The following is a guest post and opinion from Michael Egorov, Founder of Curve Finance.

As DeFi edges closer to mainstream finance, it must balance neutrality, security, and throughput. In 2025, that balance is increasingly defined by two competing architectural visions.

The evolution of DeFi has always hinged on one core question: what kind of infrastructure do we want to build the future of finance on? As the space matures and edges toward integration with global financial systems, the urgency of this question only intensifies.

In 2025, this decision is no longer purely technical. It’s a contest between two visions: Ethereum’s modular, decentralization-first stack and Solana’s high-performance, monolithic approach. The outcome will help determine what the next phase of blockchain-based finance looks like—and shape the architecture of tomorrow’s global financial systems.

In this article, I share my perspective on how both networks are positioning themselves for the future, and which is more likely to emerge ahead in the long run.

Ethereum: The Foundation of Serious DeFi

Ethereum is more than just a blockchain—it’s the bedrock of modern DeFi. It’s where secure, composable applications can thrive and where long-term financial infrastructure is being built. Institutional players turn to Ethereum when they want to tokenize assets with confidence, and capital flows here for security. The fact that over 55% of total value locked (TVL) across major chains resides on Ethereum attests to its dominance.

Unlike Solana’s one-size-fits-all Layer 1, Ethereum has embraced a modular scaling approach. Layer 1 remains the core foundation, while Layer 2s handle specific workloads such as micro-transactions or gaming, avoiding congestion on the main chain. This structure preserves decentralization while enabling scale. With the rollout of Proto-Danksharding in early 2025, Layer 2 transaction costs have dropped significantly—cementing Ethereum’s lead in modular architecture.

That said, Ethereum’s model has trade-offs. Its reliance on Layer 2s can introduce fragmentation. Some DeFi primitives need to live on Layer 1 for full composability. While isolated applications like order book DEXs can function on L2s, these solutions often feel like a temporary fix, not a long-term design. Truly integrated DeFi demands synchronous, on-chain composability—which works best when everything operates at the same base layer.

But Ethereum’s greatest strength is its uncompromising commitment to decentralization. It is one of the most politically neutral blockchains in existence—a key trait in an increasingly regulated environment. Speed and user experience can be optimized over time, but decentralization is a founding principle. Once compromised, it’s nearly impossible to restore.

Developer experience is another edge. Writing smart contracts on Ethereum is significantly simpler than on Solana, enabling developers to produce secure, well-tested code. This maturity is part of the reason why Ethereum developers are comfortable making contracts immutable—there’s confidence in the security. It’s no coincidence that nearly every major DeFi innovation originated on Ethereum. With over 1,388 deployed protocols compared to Solana’s 232, the numbers speak for themselves.

When security, composability, and developer confidence align, the entire ecosystem benefits.

Solana: Fast and Efficient, But Centralized

Solana addresses the same scaling challenge from a different angle. Its monolithic architecture keeps everything on a single Layer 1. This offers tangible benefits: extremely fast transactions, low fees, and a seamless user experience.

From a raw performance standpoint, Solana is compelling—capable of processing 3,000–4,000 transactions per second (TPS) today, with expectations of reaching over 1 million TPS through the upcoming Firedancer validator. These numbers, based on testnet results, are impressive compared to Ethereum’s average of 15–30 TPS.

However, this performance comes with trade-offs. Solana’s design includes a leader node that sequences transactions. While this improves throughput, it introduces centralization risks. The network is distributed, but not truly decentralized. That distinction matters—especially in a world where institutions prioritize political neutrality and censorship resistance.

Still, not every use case requires deep decentralization. For example, internal CBDCs or consumer-facing applications in gaming and fintech may benefit from Solana’s throughput and UX. I wouldn’t be surprised if we see state-adapted versions of Solana deployed in controlled environments.

Yet despite Solana’s momentum, Ethereum remains the platform of choice for what I call “serious money.”

Structural Soundness vs. Mass Adoption

The core DeFi debate in 2025—and beyond—centers on what the sector should optimize for: structural integrity or mass adoption? Should we build resilient, decentralized, and composable systems, even if they’re slower and more complex? Or prioritize scale and UX at the expense of core crypto values?

Chasing adoption without structural soundness is short-sighted. If protocols compromise on security or decentralization, regulators will inevitably impose the same constraints that burden traditional finance. At that point, the promise of DeFi would be lost.

That’s why institutional capital continues to favor Ethereum—and why I believe that preference will hold. Neutrality and security can’t be retrofitted; they must be built into the base layer from the start.

If we want DeFi to outlast the hype cycles and form the backbone of a new global financial order, Ethereum offers the most robust path forward. It gives us the best shot at building financial rails that are resilient, secure, and unco-optable.

