Ethereum’s Strength: Leading TVL and Transactions Despite Market Volatility

According to The DeFi Report, Ethereum recently reclaimed 42% of the total value locked (TVL) previously moved to Solana.

As Ethereum’s dominance in DeFi continues, its position remains strong across several metrics despite challenges.

Ethereum’s TVL Dominance and Layer-2 Expansion

Ethereum leads in total TVL, holding $48.8 billion on its foundational layer, far surpassing Solana’s $6.27 billion. Ethereum also commands a large portion of aggregated layer-2 volumes, with networks like Base, Arbitrum, Polygon, and Avalanche significantly contributing to its ecosystem.

Over the past 30 days, Ethereum handled $116 billion in on-chain decentralized application (DApp) volume, with transaction fees remaining stable, as reported by DappRadar.

Ethereum’s staking rewards, however, lag behind competitors. StakingRewards data shows Ethereum’s staking yield at 3.4%, compared to Solana’s 6.5% and Tron’s 4.5%. This disparity has led to a net withdrawal of 180,000 ETH from staking within the same period.

Inflows and Outflows Between Ethereum and Solana

Ethereum saw an inflow of $2.36 billion from Solana year-to-date, with over $1 billion returning to Ethereum. However, Ethereum’s outflow to Solana represents only 2.7% of Solana’s TVL, signaling Ethereum’s strength despite notable outflows.

Ethereum’s TVL remains robust, exceeding $50 billion, according to DefiLlama. Additionally, Valkirty reports that 83% of net withdrawals, totaling $6 billion year-to-date, are reinvested in Ethereum-affiliated layer-2 solutions.

This trend indicates that much of the value moving off-chain remains within Ethereum’s ecosystem, potentially returning more value to the network.

Rising Competition and Technological Innovations

On October 26, 2021, Solana briefly surpassed Ethereum in daily transaction fees, reaching $4.7 million compared to Ethereum’s $2.67 million. This increase was largely driven by Raydium, a Solana-based DEX.

As competition grows, Ethereum developers are working on scalability improvements. The proposed Ethereum Improvement Proposal (EIP) 7742 aims to introduce dynamic blob pricing, enhancing transaction efficiency without sacrificing scalability.

Additionally, the anticipated Ethereum Pectra upgrade in early 2025 could increase maximum block size to 2.7 gigabytes, supporting low-cost transactions while balancing ETH staking rewards.

U.S. Government Liquidates Seized Crypto Assets

In a related development, the U.S. government has been actively selling seized assets from Sam Bankman-Fried’s Alameda Research. Recently, approximately 82,000 ANT tokens were sold through AragonDAO’s redemption mechanism, yielding over $1 million in ETH.

Following Aragon Association’s decision to disband, users have until November 2, 2024, to redeem tokens, after which unclaimed tokens will be permanently burned.

Key Highlights:

• Ethereum’s Resilience: Dominates with $48.8B in TVL, maintaining strong layer-2 activity.
• Inflows vs. Outflows: $2.36B YTD inflow from Solana; outflows minimal in impact.
• Government Crypto Sale: U.S. nets over $1M in ETH from seized ANT token sales.

This outlook underscores Ethereum’s adaptability amid competitive pressures and technological shifts, maintaining its foothold as a DeFi leader.