Now picture Ama, a dynamic business owner in Accra, Ghana. She’s an entrepreneur who owns a microbusiness, selling her handcrafted jewelry, and she hopes to sell more of it outside of her local community. With its vision of borderless finance, DeFi was the ideal answer. Ama quickly discovered a harsh reality: Ethereum's gas fees made even the smallest transactions prohibitively expensive. Don’t even get me started on the arcane universe of Layer 2s. Forget about it. To do anything else would have been akin to asking her to fly a spaceship when she had just learned to ride a bicycle. This is the inconvenient truth Ethereum’s scaling strategy pretends doesn’t exist.
Has Ethereum created a digital divide?
Hayden Adams' recent endorsement of Solana isn't just a tech preference. It's a flashing neon sign pointing to Ethereum's potentially fatal flaw: its inherent tendency to create a two-tiered financial system. In the meantime, Ethereum is still mercilessly pursuing the highest possible security and decentralization on Layer 1. This ambition is worthy but this pursuit has sadly priced out the majority of the global population.
Think about it. All that happens is Ethereum’s L1 becomes a playground for whales, institutions and anyone else that can afford the exorbitant gas fees. It’s the tech world’s digital equivalent of a gated community. Meanwhile, the rest of us are relegated to the potentially less secure, more complex, and fragmented world of Layer 2s.
Though technically elegant, Ethereum’s modular approach has profound socio-economic implications that are being conveniently brushed aside. This harkens back to even the earlier days of the internet. At that time, broadband access was still a luxury, leaving a huge information gap and digital divide between hitters with the information and people without. Are we fated to go through this same history all over again with DeFi?
Modular scaling's socio-economic fallout
The promise of DeFi was democratization. How democratic is a system that imposes such a high barrier to entry? Yet, it makes it very difficult for those that need it the most to access. In short, ethereum gas fees can increase drastically when there is a lot of activity on the network. This increase renders the platform economically infeasible for small dollar transactions. Although L2 adoption rates are increasing significantly, they are still not at a universal adoption rate. The challenge is the steep learning curve, especially for non-technical audiences.
Ethereum’s obsession with security at all costs means it remains out of reach for millions. This is especially true in developing economies, where the potential of decentralized finance (DeFi) can be life-changing.
Along those lines, our David Hoffman argues that Ethereum L1 gives DeFi unparalleled security and resilience, making it the “natural home” for DeFi. And he's not wrong... to a point. Security is paramount. But at what cost? Is absolute security really an ideal for which we want to sacrifice accessibility and financial inclusion?
| Feature | Ethereum L1 | Ethereum L2 | Solana L1 |
|---|---|---|---|
| Security | High | Varies (generally lower than L1) | Moderate |
| Transaction Fees | Very High | Lower, but can still be unpredictable | Very Low |
| Complexity | Relatively Simple | High (requires understanding of bridging, etc.) | Relatively Simple |
| Accessibility | Limited due to cost | Limited due to complexity and fragmentation | High |
This isn’t merely a consideration of tech specs — this is about ethics. Let’s ask whether a system designed to benefit the richest of us really is what we mean by decentralization. Is it actually empowering those who need it most?
Does Ethereum's security justify exclusion?
Above all, it’s time for the Ethereum community to have a serious conversation about the socio-economic implications of its proposed scaling strategy. To do that, we have to start looking for more equitable solutions, solutions that actually help Ama and millions of other kids like her. Maybe something in-between, where you get the security and immutability of the Ethereum blockchain along with the developer friendliness of a chain like Solana, is the solution. Or perhaps entirely new solutions are needed.
The future of DeFi depends on it. Let’s not create an alternative financial system that just supercharges all the inequalities of the previous one.
It's time for the Ethereum community to have a serious conversation about the socio-economic implications of its scaling strategy. We need to explore more inclusive solutions, solutions that don't leave Ama and millions of others behind. Perhaps a hybrid approach, combining the security of Ethereum with the accessibility of platforms like Solana, is the answer. Or perhaps entirely new solutions are needed.
The future of DeFi depends on it. Let's not build a financial system that replicates the inequalities of the old one.
