DeFi (Decentralized Finance) is the most important function of public blockchains. The ongoing bear market has hit the DeFi sector very badly. Most of the DeFi protocols have taken a massive beating - Total Value Locked (TVL) has plummeted from a peak of US$ 237 billion to US$ 45 billion today.
The top 3 DeFi Blockchains by TVL are:
Ethereum: $ 26.7 billion
Tron: $ 5.7 billion
BNB Smart Chain: $ 3.5 billion
1. Ethereum
Ethereum, the world’s first DeFi blockchain, has been the largest by TVL since its launch.
The top DeFi protocols on Ethereum and their TVL are:
Lido (Liquid Staking): $ 14 billion
Maker DAO (CDP): $ 6.3 billion
AAVE (Lending): $ 4.8 billion
Uniswap (Decentralized Exchange): $ 3.6 billion
Slow speeds and high gas fees remain the biggest problems facing Ethereum. Scaling solutions like Polygon, Arbitrum, Loopring, Immutable X, and xDai Chain are solving these problems to some extent.
ETH is the native token of Ethereum Mainnet and its high price makes transactions expensive.
I am neutral on Ethereum for the short term.
2. Tron
Tron was created to enable digital content creators to better monetize their content without intermediaries.
The top DeFi protocols on Tron and their TVL are:
JustLend (Lending): $ 3.9 billion
JustStables (CDP): $ 1.3 billion
SUN (Decentralized Exchange): $ 590 million
On the plus side, transactions on Tron are fast (2000 tps) and cheap.
On the negative side, most of Tron’s TVL comes from the JustLend and JustStables.
I am bearish on Tron for the short term.
3. BNB Smart Chain
BNB Smart Chain comprises the earlier Binance Chain (which was optimized for fast decentralized trading) and Binance Smart Chain.
The top DeFi protocols on BNB Smart Chain and their TVL are:
PancakeSwap (Decentralized Exchange): $ 1.5 billion
Venus (Lending): $ 687 million
Coinwind (Yield): $ 174 million
On the plus side, transactions on BNB Smart Chain are fast and cheap.
On the negative side, it is not very decentralized. It has 21 validators who are selected every 24 hours and must stake a minimum of 10,000 BNB.
Another negative issue is that almost half of BNB Smart Chain’s TVL comes from the PancakeSwap decentralized exchange. Negative developments in PancakeSwap can have serious repercussions on BNB Smart Chain.
Another issue is the case filed by the US Securities & Exchange Commission against the Binance ecosystem.
I am bearish on BNB Smart Chain for the short term.