With more than 100 layer 2 blockchains (L2), you are apologized for thinking that Ethereum is too expensive and too slow. But ask any institution that is preparing to pay an interest rate exchange of $ 500 million where it will build, and the response is Ethereum. Reason reveals everything about how the institutional deffi is likely to develop.
The measures that matter for institutional adoption are entirely different from retail. While retail users flee the transaction costs of Ethereum for cheaper channels, institutions will readily pay this premium for security during the move of hundreds of millions. The premium that people are ready to pay for a safe infrastructure is not a problem. Ethereum’s “weaknesses” are actually its institutional pits.
A story of two markets
Examination of figures, the difference in perspective between retail investors and institutional investors is logical. If you buy a same for $ 50, you don’t want to pay $ 10 in transaction costs. But when it comes to paying an interest rate exchange of $ 500 million, spending $ 10 to ensure that a secure transaction is a small price for this peace of mind.
We must not seek further than Tradfi to see this perspective is not new, and the security premium to transform on Ethereum is in fact the product. There is a reason why institutions pay more to trade on the nyse only on pink leaves (titles on over -the -counter exchanges), and why they continue to transform via Swift, despite its costs. These are legitimacy and a proven history of the realization of transactions in a secure and compliant manner. The same will apply to 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 appreciate the security tested in the fight of channels like Ethereum rather than those which focus on speed. If you remove something from this editorial, understand that traditional finance always pays the reliability of infrastructure.
Preparation of regulations
What investors most need is a basic layer blockchain to test on the market that is widely accepted among financial institutions as a layer of neutral settlement. Ethereum obtains a serious institutional commitment because the network is correctly integrated into the existing infrastructure. This is why it was built.
A evidence is the number of large banks that rely on Ethereum, which obtain regulatory comfort with the decentralization of Ethereum, as well as in the developer talent basin which has been and will continue to be concentrated in the Ethereum ecosystem. This may well be a self-reproduction cycle of institutional adoption.
A functionality, not a failure
We must stop seeing the high costs of Ethereum as a failure – it is a characteristic that naturally segments the market. Some channels are intentionally optimized for low -cost, fast and micro transactions. The institutions need and will pay the digital equivalent of Fort Knox for the Great, where liquidity is available.
Instead of looking at measures such as daily active users or translation counts, institutions adopt a more fundamental approach. They look at where regulated entities build their infrastructure and focus on the major institutional settlement game.
So, the next time someone declares Dead Ethereum, ask him where he prefers to settle a transaction of $ 500 million? The answer reveals why the reports on the disappearance of Ethereum are very exaggerated – and why the institutions are betting on the infrastructure of “boring” Ethereum will seize the real value in the institutional future of Defi.
Read more: Paul Brody – Ethereum has already won
