Ethereum, touted as the world’s computer, continues to hold the top position in the blockchain network.
According to data compiled by CoinMarketCap, Ethereum dominates the smart contract space with a market value of $695 billion, accounting for 62%, the highest level since 2024. Additionally, the network ranks first in revenue, accounting for 70% of layer-1 revenue, and its DeFi total value locked (TVL) has doubled since the beginning of the year.
DeFi TVL breakdown
BNB Chain trails Ethereum in the smart contract space with $85 billion, followed closely by Solana with $59 billion. The DeFi TVL rankings are the same, with BNB Chain’s Q2 revenue at $5 billion and Solana’s at $4 billion.
However, these figures contradict the widespread narrative that Ethereum is losing its foothold in the industry, allowing other ecosystems like Solana to capture some of its market share.
What’s the deal?
Synthetix Spartan Council member, pseudonymously known as Millie, stated, “Most crypto Twitter narratives are driven by venture capital, and VCs can’t charge a 2% carry fee and 20% performance fee to hold ETH, but they can for SOL.”
Millie told The Defiant that on Ethereum, most activity is related to DeFi, while Solana’s activity is entirely seasonal and driven by the speculative nature of meme coins. Millie said, “Solana block space is filled with meme coin belligerence, and any serious analyst would be highly skeptical of this.”
Solana wins on some metrics
Analysts pointed out that in certain areas of the market, Ethereum is declining while Solana is rising. Helius Labs CEO Mert Mumtaz told The Defiant that Solana has surpassed Ethereum “several times” in terms of economic activity, noting that both MEV+ priority fees and validator revenue are higher.
30-day DEX volume market share
His views are supported by Blockworks research, which shows that Solana is enjoying its most profitable months for block space. It is also closing the gap with Ethereum in terms of decentralized exchange (DEX) trading volume.
While some worry that unsustainable trends like meme coins may drive activity, Mumtaz dismisses this. He said, “The pattern of a large amount of low-fee activity combined with high transaction volume is now empirically proven.” “The source doesn’t matter.”
“Extremely shocked” to see Ethereum losing dominance
Millie said she would be extremely shocked to see Ethereum lose dominance in smart contracts, revenue, and DeFi TVL. But the network doesn’t face the same constraints on these three metrics.
Millie told The Defiant, “L1 revenue is tricky because it’s unclear how long this meme coin activity will last.” However, for smart contracts and TVL, she believes “the chance is slim” as the network is already optimized for chain readability, auditability, and openness.
She explained that the latter is a critical feature. Millie said closed-source protocols pose less risk than open-source networks but also create a significant barrier to attracting TVL.
Even Mumtaz is skeptical about Solana surpassing Ethereum in DeFi TVL. According to DefiLlama, Ethereum’s TVL stands at $58 billion, while Solana’s is $4.5 billion. In between, Tron ranks second with $7.7 billion, and BNB Chain ranks third with $4.8 billion.
Notably, despite the influx of users to L2s in recent months, Ethereum still dominates the L1 space. Millie attributes this apparent discrepancy to whale activity.
She said that layer-2 is “still too permissive for most ETH whales” as they haven’t provided adequate censorship resistance yet. She also elaborated that low gas fees are a symptom of most activity shifting to L2, while whales continue to trade on the base chain, especially in lending.
Millie said, “Whale movements like lending are not computationally intensive, and they are not time-sensitive.” “Moreover, DEX volume is also lower when volatility is low, which in turn drives most of the gas fees.”
