During its first year of existence, the DeFi ecosystem was restricted to Ethereum. However, with the growing congestion on the network, many blockchains and second layer solutions have emerged in the hope of offering a more cost-effective alternative to Ethereum.
EVM compatible blockchains
The DeFi ecosystem was born in early 2020, with the sudden emergence of many decentralized financial protocols. Among them, we can mention the birth of many MAs such as Uniswap or Balancer, as well as the multiplication of so-called lending protocols, such as Aave or Compound.
However, as the DeFi ecosystem has evolved, Ethereum has faced a significant congestion problem leading to rising transaction fees.
Faced with these ever-increasing fees, several other so-called EVM-compatible blockchains have emerged. As a reminder, these blockchains offer an environment close to that of Ethereum, allowing developers of decentralized applications to migrate without having to modify them.
Among these blockchains, we can mention the Polygon commit chain and the Binance Smart Chain. In the space of a few months, the latter have seen their activity explode to several thousand transactions per day.
Subsequently, the long-awaited second layer solutions were deployed on Ethereum. Although they have not yet reached the level of EVM-compatible blockchains, these solutions are attracting new users every day.
In total, the DeFi ecosystem outside of Ethereum is now worth $44 billion, spread over several hundred protocols hosted on a dozen different chains.
Ethereum remains the queen chain
The Ethereum blockchain remains, despite everything, the queen of DeFi, despite the almost constant increase in fees and significant congestion.
As a result, the DeFi ecosystem on Ethereum is currently worth more than $121 billion, three times more than the rest of the DeFi ecosystem outside of Ethereum.
This supremacy of Ethereum over the DeFi ecosystem is not surprising. More interestingly, it is the Ethereum network that feeds much of the DeFi evolving on other blockchains.
Indeed, according to data compiled by Elias Simos, about a third of the funds deposited on the DeFi ecosystem outside of Ethereum were deposited from Ethereum via various bridges.
Thus, $13.28 billion was deposited from Ethereum to other blockchains.
In practice, it is the bridges linking Ethereum to Polygon, Fantom and Avalanche that have transmitted the most funds. Between them, these three protocols account for 80% of the funds that have migrated from Ethereum to other chains via bridges.
Certainly, most of these blockchains are presented as “Ethereum Killer”. However, at the moment, none of them can match the queen of smart contracts. It would even seem that they are highly dependent on it to attract liquidity.