Ethereum has been the second largest cryptocurrency in the world for quite some time. Indeed, as the grandfather of decentralized finance (DeFi), there is certainly a precedent for this market positioning.
A key metric to which many cryptocurrency investors addressed, particularly in the DeFi space, is the total locked value (TVL). This metric is often used to evaluate a particular network. This is because TVL directly measures the amount of capital locked within the various DeFi protocols that live on a specific blockchain.
As many investors know, for years, Ethereum has truly been the only player for developers and users in the DeFi world. As a result, Ethereum's TVL approximated the entire market, until recently.
Network congestion and skyrocketing rates on the network have given rise to the idea that perhaps other blockchains could provide a better foundation for developers to build projects on. This surge in interest in alternative protocols has resulted in Ethereum's TVL shrinking from around 97% of all value locked onto the blockchain in January 2021, to just 55% this month. A dramatic decline.
Here are two of the best blockchains that are gaining ground over Ethereum, with a real chance of taking the reins as a DeFi leader in the coming years.
Solana
In the DeFi world, Solana has certainly become a go-to network for developers and users. This network has a number of new and exciting projects that continue to drive interest. Among the most recent high-profile projects that many think have the potential to create a massive disruption is Solana Pay. This pure crypto peer-to-peer payments platform is one of the first of its kind to allow merchants to trade entirely in crypto for their purchases.
Additionally, Solana has become a leading network for the trading of non-fungible tokens (NFTs), which are digital certificates owned by art, video and other collectibles. Given Ethereum's relatively high fees, users have been looking for other blockchains to make small transactions. Solana has been a key beneficiary of this, with Solanart, Solsea, and other interesting NFT market projects built on top of Solana.
Another great example of developers specifically choosing the Solana blockchain to build an NFT market is the NFT Artrade social application. This project will allow Solana holders to mint, buy and sell NFTs efficiently and with very low commissions. Thus, investors keen to explore the NFT side of the DeFi world have reason to dive into Solana right now.
Cardano
Similar to Solana, Cardano is a network with an impressive growth trajectory. In particular, the growth of the Cardano ecosystem appears to be only just beginning. Recent comments from Cardano founder Charles Hoskinson about upcoming updates for the Cardano network have intrigued many investors. These updates, which are expected to roll out between June and October, aim to improve the scalability of the network, which is already better in many respects than Ethereum. Over time, Cardano's goal is to become as efficient as Solana and other high-speed networks.
Additionally, institutional money is starting to gravitate in a big way to smart contract-enabled proof-of-stake networks like Cardano and Solana. Grayscale, a cryptocurrency investment manager, is offering a new smart contracts fund that places huge weight on Cardano and Solana (24% each), signaling to the market that there is a lot to like about these cryptocurrencies right now.
