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Ethereum’s DeFi Dominance Is Challenged as the Web3 Ecosystem Expands

Ethereum’s overarching dominance as the top smart contract platform is being whittled down as other blockchains’ incentivisation has shrunk Ethereum’s market share by $47billion. This is one of the findings from Consensys‘ latest report on Web3, which now represents an expansive ecosystem of new ways for creators and communities to monetise, and new models for internet-native communities to collaborate, ranging from stablecoins, borrowing and lending, to NFTs in gaming.

Decentralised Finance (DeFi) Economy Highlights

  • Over the past few months, the entire blockchain ecosystem has been evolving and developing new economic patterns. There has been a 321% rise of Ethereum addresses interacting with DeFi protocols, to 171 million, in 2021, compared to the 18 million in 2018.
  • Consenys’ analysis concluded that the total value of stablecoins supply has doubled since January 1st of 2021 from nearly 20 billion to more than 40 billion.
  • Borrowing and lending in DeFi saw significant growth in terms of loans outstanding Q3, reaching new all-time highs in debt on September 6th, with approximately $24.7billion worth of debt outstanding. This was a $10.4billion rise from the end of Q2. AAVE led the DeFi lending protocols with outstanding debt on the protocol standing at $7.4billion.
  • Popular DeFi protocols like Uniswap, PancakeSwap, and SushiSwap are now generating well over $100million in annualised revenue. This has occurred as more participants enter the market and more sophisticated financial instruments are built.

DeFi Governance

Governance drives changes in most of the major DeFi protocols. Token holders vote on proposals, which range from propositions on how a protocol should allocate its treasury funds, to more specific details like changing a collateral factor for an asset. Out of any protocol, Synthetix has had the most active governance by far. Every week, there were always multiple updates changing the various parameters tied to minting synthetic assets based on posted collateral. Furthermore, Synthetix often changed the fees associated with issuing synthetic assets on the protocol. AAVE and Airswap were also recognised for being extremely active in their governance.

Non-Fungible Tokens (NFTs) and the Metaverse


2021 has been the year of the NFT with sales totalling $10.7billion for Q3 2021 and Snoop Dogg claiming to be the renowned NFT collector Cozomo de’ Medici. There have been over 33,985,609 sales, which is eight times more than the figures from Q2. Notably, the number of primary sales was outdone by secondary ones, $17.5million and $16.4 million respectively, across the quarter, highlighting that whilst new projects are still attracting attention, older projects have retained attention. Despite this, primary sales remain strong, with over $16billion in primary sales in Q3.

The platform largely facilitating the NFT revolution is OpenSea, a marketplace where users can buy and sell pieces from almost any NFT collection out there. And the transactions going through OpenSea speak volumes: in the record breaking month of August, the platform accounted for $3.16billion of the total $3.25billion in NFT sales volume.

One of the clearest examples of the Metaverse in the context of the blockchain is the concept of play-to-earn gaming. The traditional model of gaming back in the days of ‘Age of Empire’ was simple: consumers had to pay a fee in exchange for the “playing” experience. While money is typically required to play metaverse games, the revenue model continues to change and is no longer as simple as it was.

With Facebook’s rebranding to Meta, the term is increasingly getting misused, but the idea in Web3 is that products and objects that you can collect in one virtual world can move across to other virtual worlds via tokens built on collectively-owned protocols. Let’s dive into some of the bigger projects in the Metaverse space to add some colour.


  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

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