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How Total Value Locked (TVL) is Distributed in Major Blockchains

A uniform distribution of TVL across applications mitigates overall ecosystem risk and indicates a healthy ecosystem.

More TVL, More Stability

A recent report from blockchain analysis firm Messari dinged BNB Chain for having nearly half of its Total Value Locked (TVL) by a single dApp PancakeSwap. The firm flagged that TVL hegemony as a potential weakness for the network if the Decentralized Exchange (DEX) ever suffered an exploit or technical breakdown. 

But how do the other major blockchain’s compare? Let’s explore:

When you are assessing a blockchain’s performance, TVL is a crucial metric for the profit potential and usability of Decentralized Applications (dApps). A network's TVL distribution among Decentralized Finance (DeFi) protocols can reveal a lot about its health.

TVL can be defined as the total value of cryptocurrency locked in a smart contract. As a DeFi platform's TVL rises, its liquidity, popularity, and usability also increase. DeFi protocols with a higher TVL lock in more capital, resulting in more participant benefits and profits. A lower TVL implies lower availability of money, and therefore lower yields.

However, as Messari points out, a blockchain’s reliance on a single dApp can be seen as a potential vulnerability for the network as a whole.

Total crypto market TVL. Source

TVL Distribution Across Networks

This section analyzes the TVL distribution among DeFi protocols in a network. Our calculations include “double counts” and exclude staked governance tokens and borrowed coins in lending protocols.

We will be talking about the top five layer-one protocols (Ethereum, BNB Chain, Tron, Avalanche, and Solana) using data from DefiLlama as follows:

Ethereum

TVL: $59.95 billion.

Top Protocol by TVL: Maker DAO has the most TVL on Ethereum, contributing 14.7% of the entire Ethereum DeFi ecosystem with $8.79 billion. 

Top Five by TVL: With a total of $33.46 billion, accounting for 55.8% of TVL, the top five protocols include Maker DAO, Lido, Uniswap, Curve and AAVE.

The Rest: The rest of the protocols make up $26.49 billion, or 44.2% of TVL.

TVL on Ethereum. Source

BNB Chain

TVL: $7.18 billion

Top Protocol by TVL: DEX protocol PancakeSwap dominates 46.2% of TVL on BNB Chain with $3.32 billion.

Top Five by TVL: PancakeSwap, Venus, Alpaca, BiSwap and PinkSale comprise 71.7% of the TVL with $5.15 billion.

The Rest: The rest of the protocol amounts to 28.3% with $2.03 billion.

TVL on BNB Chain. Source

Tron

Total Volume Locked(TVL): $5.92 billion

Top Protocol by TVL: JustLend protocol makes up 57.4% of the network’s TVL with $3.4 billion.

Top Three by TVL: Of the total TVL on the network, 99.8% comes from the top three protocols, JustLend, SUN and JustStables, totaling $5.91 billion.

The Rest: The remaining five prominent protocols make up 0.2% of the TVL with $15 million.

Total TVL on Tron. Source

Avalanche: 

Total Volume Locked(TVL): $2.74 billion

Top Protocol by TVL: Aave accounts for 39.1% of TVL with $1.07 billion

Top Five by TVL: With $2.03 billion, Aave, Benqi, Trader Joe, Platypus Finance and Vector Finance make up 74.1% of TVL in the network.

The Rest: The rest makes up $710 million, which is 25.9% of the whole network.

Total TVL on Avalanche. Source

Solana: 

Total Volume Locked(TVL): $2.65 billion

Top Protocol by TVL: Marinade Finance accounts for 12.7% of TVL with $338 million.

Top Five by TVL: With a total of $1.31 billion in TVL, the top five networks, including Marinade Finance, Solend, Serum, Radium and Atrix, make up 49.6% of the network's TVL.

The Rest: The rest makes up $1.34 billion, accounting for 50.4% of the network’s TVL.

Total TVL on Solana. Source

Thus, we see that in most of the top five networks (BNB, Tron and Avalanche), one or a few protocols dominate all other ones. The numbers, however, show a more uniform distribution in Ethereum and Solana. Unlike other ecosystems, both networks exhibit a diversified allocation of TVL across applications that arguably mitigate overall ecosystem risk.

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