage.
The Execution Bottleneck Explained
Blockchain networks process transactions far slower than traditional financial systems. For instance, Ethereum handles about 15 transactions per second, while Nasdaq manages over 1 million order messages per second.
This gap arises from the execution layer, where chains struggle with high throughput demands. Huang notes that even advanced networks like Solana, with thousands of transactions per second, fall short of Wall Street's microsecond requirements.
Institutions require reliable, high-speed infrastructure for trading and settlements. Without it, they hesitate to shift from centralized finance systems.
Fintechs Lead the Charge in adoption
Fintech giants like Robinhood and Stripe are launching their own blockchains to tackle these issues. Robinhood's layer-2 focuses on tokenized stocks, while Stripe's Tempo targets payments.
Huang predicts this trend will expand globally. She states, “The fintechs in Asia, Latin America and other emerging markets that have looked into this for many years now are also getting ready to make more moves.”
Such developments blend centralized finance efficiencies with blockchain's decentralization. This hybrid approach appeals to institutions seeking compliance and performance.
Solutions Through Modular Infrastructure
Altius Labs develops a VM-agnostic execution layer to boost any blockchain's performance. This plug-and-play design avoids full redesigns, enhancing throughput and interoperability.
Huang explains, “Our goal is to bring performance to any blockchain in a plug-and-play way.”
This innovation addresses scalability without compromising decentralization. Pantera Capital highlights Altius's role in evolving blockchain architecture for institutional needs.
Institutional Trends in Crypto Exposure
Institutions increasingly adopt stablecoins and Bitcoin treasuries. MicroStrategy's strategy offers leveraged Bitcoin exposure at lower costs, outperforming some ETFs.
Huang observes, “What we’re seeing now — and I expect even more going forward — is a trend of institutions adopting stablecoins or even building their own blockchains for specific use cases.”
However, fragmentation from layer-2 solutions complicates user experience. Huang warns that this leads to difficult UI/UX and liquidity issues.
Bridging CeFi and DeFi for adoption
Huang's background spans centralized and decentralized finance, informing her views on integration. She advocates a hybrid model to make digital finance seamless.
In CeFi, institutions value reliability, while DeFi offers openness. Combining them reduces barriers like high gas fees and network congestion.
Overcoming Latency and Scalability Challenges
Latency crises plague blockchains, with APIs lagging behind sub-second block production. This affects oracles, bots, and user interfaces.
Modular designs like Altius aim to futureproof chains against these issues. They enable upgrades without disrupting existing ecosystems.
Institutions demand Web2-level speeds for high-frequency trading. Current chains, even Solana at 400-millisecond blocks, need enhancements.
The Path Forward for Institutions
Cross-chain interoperability remains key to reducing reliance on centralized bridges. Solutions must balance speed, security, and decentralization.
Huang's work at Altius positions it as a foundation for multi-chain futures. This could accelerate CeFi adoption in blockchain spaces.
These insights reveal how resolving blockchain bottlenecks directly impacts institutional adoption. By prioritizing performance, the crypto sector can attract more CeFi players and drive sustainable growth.
