The chain is keen to raise the locked total value [TVL] This is an advantage because it is a way to increase adoption and increase your presence in the space. Ethereum is considered the dominant DeFialt, but what are investors choosing as the market grows and more bridges and links form?
Collision of alts
2o21’s annual crypto review by Token Insight reveals some notable trends with coins in multi-chain DeFi spaces. First and foremost, the report focused on the subtlety of Ethereum’s sliding dominance. The report states:
“Compared to 2020, Ethereum’s dominance has dropped from 99% to 70%.”
Looking at the 2022 data, we can see that this decline only lasted for the first three months of the year. As of March 13, Ethereum’s TVL accounted for only 54.73% of the total. Chains with increasing dominance include Terra with a 12.48% share and Avalanche with a 5.51% share.
“Terra, Solana and Avalanche have become competitors since September.”
That said, 2022 statistics showed that BSC and Solana were declining in terms of TVL share.
Is it time to spread your wings?
Not surprisingly, these changes in TVL’s dominance raise the question of whether Terra and Avalanche can be new winners. TokenInsight reported that Avalanche had a “good summer wave” in 2021 and since then Avalanche’s TVL has grown, declined and then recovered to reach 5.51%.
Meanwhile, Terra’s LUNA has been the focus of many investors since the 2022 rally. With the rise in TVL, this asset has also beaten DeFi players. However, according to Token Insight, Terra’s anchor lending protocol (currently TVL is $ 12.6 billion) seems to struggle to maintain high yields.
But despite these changes, it may not yet be time to throw Ethereum out the window. The biggest alternative by market capitalization and TVL is one month, with average daily gas prices well below 100gwei. It is unclear whether this fall in prices will lead to a resurgence of Ethereum’s TVL dominance, as investors often leave Ethereum for high fees.
According to a TokenInsight report, Fantom is one of the chains that enjoys “great success.” However, Fantom’s TVL has plummeted since the shocking departure of Fantom Foundation members Andre Cronje and Anton Nell.
This shows that despite billions of TVLs, DeFi projects are vulnerable and highly vulnerable to changes.