Perspective by: Alisia Painter, chief operating officer at Botanix Labs
Without Ethereum, the current landscape of decentralized finance (DeFi) would look significantly different. It has been pivotal in bringing DeFi to fruition, establishing programmability as a core aspect of blockchain technology and demonstrating the real-world applicability of smart contracts. The Ethereum Virtual Machine has evolved into the essential platform for developers, boasting the largest ecosystem and an array of tools.
As DeFi continues to evolve, it’s important to consider: Is Ethereum truly the optimal foundation for future financial innovations? The answer might point towards Bitcoin.
With approximately $6 billion locked in value as of March 2025, Bitcoin’s decentralization, liquidity, and robustness position it as a prime candidate for the upcoming chapter of on-chain finance. While Ethereum’s adaptability has fostered a surge of innovation, it has also come with significant compromises.
The vulnerabilities in smart contracts leading to high-profile hacks and persistent scalability discussions reveal cracks in Ethereum’s once-invincible facade. On the other hand, Bitcoin stands as a reliable, proven structure for DeFi to thrive sustainably and bridge the gap from speculative ventures to broader market acceptance.
Ethereum’s Role and Constraints
Ethereum has been at the forefront of defining DeFi as we know it today. This trailblazing role has served as a proving ground for Bitcoin’s capabilities and potential outcomes. Its programmability has enabled the creation of diverse platforms, from automated lending to intricate derivatives, all made possible by the power of Ethereum’s smart contracts.
However, this flexibility is not without its downsides, which have manifested in consequential ways. The infamous DAO hack in 2016 resulted in a loss of $50 million, threatening the survival of Ethereum during its nascent stages. More recently, the 2022 Wormhole exploit resulted in losses totaling $325 million, and the Ronin Bridge hack amounted to a staggering $620 million.
These incidents are not mere coincidences; they are the inevitable outcomes of Ethereum’s open-ended programming model. While smart contracts have considerable power, they inherently come with complexity that can lead to vulnerabilities. The Solidity programming language, for instance, has not prioritized security in its design.
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Moreover, Ethereum’s challenges regarding scaling have rendered it increasingly hard to access.
Network congestion and exorbitant gas fees, sometimes reaching hundreds of dollars during peak usage times, have effectively excluded average users from engaging with the platform. Experienced users are familiar with the staggering gas costs required for basic transactions during such high-traffic times. Though Layer-2 solutions like Optimism and Arbitrum have made strides, they tend to split liquidity and introduce new trust assumptions.
This isn’t to claim that Ethereum is failing. Far from it. As DeFi transitions from its experimental phase into a more established position within global finance, we must consider whether it’s wise to continue relying on this architecture or explore more resilient options.
Why Consider Bitcoin?
Bitcoin operates under a fundamentally different design philosophy. Rather than being a platform for boundless experimentation, it serves as a bastion of stability. With its conservative development principles and proof-of-work consensus mechanism, Bitcoin stands as the most secure blockchain available, translating this security into trust—a crucial element for DeFi applications managing substantial sums of money.
Additionally, Bitcoin boasts significant liquidity advantages. With a market cap vastly surpassing that of Ether, Bitcoin is the most liquid cryptocurrency, making it an ideal foundational layer for DeFi. Advancements like Bitcoin’s Lightning Network and sidechains such as Spiderchain are already unlocking Bitcoin’s capacity for smart contracts, providing the programmability developers seek without compromising security or scalability.
Assessing Bitcoin Projects
Numerous so-called Bitcoin Layer-2s and sidechains assert that they are “Bitcoin native,” offering services that capitalize on Bitcoin’s inherent security features.
It’s essential to clarify that many of these projects do not genuinely meet the criteria of being Bitcoin-native.
Not to assign blame; these initiatives often depend on custodial multisig arrangements, bridging Bitcoin to Ethereum or other networks before building additional solutions. While this methodology isn’t inherently flawed and some use cases may work within these trust frameworks, it does not equate to being authentically constructed on Bitcoin.
Genuine Bitcoin Layer-2 projects are built directly on Bitcoin, leveraging its liquidity, security, and durability—attributes that have proven themselves over time. If we aim to enhance DeFi capabilities, we should focus on constructing them on Bitcoin. This is a clear objective and one worth emphasizing, especially as significant players investigate avenues that may not fully align with Bitcoin’s true potential.
Charting the Future
The discourse shouldn’t be seen as a dichotomy between Ethereum and Bitcoin. This creates a misleading framework. Ethereum’s innovative-first mindset has been vital in showcasing what is possible, and it continues to act as a significant hub for DeFi experimentation. Meanwhile, Bitcoin offers a stability that Ethereum currently lacks: a foundation that has already gained trust within the broader financial community.
Users shouldn’t have to compromise between security and functionality. Bitcoin’s tenacity is complemented by advanced financial tools akin to those initially developed by Ethereum. Among the most exciting developments today are emerging from the intersection of both ecosystems.
For DeFi to realize its vision of establishing a just, open, and inclusive financial system, it must progress beyond the experimental phase. It should be secure enough for everyday individuals to interact with it confidently, free from the worry of devastating losses due to exploits. Moreover, it must achieve deep liquidity to support real-world financial activities, and it calls for the institutional trust that only Bitcoin has secured.
Ultimately, the future of finance will be built on Bitcoin—not due to Ethereum’s shortcomings, but because Bitcoin offers the sturdy foundation that finance requires.
Perspective by: Alisia Painter, chief operating officer at Botanix Labs
This article is for informational purposes only and should not be interpreted as legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect those of any organization.