Ethereum Struggles Amid DeFi Losses; Solana Thrives
In Brief
In recent days, Ethereum (ETH) has experienced a significant drop in its burn rate, as well as a 17% loss in Total Value Locked (TVL) in the DeFi scene. While Ethereum is struggling with decreasing network activity, its rival Solana (SOL) is recording a notable increase in DeFi TVL. This post examines the reasons behind these developments and what they could mean for the future of Ethereum.
Decline in Ethereum Burn-Rate
On August 10, only 121 ETH tokens were burned, representing the lowest value since the introduction of the EIP-1559 update. This drop in the burn rate is a direct result of decreasing network traffic and Ethereum’s declining dominance in the DeFi market. Networks such as Tron (TRX) and Solana (SOL) have taken market shares from Ethereum, leading to a significant decrease in TVL by 17% since August 1.
Decreasing Activity on Ethereum
The decreasing activity on the Ethereum platform has also led to a drop in daily active addresses. Data from Santiment shows that the number of daily active addresses has fallen from 731,000 on July 22 to about 386,000 on August 11. Fewer transactions mean fewer gas fees that can be collected and burned, which has greatly reduced Ethereum’s burn rate.
Ethereum vs. Solana
While Ethereum is grappling with these challenges, Solana has seen a significant increase in its DeFi TVL. At the time of publication, Solana’s TVL was $4.72 billion, almost quadrupling since January 1. Solana also performs better than Ethereum in price comparison, with an impressive increase of 487% compared to Ethereum’s 39% over the past year.
Our Assessment
The current developments at Ethereum raise questions about the network’s long-term positioning and competitiveness. While the short-term outlook is clouded by the declining burn rate and the loss of TVL, long-term innovations and adjustments to market conditions could help Ethereum strengthen its position. However, the growing competition from networks like Solana shows that the DeFi and blockchain landscape is dynamic and fast-paced. For investors and users, this means that they should keep a close eye on developments.
Sources
– DeFiLlama
– Santiment
– Etherscan
– Ultrasound Money
– Coinglass
– SosoValue
– Coinshares
| Symbol | ETH |
| Coin type | Alt Coin |
| Transaction Speed | Medium |
| Pros |
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| Cons |
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| Price | $3,129.03 |
| 24h % | 0.10 % |
| 7d % | -2.36 % |
| 30d % | 19.00 % |
| 60d % | 20.92 % |
| 1y % | 55.49 % |
| Market Cap | $377,207,084,097.00 |
| Official Links | Website | Source Code |
| Socials | Reddit | X |
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