With over a hundred Layer-2 blockchains built on Ethereum, it’s natural to assume Ethereum is expensive and slow.
But ask any institution preparing to settle a $500 million interest rate swap where they would build — the answer is always Ethereum.
This points to why institutional DeFi is growing on Ethereum. Institutions look at a completely different set of metrics compared to retail users. While retail users often flee Ethereum due to high transaction fees and prefer cheaper chains, institutions are willing to pay more for security when moving millions of dollars.
Ethereum’s so-called “weaknesses” are, in fact, its institutional defense mechanisms.
When we examine the data, the difference in mindset between retail and institutional investors becomes clear:
If you’re buying a $50 meme coin, you wouldn’t want to spend $10 on gas fees. But if you're settling a $500 million interest rate swap, paying $10 is a negligible cost for guaranteed security.
This mirrors behavior in traditional finance (TradFi), where institutions are happy to pay premium prices to trade on the NYSE instead of over-the-counter (OTC), and continue using SWIFT for transactions — all in favor of security and regulatory compliance.
The same principle applies on blockchains.
Institutions prefer networks that are tested and secure — like Ethereum — rather than ones focused solely on speed.
Investors want a robust, battle-tested base blockchain that’s accepted as a neutral settlement layer across financial institutions. This is where Ethereum stands apart.
Major banks are already working on Ethereum because of its decentralization and deep developer talent pool — forming a self-reinforcing loop for institutional adoption.
Ethereum’s high fees shouldn’t be seen as a failure, but as a feature — one that naturally segments the market.
Some chains are built for low-cost, high-speed, small transactions. But for institutions, who need secure, liquid platforms for large transactions, the price is worth paying.
Institutions don’t care about daily active users or transaction volume — they care where regulated entities are building core infrastructure.
So next time someone says “Ethereum is dead,” ask them:
Where would you settle a $500 million transaction?
The answer makes Ethereum’s future — and its dominance in i
nstitutional DeFi — very clear.