- Ethereum’s TVL recently dipped to a 12-month low.
- At press time, Tron seemed like a worthy contender to overthrow Ethereum.
Is Ethereum [ETH] still the king of PoW networks? The answer might not be as straightforward as one might expect. Perhaps with a “yes, but…” and for good reason. Let’s explore why.
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On paper, Ethereum is still the leading PoS, according to multiple metrics. For example, it is the second-largest network/cryptocurrency by marketcap after Bitcoin [BTC].
Moreover, it also happened to be the leading network in terms of Total Value Locked. The latter is particularly important because it has been declining and might be overtaken soon.
On-chain data revealed that Ethereum’s TVL fell from its yearly high of $31.3 billion to its recent low of $19.2 billion. The network’s fees have also dipped from a yearly high of 16,720 ETH to a yearly low of $838 ETH.
Source: Glassnode
Regardless, Ethereum is still the highest network by TVL, despite the sharp decline. This observation signaled a growing probability that Ethereum’s dominance in the altcoin segment might soon be flipped.
The Tron [TRX] network, at press time, seemed to be one of the top candidates to flip Ethereum’s dominance. Notably, its TVL has been growing rapidly, while ETH has been dipping towards new yearly lows.
The TVL decline may not be too concerning
The dip in Ethereum fees was also noteworthy because it revealed that the level of dApp utility and organic growth have slowed down. This is largely due to low activity during crypto winter.
Meanwhile, the competition has been tapping into more growth opportunities.
Nevertheless, it is not all bad news for Ethereum, which has been growing in other aspects. For example, the network’s Supply in Smart Contracts and ETH 2.0 Total Number of Deposits have been achieving positive growth. In fact, they both recently achieved new historic highs.
Source: Glassnode
So, what does this all mean? Well, in a nutshell, Ethereum has been experiencing healthy utility despite the market’s cool down. However, this does not account for the state of the network.
Read Ethereum’s [ETH] Price Prediction 2023-24
Perhaps the answer lies in ETH’s price action, which correlates with the TVL outflows. The cryptocurrency’s bearish performance could explain why the TVL has been shrinking. This also suggested that we could see the TVL embark on recovery during bullish phases.
Traders should thus keep an eye out for recovery in Ethereum’s TVL once the crypto winter is over. In the meantime, ETH could remain stuck in its short-term price range.