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Journalist

Tanzeel Akhtar

Journalist

Tanzeel Akhtar

About Author

Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

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May 25, 2025

In a bold bet on Bitcoin’s DeFi future, Changpeng Zhao (CZ)–backed YZi Labs—formerly Binance Labs—has made an undisclosed investment in Avalon Labs, a fast-rising platform building on-chain capital markets powered by BTC.

In an X post on May 26, the firm said the project is building financial infrastructure around BTC-collateralized lending, stablecoin USDa, savings products, and credit services, showing there is interest in Bitcoin-powered DeFi.

USDa: Powering a Bitcoin-Backed Financial Ecosystem

At the core of Avalon’s ecosystem is USDa, a Bitcoin-backed stablecoin that allows users to borrow, earn yield, and transact without selling their BTC.

The firm has over $500 million in total value locked (TVL). USDa is the second-largest collateralized debt position (CDP) project tracked by DeFiLlama.

The platform goes beyond stablecoins to include BTC-backed lending, yield-bearing savings accounts, and a Bitcoin-collateralized credit card, managing more than 20,000 BTC.

Scaling Toward Regulation and Institutional Growth

Avalon’s journey began in Season 8 of the Most Valuable Builder (MVB) accelerator—run in partnership with BNB Chain, CoinMarketCap, and YZi Labs.

In a blog post, the firm explains that with this new capital injection, Avalon is preparing to scale globally, targeting regulatory licenses across key markets and working with elite law firms to launch a fully regulated public fund.

At the same time, the company said it is ramping up its institutional lending business, seeking to become the world’s first fully regulated on-chain Bitcoin financial institution.

“Avalon leverages Bitcoin’s security and liquidity to create a full-stack financial ecosystem,” said Alex Odagiu, Investment Director at YZi Labs. “It bridges the gap between Bitcoin’s vast potential and real-world usability.”

“We’re building the premier financial hub for Bitcoin,” added Venus Li, Co-Founder of Avalon Labs. “With YZi Labs’ support, we’ll bring Bitcoin-backed products to everyday users and unlock yield for a global audience.”

Binance Labs Rebrands to YZi Labs With CZ Engaging More

In December, Binance Labs announced plans to rebrand in 2025. Changpeng Zhao (CZ) will lead and personally engage with investment projects. CZ served four months in prison for violating the U.S. Bank Secrecy Act and other regulatory issues.

Binance Labs broke away from the exchange Binance and became an independent entity in 2024. The rebranding reflects its evolving vision and distances itself from the exchange.

The investment arm said Binance founder CZ will dedicate more time to investing and directly engaging with projects. CZ is permanently banned from being involved in Binance leadership but is allowed to focus on investments.

The following is a guest post from Chris Thomas, Head of Blockchain and Corporate Security at GRVT.

While a chain is only as strong as its weakest link, in the world of cryptocurrency, that weak link is often security. Each year, billions of dollars vanish overnight from the crypto market due to security breaches, hacks and exploits.

The recent Bybit hack, where attackers drained over $1.5 billion in Ethereum, serves as yet another reminder of these risks. While Bybit assured users that funds were secure, the incident reinforced a fundamental issue: even the largest platforms remain vulnerable to sophisticated attacks under traditional security models.

In 2024 alone, crypto-related thefts surged by 21%, totaling $2.2 billion, while hacking incidents increased from 282 in 2023 to 303. However, security failures go beyond just theft — centralized systems expose user funds to risks even without a direct breach.

Crypto’s Security Dilemma

The collapse of FTX in 2022, which erased over $8 billion in user funds, heightened concerns about custodial exchanges. Entrusting assets to centralized entities has repeatedly led to devastating losses, whether through mismanagement, fraud or outright collapse.

But decentralization hasn’t solved the problem either — flash loan attacks, smart contract exploits and governance vulnerabilities have drained liquidity pools in seconds, proving that DEXs are not immune to financial catastrophe.

The ongoing dilemma highlights a fundamental issue: neither traditional CEXs nor fully decentralized protocols offer a foolproof security model. CEXs provide user-friendly interfaces but require blind trust in a centralized entity, exposing users to custodial risks. DEXs eliminate intermediaries but introduce new challenges, such as private key mismanagement, smart contract vulnerabilities and slow governance responses to security threats.

No matter how advanced crypto technology is, fortunes can vanish in an instant. The question is no longer CEX vs. DEX — it’s how security can evolve to eliminate their weaknesses. A new approach is needed — one that blends the best of both worlds.

The Case for Hybrid Security in DeFi

A hybrid security model combines the advantages of centralized security measures with decentralized, trust-minimized solutions. Instead of forcing users to choose between control and convenience or security and usability, hybrid exchanges aim to provide institutional-grade protections while preserving self-custody.

