Perspective by: Alisia Painter, chief operating officer of Botanix Labs
Without the existence of Ethereum, the current landscape of decentralized finance (DeFi) would not be as advanced as it is today. Ethereum has played a pivotal role in bringing DeFi into reality, highlighting programmability as a crucial aspect of blockchain technology and demonstrating the effectiveness of smart contracts on a large scale. The Ethereum Virtual Machine has emerged as the preferred platform for developers, boasting the largest ecosystem and tools available.
As DeFi evolves, it raises the question: Is Ethereum the optimal foundation for future financial innovations? The answer may very well be Bitcoin.
With nearly $6 billion in total value locked by March 2025, Bitcoin’s decentralization, liquidity, and resilience make it a natural candidate for the next phase of on-chain finance. While Ethereum has allowed for a surge of experimentation, this very flexibility has its costs.
We’ve witnessed vulnerabilities in smart contracts leading to significant hacks, as well as ongoing discussions about scalability issues. Ethereum’s experimental nature has revealed cracks in its infrastructure. In contrast, Bitcoin provides a robust, battle-tested platform where DeFi can grow sustainably, making the leap from niche communities to widespread adoption.
Ethereum’s Contributions and Drawbacks
Ethereum has been instrumental in developing what we recognize as DeFi today. Its innovations have served as a testing ground for what Bitcoin can achieve. The programmability of Ethereum has enabled developers to create various products, from automated lending platforms to complex derivatives, all possible due to Ethereum’s smart contract functionality.
However, this flexibility has come with significant trade-offs. High-profile incidents, such as the DAO hack in 2016 that drained $50 million and nearly jeopardized Ethereum’s future, demonstrate these risks. Moreover, the 2022 Wormhole exploit resulted in a $325 million loss, while the Ronin Bridge hack took $620 million.
These issues weren’t mere coincidences but rather the anticipated consequences of Ethereum’s open-ended programmability. Smart contracts are indeed powerful, yet they encompass a high level of complexity. This complexity can lead to vulnerabilities, as Solidity was not designed with security as its priority.
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Simultaneously, Ethereum’s scaling issues have rendered the network increasingly exclusive.
Becoming congested and imposing gas fees soaring into hundreds of dollars during peak times has sidelined average users. Seasoned participants often grumble about the exorbitant gas fees necessary to execute basic swaps in times of high congestion. While Layer-2 solutions such as Optimism and Arbitrum have made significant headway, they also risk fragmenting liquidity and impose their own sets of trust assumptions.
This is not to suggest that Ethereum is failing; it is not. As DeFi evolves beyond its experimental phase into a more mainstream segment of global finance, we must consider whether it is wise to continue building on this foundation or to explore more resilient alternatives.
Why Bitcoin?
Bitcoin’s design philosophy is fundamentally different. It acts not as a playground for endless experimentation but as a bastion of stability. Its cautious development principles and proof-of-work consensus make Bitcoin the most secure blockchain available. This level of security translates into trust—an essential component for DeFi applications managing significant financial values.
Another advantage Bitcoin offers is its liquidity. With a market capitalization that far exceeds that of Ether (ETH), Bitcoin (BTC) is the most liquid cryptocurrency, presenting itself as an ideal base layer for DeFi. Advanced technologies like the Lightning Network and sidechains such as Spiderchain are already unlocking Bitcoin’s potential for smart contracts, providing developers with the programmability they desire without compromising security or scalability.
Not All Bitcoin Projects Are Equal
Numerous so-called Bitcoin L2s and sidechains claim to be “Bitcoin native,” offering applications the chance to leverage Bitcoin’s inherent security properties.
Let’s clarify: Many of these are not genuinely Bitcoin-native.
Without naming specific projects, these often depend on custodial multisig setups, bridge Bitcoin to Ethereum or another blockchain, and then build rollups on top. While this approach is not inherently flawed, and there will be valid use cases adhering to this trust model, it doesn’t equate to being authentically built on Bitcoin.
True Bitcoin L2s are crafted directly on the Bitcoin network, utilizing its liquidity, security, and resilience—attributes that have proven to withstand the test of time. To enhance DeFi capabilities, we must construct them upon Bitcoin. This is a clear directive, but one worth emphasizing as prominent players venture into areas that might not align fully with Bitcoin’s potential.
The Path Forward
The debate should not be limited to Ethereum versus Bitcoin. That presents a false dichotomy. Ethereum’s innovate-first approach has been invaluable in demonstrating what is achievable, and it continues to be a vital hub for DeFi experimentation. Bitcoin offers something Ethereum lacks: a foundation that has already gained the trust of the broader financial community.
Users should not have to choose between security and functionality. Bitcoin’s resilience can be combined with advanced financial tools akin to those pioneered by Ethereum. Some of the most exciting developments today happen at this crucial intersection.
For DeFi to realize its goal of fostering a fair, open, and inclusive financial system, it must progress beyond its experimental stage. It must ensure security to the extent that everyday individuals can engage without the fear of devastating losses due to exploits. It requires sufficient liquidity to sustain real-world financial activities. And it needs the level of institutional trust that only Bitcoin has secured.
The future of finance will be constructed on Bitcoin not due to Ethereum’s failures, but because Bitcoin offers the solid foundation that the financial sector demands.
Perspective by: Alisia Painter, chief operating officer of Botanix Labs
This article is intended for general informational purposes and should not be construed as 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 or opinions of Cointelegraph.
