Investors or lenders don't fear the volatility. What they fear most is the security of the platform where they have invested their money.
Someone who invests in defi or lending platform understands the volatility of cryptocurrencies as from the beginning it has always been.
I understand the point you are making, and I agree that investors and lenders in a way thrive from volatility, it is the bread and butter to making profit. Similarly, there will be no room for further discussion for any platform where security isn't in place - that must come as top priority.
Would ETH be able to rise against its predecessor BTC? Well, I think this depends on how well DeFi will do and how high smart contracts can take this. However, one possible roadblock to this is the huge fees... I think this is the grey area most people are concerned with regarding ETH
Decentralized Finance (DeFi)
temporary hype, it is based on a false notion of stability based on stablecoin. Because it is not a financial asset, it is just a derivative of ether, which is a financial asset. I already wrote while the production of stablecoins will be artificially controlled by Fiat, there will be no stability. What is good about Bitcoin, because it has no control, and why is it bad? It does not have financial protection against the fall; on its basis, open source cannot build anything like on ETH.
What is good about ETH is that everything can be done on its basis, including financial protection of the ETH itself. I have already published on the forum my version of the financial protection of the ETH, but no one has yet understood the essence of my project, they say that it is too clumsy and difficult to finish. If there are craftsmen to correctly express thoughts on paper, mercy, I ask that everyone will only benefit. The main thing is that no one was able to refute the very idea of the project, maybe try to prove the opposite, they usually say they are too lazy to understand.