Without Ethereum, the industry wouldn't be where it is today in terms of bringing decentralized finance (DeFi) to life

Bitcoin's decentralization, liquidity and resilience position it as the natural home for the next era of onchain finance

The cryptocurrency industry wouldn’t be where it is today without Ethereum. The blockchain has been instrumental in bringing decentralized finance (DeFi) to life, making programmability a key feature of blockchains and proving the value of smart contracts at scale. The Ethereum Virtual Machine has become the go-to platform for developers, boasting the largest ecosystem and tooling.

However, as DeFi matures, it’s worth asking: Is Ethereum the best foundation for the future of financial innovation?

Well, the answer might just be Bitcoin.

With nearly $6 billion in total value locked as of March 2025, Bitcoin’s decentralization, liquidity and resilience position it as the natural home for the next era of onchain finance. While Ethereum’s flexibility has enabled an explosion of experimentation, that same flexibility has come with trade-offs.

From vulnerabilities in smart contracts we’ve seen in big-name hacks to ongoing debates around scalability, Ethereum’s experimental ethos has left cracks in its foundation. By contrast, Bitcoin offers a solid, battle-tested infrastructure where DeFi can flourish sustainably and cross the chasm from degens into mainstream adoption.

Ethereum’s contribution and limitations

Ethereum was responsible for pioneering what we know to be DeFi today. This innovation and development served as a testing ground for what Bitcoin is capable of and can ultimately achieve.

Its programmability has empowered developers to create everything from automated lending platforms to sophisticated derivatives. These products exist solely because of Ethereum’s smart contract capabilities.

With that flexibility came serious trade-offs, and we’ve seen them play out in real-time. The DAO hack in 2016 drained $50 million and nearly killed Ethereum in its infancy. The 2022 Wormhole exploit cost $325 million in recent years, and the Ronin Bridge hack took $620 million.

These weren’t just bad luck — they’re the predictable result of Ethereum’s open-ended programmability. Smart contracts are powerful, but they’re also complex. Complexity breeds vulnerability. Solidity simply wasn’t designed with security as the primary consideration.

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At the same time, Ethereum’s scaling challenges have made it increasingly inaccessible.

Network congestion and gas fees soaring to hundreds of dollars during peak periods have effectively locked out average users. Seasoned users will be very well accustomed to the eye-watering gas fees required just to make basic swaps during times of high network demand. Layer-2 solutions like Optimism and Arbitrum have made great progress, but they fragment liquidity and introduce their own trust assumptions.

This isn’t to say Ethereum is failing. It’s not. As DeFi matures beyond its experimental phase and becomes more mainstream in global finance, we need to ask whether it makes sense to keep building on this foundation or to consider a more resilient alternative.

Why Bitcoin?

Bitcoin’s design philosophy is radically different. It isn’t a platform for unlimited experimentation; it’s a fortress of stability. Its conservative development ethos and proof-of-work consensus make Bitcoin the most secure blockchain in existence. This security translates into trust — a critical ingredient for DeFi applications handling billions of dollars in value.

Liquidity is another advantage Bitcoin offers. With a market capitalization that dwarfs Ether’s (ETH), Bitcoin (BTC) is the most liquid cryptocurrency, making it an ideal base layer for DeFi. The rise of technologies like Bitcoin’s Lightning Network and sidechains like Spiderchain are already unlocking Bitcoin’s potential for smart contracts, offering the programmability developers need without sacrificing security or scalability.

Not all Bitcoin projects are created equal

Many so-called Bitcoin L2s and sidechains claim to be “Bitcoin native,” offering applications the promise of leveraging Bitcoin’s intrinsic security properties.

Let’s set the record straight: Many aren’t truly Bitcoin-native.

Without pointing fingers, these projects often rely on custodial multisig setups, bridge Bitcoin to Ethereum or another chain, and then build rollups on top. While there’s nothing inherently wrong with this approach, and there will be use cases that work with this set of trust assumptions, it’s not the same as being natively built on Bitcoin.

True Bitcoin L2s are designed directly on Bitcoin, tapping into its liquidity, security and resilience — qualities that have withstood the test of time. If we want to expand DeFi capabilities, we must build them on Bitcoin. It’s a straightforward ask, but one worth reiterating as we see major players exploring paths that may not fully align with Bitcoin’s potential.

The path forward

The debate shouldn’t be framed as Ethereum versus Bitcoin. That’s a false binary. Ethereum’s innovation-first approach has been crucial in proving what’s possible, and it remains an essential hub of DeFi experimentation. Bitcoin offers something Ethereum doesn’t: a foundation that has already earned the trust of the broader financial world