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96% of DeFi operations take place on the Ethereum network

Photo of: Joseph Stone
by Joseph Stone

The Ethereum blockchain alone captures practically all the transactions of decentralized finance (DeFi). According to DappRadar indicators, Ethereum represents 96% of the total transaction volume.

At the recent LA Blockchain Summit, the CEO of the Decentralized Exchange (DEX) FTX, deplored Ethereum’s performance. For Sam Bankman-Fried, a major player in DeFi, “Ethereum cannot host an exchange”. Strange declaration considering it currently very much does…

If Ethereum is not ideal for a DEX, the blockchain is nevertheless essential in decentralized finance. And this is not without explaining the soaring trading costs and its saturation in recent months.

In the third quarter of this year, global transaction volume in the DeFi universe reached $125 billion. According to DappRadar, this represents a significant increase of $113 billion over the previous quarter.

More importantly, 96% of this transaction volume was through the Ethereum blockchain. However, this figure is not the only one to underline the preponderance of the network co-created by Vitalik Butterin.

Indeed, the total value of funds blocked in Ethereum smart contracts now exceeds $10 billion, according to the report. In total, DeFi’s smart contracts have reached $10.82 billion (compared to $1 billion in June).

If other blockchains are trying to invest in DeFi, Ethereum remains the reference today. And this domination is also found in the field of active crypto-wallets. Ethereum portfolios thus account for 57% of active wallets every day.

Ethereum wallets weigh 57% of all of DeFi’s active wallets

In Q3 2020, Tron and EOS nevertheless manage to exist with a market share of 35% and 5% respectively. If other blockchains, such as Solana or Avalanche, want to find their place in DeFi, they will have to convince key protocols.

Uniswap, Sushiswap, Balancer, and Compound are the largest contributors to Ethereum with 56% of the active wallets. Dapps on Tron in DeFi, such as JUST, Zethyr Finance, Sun, and SharkTron, still represented 32,000 active wallets over the period.

The delays in the development of Ethereum 2.0 could nevertheless serve its rivals. Last week, Solana launched a “decentralized bridge” for the ERC-20 tokens. With Wormhole, it becomes possible to transfer value between the two blockchains. Still, it’s hard to believe at this point that anyone will be able to dethrone Ethereum from its pedestal as the de facto platform of DeFi.