Ethereum recovered 42% of the overall TVL, which shifted to Solana, according to information shared by Michael Nadeau, the founder of The DeFi Report. According to Nadeau, these observations show that although Solana has caked value from other blockchains, much of that value has returned to Ethereum, including its layer-2 solutions.
More recently, in a post on X, Nadeau reiterated that Solana needs to continue building its TVL from Ethereum and its layer-two counterparts to strengthen its place in the DeFi space. He said this has been evidenced by data from the crypto data platform Artemis, where Solana has deposited $55 million TVL into Ethereum layer two protocols like Base, Optimism, and Arbitrum.
According to Nadeau, Solana received $2.36 billion in inflows from Ethereum YTD, and over $1 billion has returned to Ethereum, a significant outflow to layer 1. He clarified that the Ethereum to Solana inflow is insignificant as it only contributed to 2.7% of Solana’s TVL.
Ethereum Maintains Strong TVL Despite Significant Outflows
According to data provider DefiLlama, Ethereum TVL is over $50 billion. YTD, Valkirty saw net outflows of $6 billion, of which 83% was invested in layer-2 chains that are still associated with the Ethereum network, as pointed out by Nadeau. He said these assets are expected to repatriate more value to Ethereum as most of the value that moved off the chain is retained in the ecosystem.
For instance, on October 28, 2021, Solana, for the first time, transited Ethereum to become the most used blockchain in terms of daily transaction fees, with over $2.54 million fees against Ethereum’s $2.07 million fees. This change made Solana the fifth largest fee-generating blockchain that day, mainly due to increased activity through Raydium, a DEX and AMM built on the Solana blockchain.
While striving in this dynamic DeFi environment, the blockchains’ competition for TVL and transactional volume increases as the DeFi frontier pushes forward.
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