Centralized exchanges implement multi-factor authentication (MFA), cold storage, anti-money laundering (AML) compliance and insurance coverage against cyber threats. However, these protections have limits — cold storage remains a single point of failure, MFA can be compromised through social engineering, and users must trust the exchange to act in good faith.

Decentralized exchanges rely on non-custodial asset management, smart contract audits and decentralized governance mechanisms. While these features enhance transparency and user autonomy, they do not eliminate risks. Lost private keys mean lost funds and even the most rigorously audited contracts have been subject to multi-million-dollar exploits.

A hybrid security model closes these gaps by combining CEX-level protections with DeFi resilience, allowing users to enjoy high-security standards while retaining decentralization.

How Hybrid Security Reduces Risk

Hybrid security models seek to mitigate the risks that have led to billions in losses across the crypto space. By combining decentralized self-custody with centralized security controls, these models offer a more resilient approach to asset protection.

1. Self-Custody Without Exchange Failure

Unlike traditional CEXs, which require users to relinquish control of their assets, hybrid models enforce self-custody through solutions like Secure Multi-Party Computation (MPC) technology. With the new approach, users can be confident that their funds will be protected even if the exchange is compromised, reducing the risk of catastrophic failures seen in past CEX crashes.

2. Smart Contract-Backed Withdrawal Protection

Hybrid security platforms integrate Web2 and Web3 security measures at the smart contract level. Users can whitelist withdrawal addresses, and transactions require multi-factor authentication and wallet signatures. The hybrid security model significantly reduces the likelihood of unauthorized withdrawals, even in cases of compromised login credentials.

3. Order Book Systems Prevent DeFi Exploits

One of DeFi’s biggest vulnerabilities is flash loan attacks, which exploit automated market makers (AMMs) to drain liquidity pools in seconds.

Hybrid exchanges avoid this risk by utilizing off-chain order books, preventing front-running, sandwich attacks and price manipulation that plague fully decentralized protocols.

4. Institutional-Grade Compliance with Blockchain Transparency

While implementing traditional security controls like suspicious activity monitoring and withdrawal limits, hybrid security models ensure that key aspects of governance remain decentralized. Smart contract enforcement minimizes human intervention risks while maintaining transparency on the blockchain.

Hybrid Security: The Next Evolution of DeFi

The idea that finance must be fully centralized or fully decentralized is outdated. Security should not come at the cost of autonomy, and usability should not require blind trust in a single entity.

The hybrid security model represents a logical evolution in DeFi’s development — balancing institutional safeguards with blockchain transparency. Pure CEX models have demonstrated their vulnerabilities through high-profile collapses, while fully decentralized models are still in their infancy and vulnerable to emerging exploits.

Hybrid models signal a shift towards a more robust security framework, ensuring that exchange failures and protocol breaches become relics of the past. The question is no longer whether hybrid security will define the next era of crypto but how soon the industry will accept that the old ways are no longer enough.

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The following is a guest article from Mike Wasyl, CEO at Bracket.

DeFi has fast-tracked and failed with some terrible economic models over the last four years. But there’s something romantic about a tarpless economy that keeps onlookers gawking. Peeling back the penguins, Ponzi schemes, and perpetual jargon, we find a 24/7 market creating opportunities for generations left to fend for themselves. No 30-year ice cream scooper pensions for Gen Z.

Jokes aside, we younger generations had little choice but to use the tools we were dealt. In our brokerage accounts, we click around a fine UI generated by some megacorp army. But beneath the facade, we are actually duct-taped to a rickety seat riding decades-old rails. I don’t want to ride that old roller coaster slinging Jazz Age bucket shop finance lingo. There are new rides—new tools that modernize the financial experience and help us earn on our own terms, 24/7. Let’s take a look at a slice of this world and where we might go in 2025.

In crypto, proof-of-stake networks deliver native rewards for securing the network—“staking.” Staking cannot be replicated in traditional finance and is a revolutionary economic primitive native to blockchains (it’s ours!). Staking has led to the creation of Liquid Staked Tokens (LSTs), which allow users to earn rewards without running nodes. Ethereum-based liquid staking witnessed a precipitous rise through 2024, reaching a high of $70 billion in total value locked (TVL) by year’s end. Passive block rewards fueled holder count even with ETH’s staking rate hovering around just 3%.

