Ethereum Killers Avalanche and Optimism See Their DeFi Role Diminish Greatly

Ethereum continues to dominate the decentralized finance landscape. Despite stiff competition, it represents over 58.6% of all Total Value Locked. Interestingly, the so-called Ethereum-killers, notably Optimism and Avalanche – continue to head in the wrong direction and lose traction. 

Ethereum Killers Face A Steep Struggle

Although the solutions of Optimism and Avalanche provide benefits to the blockchain world, their role in DeFi is far less outspoken. That may seem strange, as they are the fourth and eighth network by Total Value Locked today. However, that is a misleading label, as their TVLs represent $1.72bn and $869 million, respectively. A far cry from Ethereum’s $33.85 billion. 

One could argue the bearish crypto market prevents these Ethereum killers from succeeding. That is partially true, although Ethereum has also been incredibly bearish. The difference is how Ethereum’s DeFi TVL dropped by less than 10%, and the other two saw setbacks of over 24.5% and 21.2%, respectively. When one loses twice as much ground – and the loss is bigger on a far lower Total Value locked – things go from bad to worse very quickly. 

Unfortunately for Avalanche and Optimism, it doesn’t appear much improvement will materialize for these Ethereum killers. Both networks continue to lose ground- even if Avalanche dethroned Polygon and Solana and Optimism inched ahead of Cronos and Fantom – and the overall DeFi-oriented excitement regarding both networks has all but evaporated. There is no shortage of protocols on Avalanche either, at 252 offerings. For Optimism, the count of 70 projects is a tad low, but that can change quickly.

All Big Protocols Lose Tremendous TVL

Looking deeper into the statistics, the TVL decrease for Avalanche is easy to explain. Although it is home to major protocols like AAVE, BENQI, Trader Joe, and Curve, those are also the platforms going backward the quickest. Curve has the best monthly performance at -2.3%, but the other three are between -28.2% and -32.26% over the past 30 days. Nothing impressive; instead, it is rather problematic for the most prominent of the Ethereum killers.  

A similar scenario unfolds for Optimism, home to Aave v3, Synthetix, Unisap, Curve, and PoolTogether, among other protocols. While Uniswap and Curve had a TVL increase, they represent under $100m in combined assets. Aave V3 decreased by over 34% this month, and Synthetix lost 24.48%. Top-tier platform Velodrome saw its TVL nearly cut in half, which is never a good sign. 

Some hopefuls expect Ethereum’s DeFi dominance to become more outspoken after The Merge. A strange thought, as The Merge offers no network improvements regarding fees, throughput, scaling, etc. The upgrade that comes after that may render most of these Ethereum killers obsolete in DeFi, though. 

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