As DeFi grows, regulatory scrutiny is inevitable. Emerging blockchains that prioritize regulatory compliance and build in features like identity verification and transaction monitoring could gain an advantage. While Ethereum currently dominates, its decentralized and pseudonymous nature could become a liability in a more regulated environment. Newer chains that are designed with compliance in mind might attract institutional investors and traditional financial players who are wary of regulatory risks. This could create a two-tiered DeFi market, with Ethereum serving the decentralized, retail-focused segment and compliant-friendly chains catering to institutions. The threat here is that Ethereum might lose out on a significant portion of the market that values regulatory clarity and security. However, this also depends on the regulatory landscape evolving in a way that favors compliant blockchains.