With over 100 Layer-2 (L2) Blockchains, you are excused for thinking Ethereum is too expensive and too slow. But ask any institution preparing to run an interest exchange of $ 500 million where they will build and the answer is Ethereum. The reason reveals all about how institutional defi is likely to develop.
The measurements that matter to institutional adoption are completely different for retail. While retail users flee from Ethereum’s transaction fees for cheaper chains, institutions gladly pay this prize for security as they move hundreds of millions. The prize that people are willing to pay for a safe infrastructure is not a problem. Ethereum’s “weaknesses” are actually its institutional Vollgrav.
A tale of two markets
Examination of the figures makes the difference in perspective between retail and institutional investors meaning. If you buy a Memecoin for $ 50 you won’t pay $ 10 in transaction fees. But when it comes to running an interest exchange of $ 500 million, peeling off $ 10 to make sure a safe transaction is a small price for that peace of mind.
You don’t have to look longer than Tradfi to see that this perspective is not new, and the security premium for shopping at Ethereum is actually the product. There is a reason why institutions pay more to shop on sneezing than the pink sheets (securities on OTC exchanges) and why they continue to trade through Swift despite its costs. It’s about legitimacy and a tested track record to implement transactions in a safe and compatible way. The same goes for blockchains.
The idea of having hundreds of millions of dollars in funds stuck on an inoperable network is the definition of a nightmare for institutions. Many institutions value the fight -tested security for chains like Ethereum rather than those focusing on speed. If you take one thing away from this UP-ET, you need to understand that traditional funding always pays for the reliability of infrastructure.
Preparing for rules
What investors need most is a robust, market -tested base layer blockchain that is widely accepted among financial institutions as a neutral settlement layer. Ethereum gets a serious institutional commitment because the network is properly integrated with existing infrastructure. That’s what it was built for.
A point of evidence is the number of larger banks based on Ethereum that gain regulatory comfort with Ethereum’s decentralization as well as from the pool of developer talent that have been and will continue to be concentrated within the Ethereum ecosystem. This can just be a self -reinforcing cycle of institutional adoption.
A feature, not a failure
We have to stop seeing Ethereum’s high fees as a failure – they are a feature that naturally segment the market. Some chains are intentionally optimized at low cost, fast, microt transactions. Institutions need and pay for the digital equivalent of Fort Knox too large where liquidity is available.
Instead of looking at measurements such as daily active users or translation counts, institutions are taking a more basic approach. They see where regulated units build their infrastructure and are focused on the large game of institutional settlement.
So next time someone declares Ethereum death, you should ask them where they would rather run a transaction of $ 500 million? The answer reveals why reports of Ethereum’s death are very exaggerated – and why institutions are focusing on “boring” Ethereum infrastructure will capture the real value in the defense institutional future.
Read more: Paul Brody – Ethereum has already won
