Source: Cointelegraph
Original: “The Future of Finance is Built on Bitcoin (BTC) — Ethereum (ETH) is Just a Testnet”
Author: Alisia Painter, COO of Botanix Labs
Without Ethereum, the industry would not have made the progress it has today in achieving DeFi, making blockchain programmable, and demonstrating the large-scale value of smart contracts. The Ethereum Virtual Machine (EVM) has become the preferred platform for developers, boasting the largest ecosystem and tools.
However, as DeFi matures, a question arises: Is Ethereum the best foundation for future financial innovation? The answer may be Bitcoin.
As of March 2025, Bitcoin's total value locked (TVL) is close to $6 billion. Bitcoin's decentralization, liquidity, and resilience make it a natural home for the next generation of on-chain finance. While Ethereum's flexibility has facilitated a plethora of experimental innovations, this flexibility has also brought many trade-offs.
From the smart contract vulnerabilities we have seen in large-scale hacking incidents to the scalability issues, Ethereum's experimental ethos has left cracks in its foundation. In contrast, Bitcoin offers a solid and battle-tested infrastructure on which DeFi can sustainably grow and bridge the gap from "speculators" to mainstream adoption.
The Contributions and Limitations of Ethereum
Ethereum is the foundation upon which decentralized finance (DeFi) stands today. This innovation and development have provided a testing ground for Bitcoin's potential and ultimate achievements. Its programmability allows developers to create a wide range of products, from automated lending platforms to complex derivatives. The existence of these products is entirely due to Ethereum's smart contract capabilities.
However, flexibility comes with serious trade-offs, and we have seen these issues arise in real-time. The 2016 DAO hack resulted in a loss of $50 million and nearly stifled Ethereum in its early days. The 2022 Wormhole exploit lost $325 million, while the Ronin bridge hack resulted in a loss of $620 million.
These are not just bad luck; they are foreseeable outcomes of Ethereum's open programmability. Smart contracts, while powerful, are also complex. Complexity brings vulnerabilities. The Solidity language fundamentally did not prioritize security as a primary design consideration.
Meanwhile, Ethereum's scalability challenges have made it increasingly difficult to access.
Network congestion and transaction fees soaring to hundreds of dollars during peak times effectively exclude ordinary users. During peak periods, experienced users are accustomed to paying exorbitant fees just to conduct basic transactions. Layer-2 solutions like Optimism and Arbitrum have made significant progress, but they fragment liquidity and introduce their own trust assumptions.
This is not to say that Ethereum has failed; it has not. As DeFi transitions from the experimental phase to broader global finance, we need to ask a question: Does it make sense to continue building on this foundation, or should we consider a more resilient alternative?
Why Bitcoin?
Bitcoin's design philosophy is fundamentally different. It is not a platform for endless experimentation but a stable fortress. Its conservative development philosophy and proof-of-work consensus mechanism make Bitcoin the most secure blockchain in existence. This security translates into trust — a key factor for DeFi applications handling billions of dollars in value.
Liquidity is another advantage of Bitcoin. Bitcoin's market capitalization far exceeds that of Ethereum, making it the most liquid cryptocurrency, which makes it an ideal foundational layer for DeFi. Technologies like Bitcoin's Lightning Network and sidechain technologies like Spiderchain are already unlocking the potential of Bitcoin smart contracts, providing the programmability developers need without sacrificing security or scalability.
Not All Bitcoin Projects Are Equal
Many so-called Bitcoin L2s and sidechains claim to be "Bitcoin-native," promising to support applications by leveraging Bitcoin's inherent security features.
Let’s clarify: many are not truly Bitcoin-native.
Without naming names, these projects often rely on custodial multi-signature setups to bridge Bitcoin to Ethereum or other chains, and then build rollups on top of them. While this approach is not inherently problematic and some use cases fit this trust assumption, it is not equivalent to applications built natively on Bitcoin.
True Bitcoin L2s are built directly on Bitcoin, leveraging its liquidity, security, and resilience — characteristics that have stood the test of time. If we want to expand DeFi capabilities, we must build them on Bitcoin. This is a straightforward request, but it is worth reiterating as we see some major players exploring paths that do not fully align with Bitcoin's potential.
The Path Forward
The debate should not be framed as a competition between Ethereum and Bitcoin. This is a false dichotomy. Ethereum's innovative ethos is crucial in proving what is possible, and it remains an important hub for DeFi experimentation. Bitcoin offers something that Ethereum does not: a foundation that has earned the trust of the broader financial world.
Users should not have to choose between security and functionality. The resilience of Bitcoin combined with the complex financial instruments pioneered by Ethereum. Some of the most exciting work is happening at the intersection of these two realms.
For DeFi to fulfill its promise of creating a fair, open, and inclusive financial system, it must move beyond the experimental phase. It must be secure enough for ordinary people to use without fear of losing everything due to vulnerabilities. It needs to have deep enough liquidity to support real-world financial activities. It also needs the kind of institutional trust that only Bitcoin can provide.
The future of finance will be built on Bitcoin, not because Ethereum has failed, but because Bitcoin provides the foundation that finance needs.
Author: Alisia Painter, COO of Botanix Labs
Related: How Decentralized Finance (DeFi) Achieves Secure Scaling in the Age of Artificial Intelligence (AI)
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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