Some thoughts on 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 that Ethereum is expensive and slow.

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

This guides the development of institutional DeFi; the metrics that are important for institutional adoption are completely different from those of retail users, where retail users tend to avoid Ethereum’s transaction fees in favor of cheaper chains, while institutions willingly pay more for security in multi-million dollar 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 $50 meme coin, you wouldn’t want to pay $10 in transaction fees, but in the case of a $500 million interest rate swap, a $10 payment is a small price to guarantee a secure transaction.

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

The same principle will apply to blockchains.

Institutions prefer networks that are proven and secure, 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 viewed as a failure but rather as a distinct 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 large transactions, and they will pay the price for it.

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

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

The answer will clarify the survival of Ethereum and its dominance in institutional DeFi....