Why Institutions Still Prefer Eth Despite Faster Blockchains
Institutions favor Ethereum over faster blockchains primarily due to its unmatched capital depth and liquidity, which ensures stability and better execution for large trades.Summary
Despite the emergence of faster blockchains like Solana, institutions continue to favor Ethereum because they prioritize capital depth and liquidity over raw transaction speed (TPS). Kevin Lepsoe, founder of ETHGas, likened Ethereum to "downtown" where the deepest liquidity resides, making it ideal for absorbing institutional-sized transactions with lower slippage.
Ethereum hosts the largest concentration of stablecoins and decentralized finance (DeFi) capital, which anchors the ecosystem's stability beyond retail hype. This deep liquidity is crucial for real-world asset (RWA) tokenization, exemplified by BlackRock's BUIDL fund, which is heavily weighted on Ethereum. While Layer-2 solutions initially fragmented liquidity, they arguably saved it from migrating entirely to competing L1s.
Ethereum is addressing performance concerns through upgrades like the expected 2026 Glamsterdam fork, which will significantly increase the L1 block gas limit. Although competitors like Canton offer privacy advantages, experts argue that Ethereum's battle-tested nature and superior liquidity pool remain the defining, enduring advantage for large capital allocators.
(Source：Cointelegraph)