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Ethereum is not the only blockchain seeing growth as decentralized finance continues to be the hottest ticket in crypto. This year has continued to be good for the DeFi space as evident by the value locked up on various platforms. We saw a peak of over $88 billion TVL (Total Value Locked) in May before the price of Bitcoin started plunging.
Chart by DeFi Pulse
Ethereum is still the most popular smart contract blockchain for projects to build and launch apps. Many competitors are eyeing that top spot with Binance Smart Chain closing in fast. However, the DeFi space is still linked to Ethereum with a large majority of the biggest projects running on its blockchain.
Chart by CryptoDiffer with data from CryptoRank
As we see by market cap, ETH is still seated firmly at the top with more than 5 times that of its closest competitors – BNB and ADA. Polkadot and Solana are poised to make a run as well with both chains nearing the end of their initial roadmaps. But don’t overlook some of the smaller caps that have been quietly building while the big names get all the attention.
The value staked in DeFi protocols may have dropped with Bitcoin, but it’s getting lots of attention lately as investors fear a bear market could be upon us. Only time will tell as we watch BTC range; however, DeFi is not going anywhere, and money will always go where it’s treated best. That’s where Ethereum’s competition comes into play.
Ethereum’s high transaction fees and slow block times might be fine for anyone trading with thousands of dollars, but it leaves out a large majority of people that just want to earn more on their money than they can at the bank. The unbanked are in the same boat as well. It just doesn’t work for sending small payments or those participating in DeFi that want to move in and out of yield farms and staking pools.
While Eth-2 may take another year or two to complete, it still doesn’t solve the problems with Ethereum, and so Level-2 solutions will still be needed. The vision is that Ethereum will act as the foundation while the L2 solutions will run the bulk of the transactions. The competition is boasting fast transactions, low fees, interoperable multi-chain all-in-one solutions that say – Hey! Skip all that and come here instead.
Who will be the winner?
I see this debated a lot. When I’m asked this question, I usually reply with a question of my own – is it really a zero-sum game or is there room for many to exist and compete? I prefer that latter and believe that will be the reality. While Ethereum is still in this multi-year deployment, it is leaving the door open for competition to gain ground and get a foothold.
It will be interesting to watch this all play out. When you’re playing king-of-the-hill and you are sitting at the top, the challengers will always be lined up to knock you off your throne.
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