While Ethereum leads in staking value, only ~28% of ETH supply is actively staking. We believe this number will increase to 40-50% within a few years, with 2025 pivotal to unlocking institutional capital. Over half of institutional Ethereum holders use liquid staking tokens (LSTs) and understand the utility of reward-bearing assets. As more entrants from traditional finance venture on-chain, LST dominance will rise. Despite the tailwinds, competition for rewards will heat up. It is up to users and capital allocators to decide how to stack yield efficiently to maximize the value of their on-chain collateral.

As competition compresses yields, stakers will look for new ways to grow beyond simple block rewards. Providing opportunities is difficult, as liquidity is stuck in DeFi protocols across several chains. A user’s staked ETH in one DeFi pool is a monolith, typically stuck until yields disappear or better opportunities arise. It’s inefficient and limiting, which makes users hunt for airdrops and outsized inflationary rewards in the meantime.

Ether.fi, a major player in the ETH restaking space, controls >50% of the liquid restaking market by allowing users to restake ETH across services like EigenLayer. “Restaking” turns idle LSTs into Liquid Restaking Tokens (LRTs) that aim to earn extra yield from extending ETH’s security to other services, getting rewards in return. So far, most returns are loyalty points, tokens, and other inflationary economic incentives to keep users occupied. As more restaking-secured services come online, we will see if there is adequate yield supply to meet the billions in demand for passive, on-chain earnings.

Users want flexible, mobile, reward-accruing, stackable products. But in DeFi, protocol design lags behind demand. Simply reusing economic security is speculative and stresses Ethereum. Most platforms still treat staking as a one-way mechanism—deposit ETH and earn rewards. This leads to capital recirculation within the rewards loop, the “ouroboros” we talk about at Bracket, where capital never leaves DeFi.

However, users want products that provide diversified exposure to new asset classes with “set it and forget it” experiences. We’d like to remove complexity and have transparent products that prioritize earning but with additional safety measures. Product builders ignoring this shift leave yield-seekers stranded in an inflationary rewards cycle.

The Playbook for 2025 – Real-Yield Optimization and Strategy Management

DeFi enables money-legos, something traditional finance has struggled to deliver in banks or brokerages due to highly siloed systems with those rickety old rails we talked about. DeFi, however, has unlocked the ability to layer great-quality on-chain collateral to compound yields. Think of the ideal state as a digital “yield stack”—passive staking rewards, plus real trading yield, plus real-world products, plus economic incentives that generate solid returns without leaving the on-chain ecosystem.

If products from Lido, Coinbase, and Binance could be used alongside real-world assets across DeFi, users wouldn’t have to pick one pool or opportunity. They could be automatically reallocated among the best options, managing participation based on risk tolerance.

2025 brings a surge in new blood, new products, and most importantly, a shift in perspective about high-quality collateral. For the first time, staking assets, ETH, and stablecoins are being legitimized by the government and influential capital allocators. Tokenized TradFi products like on-chain money market funds, credit funds, and even hybrid on-chain/off-chain models are emerging.

Introducing these yield-producing assets alongside an improved regulatory climate should unlock a wave of new capital deployment—something DeFi needs in order to exit the ouroboros loop and participate in the global economy. These changes will force DeFi to build toolkits and infrastructure to help the trillions of dollars waiting to move at the speed of on-chain finance.

Yet, a massive knowledge gap remains. DeFi builders don’t always understand finance, TradFi doesn’t understand on-chain building, and regulators understand nothing. This is where seasoned DeFi builders will help usher in the next wave of global finance—but they have to play nice. We are at the precipice of making all tokenized markets 24/7, offering users the best choices among highly competitive products and services. In 2025, the place to be is building infrastructure to connect products and DeFi power users to real economic value (fun new rides).

The Bottom Line

Stagnation in real yield in DeFi exposes a need for new assets, new managers, and new gateways to tokenized products and hybrid experiences. Users don’t want to stay stuck in old systems that don’t serve them. Institutional actors are getting the message, building trust in new collateral types. New regulations should usher in waves of innovative competitors looking for an edge, benefiting users like us.

DeFi is reaching an inflection point—its long-term viability depends on its ability to evolve beyond basic caveman reward structures and isolated PvP yield battles. We can only recycle capital for so long before the ride isn’t fun anymore for anyone. Yield generation must become an active, adaptive process—one that integrates automation (even AI) and diversified income streams from asset classes that move at the speed of on-chain finance.

Without unlocking new asset exposure and utility on-chain, DeFi risks becoming a zero-sum game where capital comes in, but real returns stagnate, and the snake eats its own tail again and again. TradFi is already tokenizing yield products with institutional backing, and DeFi will rise to provide the new rides and rails in 2025.

So it’s up to DeFi builders to realize that we aren’t going to win PvP against one another. Eating our own tails is exhausting. It’s time to build new rides and new rails for trillions of financial assets to deliver on the promise of a more meritocratic system.

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