Ethereum Faces DeFi Challenges Amid Multichain Fragmentation

Ethereum, the leading blockchain platform for decentralized finance (DeFi), is facing significant challenges due to the rapid expansion of blockchain networks. This expansion has led to fragmented liquidity in DeFi, which threatens its core principle of composability and scalability. The proliferation of Layer 1 blockchains, rollups, and appchains has splintered the once cohesive liquidity pool into isolated pockets, making it difficult for assets to flow seamlessly within a unified ecosystem. This fragmentation results in thinner markets, increased slippage, and diminished incentives, impacting user experience and protocol efficiency across multiple chains.

Protocols like Aave and Pendle, which operate on multiple chains, are particularly affected by this issue. While multichain deployment addresses Ethereum’s scalability constraints, it simultaneously undermines DeFi’s foundational advantage by diluting liquidity density and composability. The economic models that performed robustly on Ethereum’s mainnet face challenges when applied to these siloed chains, leading to significant inefficiencies.

Much of the discourse around multichain DeFi centers on user experience (UX) challenges such as wallet switching, gas token management, and navigating bridge interfaces. However, these are superficial symptoms of a deeper issue: the absence of a unified execution layer that can seamlessly coordinate crosschain operations. Users attempting crosschain transactions encounter inconsistent interfaces, fragmented pricing, and unpredictable outcomes. Although swap-and-bridge solutions have improved recently, they still rely on isolated liquidity pools and limited routing options, leading to capital inefficiencies and composability barriers.

To bridge this gap, solvers—specialized actors deploying capital and logic—execute complex, fragmented actions on users’ behalf. This approach abstracts away multichain complexity, enabling users to express simple intents like swaps or deposits, which solvers fulfill across diverse chains. Solver infrastructure and intents-based execution offer a pragmatic path forward. By emulating synchronous execution across fragmented chains, these innovations preserve the composability and liquidity density that underpin DeFi’s success. They enable the ecosystem to scale sustainably while maintaining the flexibility and diversity that characterize the multichain environment.

Intents-based models represent a transformative approach to DeFi composability and liquidity management. The ERC-7683 standard formalizes how crosschain intents are expressed and executed, facilitating “invisible bridging” where users can perform one-click swaps or interactions spanning multiple blockchains without manual intervention. This infrastructure enables interoperability between historically siloed ecosystems, allowing a user on Solana to seamlessly swap assets into a vault on Arbitrum, or liquidity to flow between BNB Chain and Ethereum-native protocols. Instead of enforcing uniform standards across all chains, intents empower users to define desired outcomes while solvers orchestrate execution across heterogeneous environments.

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The result is a resilient multichain ecosystem that preserves the unique strengths of individual chains while enabling global liquidity and composability. This approach does not eliminate multichain complexity but strategically routes around it, maintaining DeFi’s core advantages in a fragmented landscape. As Hart Lambur, co-founder of Risk Labs, emphasizes, embracing these innovations is essential to preserving DeFi’s revolutionary potential and unlocking its next phase of growth. Without robust infrastructure solutions, DeFi protocols risk diminished effectiveness and user engagement, leading to a gradual erosion of liquidity quality, incentive alignment, and crosschain functionality.