Why do organizations still prefer Ethereum despite the emergence of faster blockchains like Solana

Ethereum continues to maintain its position as the largest blockchain for stablecoin concentration and decentralized finance (DeFi) capital, despite the rise of faster networks.

In recent years, many new blockchains have promoted their superior transaction processing capabilities and low costs, raising questions about whether institutional funds might move away from Ethereum in the future.

Kevin Lepsoe, founder of ETHGas and former derivatives director at Morgan Stanley in Asia, believes Ethereum’s advantage will persist because financial institutions tend to prioritize capital depth over performance metrics.

He notes that while transactions per second (TPS) can excite engineers, they are not the decisive factor in where capital flows. According to Lepsoe, liquidity and stablecoin supply are mainly concentrated on Ethereum, and traditional finance (TradFi) always seeks the highest liquidity.

Institutional capital provides scale and stability to the blockchain ecosystem. Major asset managers and tokenized fund issuers deploy capital at a scale that increases liquidity and strengthens stablecoin supply. Their presence helps a network sustain a long-term position rather than relying on retail speculative waves that often surge during bull markets and decline when conditions worsen.

Liquidity Keeps Ethereum Ahead

If institutions prioritize operating in areas with existing large capital pools, building a faster blockchain alone isn’t enough to pull funds away from Ethereum.

In many previous cycles, performance became a key tool for attracting users. Solana emerged as a high-speed alternative to Ethereum and was dubbed the “Ethereum killer.” The network attracted many retail investors through NFT waves and memecoin fever, but that vibrancy was not sustainable.

Today, Solana also faces new “Solana killers” claiming even higher theoretical TPS. However, Ethereum’s liquidity advantage results in narrower spreads, lower slippage for large transactions, and the ability to absorb institutional-scale transactions without significant price volatility.

Lepsoe compares Ethereum to a city’s financial district. There may be markets in the suburbs with different prices or experiences, but if you need the deepest liquidity, the money will go to the center—and in today’s blockchain ecosystem, that’s Ethereum.

While previous cycles were mainly driven by retail speculation, the next phase is increasingly shaped by institutional capital. Financial institutions are paying more attention to practical applications like stablecoins and real-world assets (RWA) tokenization.

Even the world’s largest asset manager, BlackRock, is pushing RWA strategies. The USD Liquidity Fund (BUIDL)—a tokenized US government bond fund—initially launched on Ethereum before expanding to other blockchains. Currently, Ethereum accounts for over 30% of BUIDL’s market capitalization.

Ethereum is also the largest network by stablecoin market cap, with $160.4 billion according to DefiLlama. Samara Cohen, BlackRock’s global head of market development, states that stablecoins are becoming a bridge between traditional finance and digital liquidity.

Ethereum is increasingly consolidating its leading position as the distribution layer for real-world assets (RWA), excluding stablecoins | Source: RWA.xyz## Restructuring to Strengthen Position

While liquidity is fundamental, technical performance cannot be overlooked. Ethereum has restructured to improve scalability. Transaction fees, which once soared to levels that made usage difficult, have been significantly reduced thanks to the development of layer 2 (L2) solutions. However, L2 also creates liquidity fragmentation across different environments.

According to Lepsoe, this fragmentation can be seen as “risk mitigation.” If L2s do not retain some liquidity within the Ethereum ecosystem, capital might flow to competing layer 1 blockchains and struggle to return.

Recently, Ethereum has shifted focus back to expanding layer 1. Co-founder Vitalik Buterin believes many L2s have not achieved the expected level of decentralization, while the main chain now has enough infrastructure to expand directly.

Ethereum plans to implement the Glamsterdam upgrade in 2026, increasing the gas limit per block from 60 million to 200 million, aiming for 10,000 TPS over time.

Alongside protocol upgrades, infrastructure providers are testing efficiency solutions. Lepsoe’s ETHGas focuses on improving block construction through off-chain processing mechanisms, while Psy Protocol uses zero-knowledge technology to bundle multiple transactions.

Marcin Kaźmierczak, co-founder of RedStone—an oracle data provider for tokenized assets and blockchain applications—believes Ethereum still holds an advantage due to its long operational history and proven reliability. Although institutions are expanding heavily into Ethereum, they also consider alternatives like Solana or Canton, especially when privacy is a priority.

However, Lepsoe emphasizes that he does not see significant threats from competitors, as Ethereum still has the deepest liquidity pool—an essential factor for large capital allocators.

In the blockchain market, speed can attract users during boom periods, but long-term capital tends to stay where the market is deep and liquidity is solid. Currently, that advantage still belongs to Ethereum.

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