Why Solana and Binance Defi are behind Terra and Fantom by such a significant margin?
Regardless of the perspective you choose, there is no denying that DeFi has seen better days. At this time, $288 billion AUD is locked as a total value across all of the multiple DeFi protocols, which is much less than the all-time high of $350 billion AUD that was reached in December. Ethereum’s TVL is now at 65% of the total DeFi TVL, which is a decrease of 30% from its all-time high and a loss of a significant amount of market share. However, BNB Chain and Solana have been affected more than any other companies.
Why BNB Chain and Solana are having such a hard time?
The BNB Chain, which was formerly known as the Binance Smart Chain, was the first major alternative layer-one chain to gain popularity at the conclusion of the DeFi summer of 2020. The value of BNB Chain skyrocketed in 2021, going from almost nothing to a high of $42.5 billion Australian Dollars. Since then, its value has dropped by sixty percent.
The centralization of the BNB Chain, ongoing concerns about its security, and a general lack of innovation are, according to analysts, the three most significant flaws with Binance’s in-house blockchain. Although it still has numerous reputable exchanges and apps, such as PancakeSwap, Venus, Alpaca, and Ellipsis Finance, BNB Chain is not the go-to alternative layer-one that it used to be a year ago. Specifically, PancakeSwap is no longer using BNB Chain.
Solana, the industry’s second major breakthrough star after BNB Chain, met the same untimely end (to exchange FTM for SOL you can go here: https://godex.io/versus/ftm-vs-sol). Solana skyrocketed to record values and an all-time high in TVL of over $20 billion AUD in December 2021, because of the company’s stellar performance, which propelled it to new heights. It is presently sixty percent below its peak point.
In a manner quite similar to that of BNB Chain, the Wormhole bridge of the Solana network was breached, and the stolen funds totaled $322 million (or $441 million AUD). On the other hand, the difficulties existed long before it. A number of disruptions to the network made it very clear how centralized Solana actually is and that the network’s speed comes at a price. Even while Solana is working to solve these problems, crypto money doesn’t inspire much devotion, and investors have already moved on to other promising projects.
The ascendancy of Fantom and Terra
DeFi monies are rarely lost. The only difference is that someone else now has it.
This is the case with Fantom and Terra, two alternative L1s with the greatest TVL expansion in 2022. Already accounting for 11% of DeFi TVL, terra’s sare have increased from almost nothing a year ago. Compare Solana vs Luna for a successful exchange on the Godex website. Primarily, capital is flooding into its Anchor, Mirror, and Astroport protocols, which let investors benefit from the stablecoin’s lucrative dividends.
Fantom is a similar success story to Terra, with its TVl hovering around the same levels. Daniele Sestagalli, a colorful and massively popular DeFi developer who created Abracadabra Finance and Wonderland, has been its primary draw. In February, Sestagalli launched Solidly, a B2B stablecoin exchange that he co-created with Andre Cronje, a highly regarded DeFi developer. This attracted a tremendous amount of capital from DeFi investors seeking new returns in a potentially big new exchange.
The takeaway here for everyday investors is that you shouldn’t become too emotionally invested in your investments in DeFi, since money is often mercenary and out for the maximum profits it can get.