Some insights about Ethereum 👇🏼

Why expensive 'Ethereum' will dominate institutional DeFi...

July 25, 2025

There are over a hundred Layer-2 blockchains on top of Ethereum, making it natural to think of Ethereum as expensive and slow.

But when asked where an institution that is about to settle a $500 million interest rate swap will build, the answer will always be Ethereum.

This guides the development of institutional DeFi, where the metrics important for institutional adoption are drastically different from retail customers, where retail customers flee to cheaper chains to avoid Ethereum's transaction fees, institutions willingly pay a premium for security in millions of dollars in transfers.

Ethereum's 'weaknesses' are actually its institutional defensive barriers.

When we look at the data, the difference in perspectives between retail and institutional investors becomes clear.

If you are buying a meme coin for fifty dollars, you wouldn't want to pay ten dollars in transaction fees, but in a $500 million interest rate swap, paying ten dollars is a small price to ensure a secure transaction.

This attitude is also found in the traditional financial system (TradFi), where institutions prefer to pay higher prices on the NYSE rather than the OTC market, and continue transactions via SWIFT, as it ensures security and legal compliance.

The same principles will apply to blockchains.

Institutions prefer networks that are tried and tested, like Ethereum, rather than those that focus solely on speed.

Investors want a robust, market-tested foundational blockchain that is accepted as a neutral settlement layer in financial institutions, and this feature distinguishes Ethereum from other blockchains.

Large banks are also working on Ethereum because they are satisfied with its decentralized nature and the presence of developer talent, which is a self-reinforcing process for institutional adoption.

Ethereum's high fees should not be seen as a failure but rather as a unique feature that naturally segments the market.

Some chains are for low-cost and fast small transactions, while institutions want secure and liquidity-rich platforms for larger transactions and they are willing to pay for it.

Institutions focus not on the number of daily active users or transactions, but on where legally compliant organizations are building their infrastructure.

So the next time someone says that Ethereum is finished, be sure to ask them where they would like to settle a $500 million transaction??

The answer will clarify why Ethereum's survival and dominance in institutional DeFi is evident....