Ethereum’s DeFi Dominance In Crisis; DeFi TVL In ETH Drops Below 55%
The landscape in the decentralized finance space keeps morphing into new shapes as the market advances. A new report indicates that Ethereum’s DeFi dominance has been getting shaved off by other blockchains.
Multi-chain trend coming to prominence in DeFi
Citing data from Defillama, the market intelligence arm of Galaxy Digital, Galaxy Digital Research, noted that the Total Value Locked in Ethereum’s DeFi has hit an all-time low. Ethereum’s share of DeFi TVL fell below 55% in recent weeks.
Ethereum’s share of total value locked is at all-time lows trending below 55% for the first time ever
h/t @glxyresearch pic.twitter.com/A3ZXo1OVyk
— unfolded. (@cryptounfolded) March 7, 2022
At the moment Ethereum’s DeFi TVL stands at $108 billion and accounts for 55.53% of the DeFi market value. The trend points to the DeFi market reaching a multi-chain future where investors have multiple protocols to choose from. Galaxy Digital Research noted in a previous research that:
Despite the sheer size of Ethereum’s DeFi TVL, we can see its market share declining over the last 6 months, providing clear cut proof that the multichain world not only exists, but is expanding.
Total Value Locked is an indicator that evaluates the adoption scale of a DeFi project by calculating the total USD value of all assets locked in its smart contracts.
The main blockchain networks edging out the Ethereum network at the moment include Terra, BSC, Avalanche, and Fantom. Terra currently has a TVL that gives it a market share of 11.10%. The blockchain has been rising rapidly in the DeFi ranks, recently surpassing BSC.
For its part, BSC accounts for 5.91% of the DeFi market TVL. Avalanche and Fantom account for 5.51% and 3.70% respectively.
Remarkably, the ecosystem looks much more different than it did six months ago. As of October 2021, the top five DeFi chains were Ethereum (66.46%), BSC (9.80%), Solana (5.70%), Terra (4.99%), and Polygon (2.48%).
What the future looks like for Ethereum’s DeFi
While all the purported “Ethereum killers” seem to be gaining on Ethereum, it may not remain so for very long. One factor that has been driving investors to other chains has bottlenecks caused by high transaction fees and low throughput.
Ethereum has plans to scale massively come its planned upgrade, ETH 2.0. It is projected that the next phase of its scaling plan, the merge, will happen in Q2 of 2022. When the entire scaling roadmap is executed, Ethereum hopes to stall the growth of its competitors.
However, other chains appear to already have most of the capacities Ethereum hopes to get when it upgrades to being a proof-of-stake blockchain. This has been at the head of the reasons they are gaining market share. In the meantime, the price of Ethereum (ETH) is heading towards $2,7000, as Ether bulls tighten up.
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