2 months ago
Opinion by: Matt Mudano, CEO of Arch Labs
Ethereum is struggling, and decentralized concern (DeFi) is suffering arsenic a result. Layer-2 (L2) solutions person fractured liquidity, making superior inefficient. In hunt of greener pastures, the assemblage has turned to Solana — lone to find a memecoin-driven ecosystem fueled by pump-and-dump schemes, attracting liquidity extractors, and turning the concatenation into a playground for speculation and fraud.
DeFi needs a reset that returns to archetypal principles and aligns with Satoshi’s archetypal imaginativeness of a decentralized fiscal system. The lone web susceptible of sustaining the adjacent improvement of DeFi isn’t Ethereum oregon Solana. It’s Bitcoin.
DeFi is struggling connected Ethereum
Ethereum was erstwhile the undisputed location of DeFi, but today, it’s wide that the ecosystem is struggling. The network’s roadmap perpetually changes, with nary wide way toward semipermanent sustainability.
L2 solutions were expected to standard Ethereum. Instead, they’ve fractured DeFi into isolated liquidity silos. While L2s person lowered transaction fees, they present vie for liquidity alternatively than contributing to a unified fiscal system. The result? A fragmented scenery that makes superior inefficient and DeFi protocols harder to scale.
Ethereum’s projected solution — concatenation abstraction — sounds promising successful mentation but fails successful practice. The cardinal contented is simply a structural misalignment of incentives, and arsenic a result, Ethereum is gradually losing its competitory borderline successful DeFi.
It’s clip to ask: Can DeFi’s aboriginal prevarication successful a fragmented Ethereum?
Solana isn’t the answer
With Ethereum losing its competitory edge, galore developers and users person turned to Solana. The blockchain has seen an 83% summation successful developer activity year-over-year, and its decentralized exchanges (DEXs) person outperformed Ethereum’s for 5 consecutive months.
There’s a cardinal problem: Solana’s DeFi maturation isn’t built connected sustainable fiscal applications — a memecoin frenzy fuels it.
The caller surge successful enactment isn’t driven by innovation successful decentralized concern but by speculative trades. Following the TRUMP memecoin craze, the full extracted worth from Solana’s memecoins ranged betwixt $3.6 cardinal and $6.6 billion. This isn’t DeFi maturation — it’s a liquidity extraction motor wherever short-term speculators currency successful and determination on.
Solana has existent strengths. Its velocity and debased transaction costs marque it perfect for high-frequency trading, and its ecosystem has made meaningful strides successful decentralized carnal infrastructure networks (DePINs), AI and decentralized science, oregon DeSci. But the dominance of memecoin speculation has turned the concatenation into a playground for fraud and pump-and-dump schemes. That’s not the instauration DeFi needs.
Solana isn’t the reply if the extremity is to physique a lasting fiscal system.
Bitcoin DeFi is thriving
It’s clip to instrumentality to archetypal principles and physique DeFi connected the archetypal blockchain: Bitcoin — the astir trusted, decentralized web backed by the soundest wealth successful the integer economy.
This is not conscionable theoretical. Bitcoin DeFi is already experiencing explosive growth. Consider the numbers: Total worth locked (TVL) successful Bitcoin DeFi surged from $300 cardinal successful aboriginal 2024 to $5.4 cardinal arsenic of Feb. 28, 2025 — a staggering 1,700% increase. The Bitcoin staking assemblage is dominating, with protocols similar Babylon ($4.68 cardinal TVL), Lombard ($1.59 billion) and SolvBTC ($715 million) starring the charge. This demonstrates the increasing request for Bitcoin to go a productive plus alternatively than a passive store of value.
Recent: Bitcoin DeFi takes halfway stage
Bitcoin-native DeFi isn’t simply copying Ethereum’s playbook — it’s pioneering caller fiscal models. Advancements successful the abstraction person introduced dual staking, allowing users to involvement Bitcoin (BTC) alongside autochthonal tokens to heighten information and gain yields. Meanwhile, caller approaches to tokenizing Bitcoin’s hashrate crook mining powerfulness into collateral for lending, borrowing and staking, further expanding Bitcoin’s fiscal utility.
In addition, Ordinals and BRC-20 tokens person driven record-high transaction activity, with inscriptions reaching 66.7 cardinal and generating $420 cardinal successful fees — highlighting the increasing request for tokenized assets connected Bitcoin.
It is wide that Bitcoin is nary longer conscionable integer golden — it’s becoming the instauration for the adjacent signifier of decentralized finance.
The aboriginal of DeFi is connected Bitcoin
The aboriginal of DeFi lies with Bitcoin, wherever incentives align with semipermanent worth creation. Unlike Ethereum’s fragmented exemplary and Solana’s speculative economy, Bitcoin-based DeFi is built connected institutional-grade liquidity and sustainable growth.
As the largest and astir liquid crypto asset, Bitcoin boasts a $1.7 trillion marketplace headdress and $94 cardinal successful exchange-traded money (ETF) holdings. Even a fraction of this liquidity migrating into DeFi would beryllium a game-changer. Bitcoin holds implicit $1 trillion successful untapped liquidity and continues to pull beardown involvement from organization investors and sovereign wealthiness funds, with governments already exploring it arsenic a imaginable reserve asset.
Several projects are already gathering connected Bitcoin, gathering a sustainable ecosystem wherever users tin clasp the astir trusted integer plus portion making it productive done DeFi mechanisms.
Ethereum had its moment. Solana had its hype. It’s Bitcoin’s crook to actualize Satoshi’s archetypal imaginativeness of a decentralized fiscal system.
Opinion by: Matt Mudano, CEO of Arch Labs.
This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.
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