Ethereum has established itself as the leading blockchain for smart contracts and decentralized applications (DApps) since its inception. A closer look at Ether’s price and market capitalization reveals undeniable evidence of its growing market share.
Over the past few years, Ether’s dominance in terms of market capitalization has steadily increased. In July 2021, it averaged around 18%, and it has now reached a current level of 20%. If we exclude Bitcoin from the analysis, Ether’s market share jumps to an impressive 40.6%, leaving its closest competitor, BNB, with only a 7.2% share.
The gap between Ethereum and other blockchains becomes even more evident when examining the total value locked (TVL) in each network’s smart contracts. Ethereum leads the pack with a staggering $24.6 billion in TVL, followed by Tron with $5.4 billion and BNB Chain with $3.3 billion.
Although Ethereum’s TVL market share experienced a decline in the past year, dropping from 70.5% in June 2021 to 49.5% in May 2022, the collapse of the Terra ecosystem in May 2022 had a significant impact. Ethereum quickly regained its market share, reaching 58%. Despite the emergence of DApps on the BNB and Tron blockchains, the leadership of Ethereum remained unchallenged over the past 12 months.
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However, it is worth noting that the total number of unique active wallets (UAW) interacting with smart contracts per chain does not necessarily reflect the dominance or relevance of a blockchain. For example, DappRadar reports that WAX has 363,600 active users, BNB Chain has 517,300 30-day UAW, while Ethereum only has 66,300 unique active addresses. These figures may be higher for other chains, but they often reflect lower transaction fees, making them more susceptible to manipulation.
One key aspect that sets Ethereum apart from its competitors is its decentralization. The Ethereum ecosystem boasts a high number of active developers, surpassing 1,870 individuals. This number is higher than the combined active developers of its three closest competitors – Polkadot, Cosmos, and Solana. Additionally, Ethereum has over 700,000 validators, with 99% of the staked balances actively participating in the process. Although the 32 ETH threshold per validator may inflate this number, it is noteworthy that Lido, the largest staking pool, controls 32% of the staking, while Coinbase holds 9.6%.
Ether’s dominance has been maintained and reinforced for several reasons, including its leading position in derivatives markets and the NFT sector. The inclusion of Ether’s futures contracts on the Chicago Mercantile Exchange, the world’s largest derivatives exchange, signifies its importance to institutional investors. With aggregated open interest of $5.4 billion, Ether outperforms BNB with $380 million and Solana with a mere $178 million.
Moreover, Ethereum continues to lead the market in nonfungible tokens (NFTs). Despite facing high gas fees, Ethereum remains the preferred choice for buyers and total sales. Over the past 30 days, the Ethereum network reached $380 million in NFT sales, while Solana, Polygon, and BNB Chain combined only amounted to $93 million.
While the positive trend in Ether’s dominance may change if the network upgrade, enabling parallel processing (sharding), does not materialize, for now, Ethereum’s 20% market capitalization share remains unchallenged.
In conclusion, Ethereum’s dominance in the smart contract and DApp space is indisputable. Its market share and total value locked surpass those of its competitors. The platform’s decentralization, active developer community, and strong presence in derivatives markets and NFTs further solidify its position as the leading blockchain. However, investors should always exercise caution and conduct thorough research before making any investment decisions.
