The Banking Executive Issue - October 2025 Issue

INTRODUCTION This article presents a comprehen- sive overview of the growth of on- chain finance globally and in Arab countries with a focus on growth and key providers of onchain finance in Saudi Arabia, United Arab Emirates, Qatar, Kuwait, and Lebanon. The ar- ticle highlights challenges facing on- chain finance followed by a SWOT (strengths, weaknesses, opportuni- ties, and threats) analysis. Key tech- nologies and infrastructure, regulation, and major platforms of- fering onchain finance are consid- ered. The article concludes with the future of onchain finance and the road ahead for Arab banks to em- brace onchain finance. ONCHAIN FINANCE AT A GLANCE Onchain finance refers to financial activities and services that are exe- cuted and recorded directly on blockchain, without relying on tradi- tional intermediaries like banks or brokers. It encompasses decentral- ized finance (DeFi) applications such as lending, borrowing, trading, and asset management, all governed by smart contracts, and self-executing code that enforces rules transparently and automatically. By operating on public blockchains like Ethereum, onchain finance offers greater trans- parency, accessibility, and program- mability, enabling users to interact with financial products in a secure environment. Onchain finance and traditional finance differ fundamentally in archi- tecture, accessibility, and trans- parency. Traditional finance relies on centralized institutions like banks and clearinghouses to manage trans- actions, enforce trust, and maintain records, often resulting in slower set- tlement times, limited access, and higher fees. In contrast, onchain fi- nance operates on decentralized blockchain networks, where smart contracts automate financial processes, reduce intermediaries, and enable real-time, borderless Onchain Finance In Arab Countries ISSUE 202 OCTOBER 2025 the BANKING EXECUTIVE 75 ONCHAIN FINANCE TECHNOLOGIES AND INFRASTRUCTURE Layer / Component Base Layer (L1 Blockchains) Scaling Solutions (L2 / Rollups) Smart Contracts Tokenization Frameworks Stablecoins & Settlement Assets Data Infrastructure (Oracles) Interoperability Protocols Privacy & Compliance Layers Custody & Access Infrastructure Developer & Enterprise Tools Ethereum, Solana, Avalanche, Cosmos Optimistic Rollups, ZK-Rollups, Sidechains Solidity, Rust, Move ERC-20, ERC-721, ERC-1155, ERC-1400 USDC, DAI, Euro-backed stable- coins Chainlink, Pyth, The Graph Cross-chain bridges, IBC (Cosmos), Wormhole Zero-Knowledge Proofs, Confidential Transactions MPC wallets, Hardware wallets, Institutional custody Cloud integrations (AWS, Azure) Consensus, security, settlement Scalability, lower fees, faster execution Automated financial agreements, programmable logic Representation of assets (currencies, securities, RWAs) Predictable settlement, reduced volatility Secure data feeds, analytics, benchmarks Liquidity transfer, multi-chain connectivity Regulatory compliance, data protection Secure asset storage and access Facilitate adoption, integration with TradFi Ethereum dominates DeFi; Solana optimized for speed; Cosmos enables modular chains Arbitrum, Optimism, StarkNet; Polygon PoS sidechain Lending, trading, derivatives, compliance automation Tokenized bonds, equities, real estate, stablecoins USDC widely adopted in DeFi and institutional rails Chainlink brings FTSE Russell in- dices onchain Wormhole connects Solana; Ethereum; Cosmos IBC ZK-proofs for AML/KYC, confi- dential settlement Fireblocks, Coinbase Custody, Ledger Circle Arc integrates with AWS, Visa, BlackRock Layer / Component Layer / Component Layer / Component