Top Ethereum DeFi Projects Lose TVL In Favor Of Binance Smart Chain

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CryptoMode DeFi TVL Ethereum BSC SUNC

There have been some interesting changes across Ethereum’s DeFi ecosystem. Various protocols note a steep dropoff in Total Value Locked (TVL) over the past 24 hours. It appears some of this liquidity is moving to projects on the Binance Smart Chain. 

1Inch and LINKSWAP TVL Drops Significantly

As competition continues to heat up in the world of decentralized finance, tough choices have to be made by developers of individual projects. Staying on Ethereum is too expensive for the users, making the majority of these platforms far less appealing than they can be. No one wants to pay between $20 and $90 to deposit, lock, or remove liquidity, after all. 

For projects such as 1Inch and LINKSWAP, the TVL outflow has become more outspoken. 1Innch saw its TVL decrease by 48.8% in the past day, whereas LINKSWAP noted a 36.56% decline. Some people may be alarmed by these developments, but they don’t necessarily have to be. 

In case you missed the news, 1Inch recently confirmed it has integrated Binance Smart Chain support. As there are some incentives associated with this upgrade, it is not unthinkable many users will move liquidity off Ethereum and onto Binance Smart Chain. Comparing the transaction fees of both networks alone, using ETH has become nefast for all users.

For LINKSWAP, it is a bit unclear as to what is going on exactly. The project has recently introduced a new reward pool for a specific pair. Moreover, it supports many other native DeFi tokens; thus a decrease in liquidity isn’t entirely expected. Nor is it the first time this platform notes a steep decline in TVL lately, indicating this may be a temporary blip on the radar. 

CryptoMode DeFi Liquidity Ethereum TVL

Similar declines are visible for DODO (-28.81%) , Harvest Finance (-17.57%) and Badger DAO (-12.71%).   Such big swings in TVL are not uncommon, but seeing multiple projects lose over 10% in TVL in the same day is a tad worrisome. Despite this decline, there is still $38.5 billion in liquidity across top Ethereum DeFi platforms. 

Will This Trend Continue?

As long as Ethereum remains too expensive to use for anything, yield farmers and other DeFi enthusiasts will continue to look for alternative solutions. For the DeFi developers, it is now a matter of integrating the top blockchains into their offering to provide competitive options. Anyone who sticks with just one blockchain is likely to miss out on a lot of liquidity and fees. Maintaining a healthy TVL is crucial at this stage.

Moreover, it would appear that decentralized finance on Binance Smart Chain is growing by leaps and bounds. Several new projects are coming to the market quickly. While there are still concerns over the centralized nature of the network, especially for validators, most users aren’t too bothered by that aspect. 

The bigger question is whether Ethereum’s DeFi projects can reclaim some lost TVL this week. 


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