Matt Mudano CEO of Arch Labs gives his opinion
Ethereum’s struggles are affecting decentralized financial (DeFi). The Layer-2 solutions (L2) have fragmented liquidity and made capital inefficient. In search of greener pastures, the community has turned to Solana — only to find a memecoin-driven ecosystem fueled by pump-and-dump schemes, attracting liquidity extractors, and turning the chain into a playground for speculation and fraud.
DeFi requires a reset to align with Satoshi’s original vision for a decentralized system of financial transactions. Ethereum and Solana are not the only networks capable of supporting DeFi’s next evolution. It’s Bitcoin.
DeFi has a tough time on Ethereum
Ethereum used to be the home of DeFi. But today it is clear that this ecosystem has problems. There is no long-term sustainable path for the network, as its roadmap changes constantly.
The L2 solution was supposed to be able to scale Ethereum. They’ve instead fragmented DeFi and created isolated liquidity silos. They have decreased transaction costs, but they are now competing for liquidity and not contributing to one financial system. What is the result? The result? A fragmented environment that is capital inefficient, and DeFi protocols are harder to scale.
Ethereum’s proposed solution — chain abstraction — sounds promising in theory but fails in practice. Ethereum has lost its edge over DeFi due to structural incentives misalignment.
Now is the time to consider: Is DeFi’s long-term future in Ethereum’s fragmentation?
Solana doesn’t have the answer
Solana has gained popularity as Ethereum’s competitive edge is losing. Since the blockchain’s inception, it has grown exponentially. 83% increase in developer activity The performance of its decentralized exchanges has outperformed Ethereum for the last five months.
There’s a fundamental problem: Solana’s DeFi growth isn’t built on sustainable financial applications — a memecoin frenzy fuels it.
Recent activity surges are not driven by innovations in decentralized financial systems, but rather by speculation. After the TRUMP mecoin frenzy, Solana extracted between $3.6 and $6.6 billion in value. This isn’t DeFi growth — it’s a liquidity extraction engine where short-term speculators cash in and move on.
Solana’s strengths are real. The low transaction cost and speed of Solana make it an ideal platform for high-frequency traders. Its ecosystem also has significant achievements in AI, DeSci, DePINs, and Decentralized Science. The dominance of memcoin speculation, however, has made the chain a haven for pump-and dump schemes and fraud. DeFi does not need this foundation.
Solana won’t help you build a long-lasting financial system.
Bitcoin DeFi has a thriving market
It’s time to return to first principles and build DeFi on the original blockchain: Bitcoin — the most trusted, decentralized network backed by the soundest money in the digital economy.
It is real. Bitcoin DeFi’s growth is already explosive. Consider the numbers: Total value locked (TVL) in Bitcoin DeFi surged from $300 million in early 2024 to $5.4 billion as of Feb. 28, 2025 — a staggering 1,700% increase. Bitcoin’s staking is a dominant sector, led by protocols such as Babylon (4.68 billion TVL), Lombard (1.59 billion) or SolvBTC (715 million). It shows the increasing demand for Bitcoins to be used as productive assets rather than passive stores of value.
Recent: Bitcoin DeFi takes center stage
Bitcoin-native DeFi isn’t simply copying Ethereum’s playbook — it’s pioneering new financial models. The space has seen advancements in dual staking allowing users stake Bitcoin.BTC( ) along with native tokens for enhanced security and yields. Novel approaches for tokenizing Bitcoin hashrate transform mining power into collateral to lend, borrow and stake, further increasing Bitcoin’s utility.
In addition, Ordinals and BRC-20 tokens have driven record-high transaction activity, with inscriptions reaching 66.7 million and generating $420 million in fees — highlighting the growing demand for tokenized assets on Bitcoin.
It is clear that Bitcoin is no longer just digital gold — it’s becoming the foundation for the next phase of decentralized finance.
Bitcoin will be the future for DeFi
DeFi will be a success if it is based on Bitcoin. Bitcoin’s incentives are in line with the creation of long-term value. DeFi, based on Bitcoin and unlike Ethereum’s fragmented system and Solana’s speculation economy is built upon institutional-grade liquidity.
Bitcoin is the most liquid and largest crypto asset with a market capitalization of $1.7 trillion and $94 Billion in ETF holdings. DeFi could be transformed if even a small fraction of the liquidity in Bitcoin was transferred. Bitcoin is estimated to have over $1 trillion worth of liquid funds that are untapped. Institutional investors, sovereign wealth funds and governments continue to show strong interest in Bitcoin. exploring it as a potential reserve asset.
Many projects already build on Bitcoin. They create a stable ecosystem that allows users to hold their most valuable digital assets while making them productive using DeFi.
Ethereum has had its time. Solana was the hype. Bitcoin now has the opportunity to fulfill Satoshi’s original vision.
Matt Mudano CEO of Arch Labs.
The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.
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Source: cointelegraph.com
