In recent months, the network has lost almost 40% of its dominance, which was almost absolute.
BSC, Terra and Fantom are currently its main competitors.
Decentralized finance (DeFi) protocols base their operations on smart contracts. Many of them run on the Ethereum network, which is why it has always been preferred by these platforms and their users. However, in recent times, competitors have emerged that, although they are still far away, seek to force it into that first place.
According to what the site shows defillama.com, Ethereum has always hosted a high percentage of the operations that took place on decentralized finance platforms. Until January 2021, the dominance figure hovered around 95%, and even had peaks above this number.
However, as of February of that same year, the percentage began to decrease little by little. until reaching the 56% dominance that this network currently has. In absolute numbers, the value locked remains high, with more than $120 billion deposited in contracts on that blockchain.
Along the way, various contenders threatened to take part of the slice that Ethereum always had. Although the bearish trend of the leading network continues, most of them failed to meet the expectations generated.
Binance Smart Chain and other Ethereum competitors
The network of the renowned exchange Binance has historically been the one that occupied the second place on the podium in DeFi. From February 2021 to December of that same year, has maintained a dominance percentage of around 10%, and even peaked at 20% in May.
Currently, there is USD 12 billion locked in the BSC. The number represents 10% of what is in Ethereum and places it in third place among the most used networks.
In the last month of 2021, Terra appeared to dethrone Binance Smart Chain. Terra is a network that primarily focuses on stablecoins and enabling high-speed trading. It has its own token, LUNA, whose burning allows it to maintain the stable value of its cryptocurrency, TerraUSD (UST).
This blockchain has a total locked value of USD 16,000 million. Since its appearance in November 2020, it has been attracting investors until reaching 9% dominance in decentralized finance in January 2022.
Another network with notable growth is Fantom. In recent days, it showed an increase in TVL of 39%, which places it in fourth place in the ranking prepared by defillama.com. At the closing of this note, this blockchain had just over USD 11,000 million deposited. Its irruption in the first positions among the most used networks occurred in the middle of last year, and for the last week it came to keep 5% of the scene in this type of protocol.
the ones that were top but they lost their place
Finally, other networks that have lost the place of privilege they once held are Avalanche (current TVL of USD 8.4 billion, 4% dominance); Solana (TVL of USD 8,000 million and 3.9% dominance); and Polygon and Tron (both with a TVL of about $4 billion and about 2% dominance).
The possible reasons underlying this downgrading of these networks may be linked to the technical problems they have experienced. For example, as CriptoNoticias reported, Solana has had to deal with DeFi demise costing its users millions and numerous crashes that have lasted for hours.
In addition, their own limitations may leave them at a disadvantage against the competition. In the case of Polygon, despite being one of the cheapest blockchains to operate, it has recently had to incorporate the EIP-1559, which allows it to further lower the cost of transactions by burning fees. This could be the boost it needs to occupy the first places among the most used networks, as it once did.