Ethereum (ETH 2.90%) has been the world's second-largest cryptocurrency for quite some time. Indeed, as the grandfather of decentralized finance (DeFi), there's certainly precedent for this market positioning.
One key metric many crypto investors have turned to, particularly in the DeFi space, is total value locked (TVL). This metric is often used to value a particular network. That's because TVL directly measures the amount of capital locked within various DeFi protocols living on a specific blockchain.
CRYPTO: ETH
Key Data Points
As many investors know, for years, Ethereum was really the only game in town for developers and users in the DeFi world. Accordingly, Ethereum's TVL approximated the entire market, until recently.
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Network congestion and skyrocketing fees on Ethereum's network gave rise to the idea that perhaps other, newer blockchains could provide a better foundation for developers to build projects on. This surge in interest in alternative protocols has resulted in Ethereum's TVL shrinking from around 97% of all value locked on the blockchain in January 2021, to just 55% as of this month. That's a dramatic drop off.
Here are three of the top blockchains that are gaining steam relative to Ethereum, with a real shot at taking the reins as the DeFi leader moving forward.
Solana
In the DeFi world, Solana (SOL 3.24%) has certainly become a go-to network for developers and users to commiserate. This network has a number of new and exciting projects that continue to drive interest. Among the most recent high-profile projects many think have the potential to create massive disruption is Solana Pay. This pure crypto peer-to-peer payments platform is one of the first of its kind to allow merchants to deal entirely in crypto for their purchases.
Additionally, Solana has become a leading network for buying and selling non-fungible token (NFT), which are digital certificates of ownership of art, video and other collectables. Given Ethereum's relatively high fees, users have sought out other blockchains to carry out smaller transactions. Solana has been a key beneficiary of this, with Solanart, Solsea, and other exciting NFT marketplace projects being built on top of Solana.
Yet another great example of developers specifically choosing the Solana blockchain to build out an NFT marketplace is social NFT app Artrade. This project will allow Solana holders to mint, buy, and sell NFTs efficiently and with very low fees. Thus, investors keen on exploring the NFT side of the DeFi world have reason to dive into Solana right now.
Cardano
Similar to Solana, Cardano (ADA 3.02%) is a network with an impressive growth trajectory investors are picking up on.This network's growth has come via a number of key catalysts that investors see as bullish for this network.
Specifically, developer growth in the Cardano ecosystem appears to only be starting to pick up. Recent comments from Cardano's founder Charles Hoskinson about updates coming to the Cardano network have many investors intrigued. These updates, expected to be rolled out between June and October, aim to improve the network's scalability, which is already better in many respects than Ethereum. Over time, Cardano's goal is to become as efficient as Solana and other high-throughput networks.
Additionally, institutional money is beginning to gravitate in a big way toward smart contract-enabled proof-of-stake networks such as Cardano and Solana. Grayscale, a crypto investment manager, is offering a new smart-contract fund that gives huge weightings to Cardano and Solana (24% each), signaling to the market that there's a lot to like about these cryptocurrencies right now.
Avalanche
Last, but certainly not least, Avalanche (AVAX 3.20%) is a project that has absolutely skyrocketed in recent weeks. Now a top-10 cryptocurrency by market capitalization, Avalanche is no longer a second-tier crypto, in terms of projects most aficionados have their eye on.
Much of this comes from Avalanche's speed, cost, and interoperability profile relative to Ethereum. These factors are what have driven developer interest to Avalanche, alongside Solana and Cardano. However, Avalanche's unique structure (built on three different blockchains) provides for perhaps the largest-scale interoperability project among top-10 networks right now.
Additionally, recent reports highlighted the move for Avalanche's network to support Terra's UST stablecoin on its network. The launch of various staking solutions for Avalanche via Coinbase Cloud has investors excited. This launch supports the idea that staking on the Avalanche network could become simpler, allowing for a more secure network, and one that more AVAX holders are able to create passive income from.
The bigger picture
Ethereum is still the dominant player. This network's size and scale, when it comes to ecosystem development, remains the gold standard most crypto projects look to attain. Additionally, the upcoming Ethereum "merge" has provided many investors with a reason to hold onto their Ether.
However, Solana, Cardano, and Avalanche are all fast-growing projects with some real potential to disrupt the crypto world. Ethereum's status as the sole DeFi king may not yet be over. However, these competing networks are certainly laying claim to the idea that overtaking Ethereum isn't as impossible as it once seemed.
