Ethereum has been the leader in the smart contract and decentralized application (DApp) network since its inception. The analysis of Ether’s price (ETH) and market capitalization provides indisputable evidence that the blockchain has been gaining market share. Over the past couple of years, Ether’s dominance in market capitalization terms has grown from an average of 18% in July 2021 to the current 20%. When excluding Bitcoin (BTC) from the analysis, Ether’s market share presently stands at 40.6%, while its next competitor, BNB (BNB), holds a 7.2% share.

Ethereum’s dominance is further evident when analyzing the total value locked (TVL) on each network’s smart contracts. Ethereum is the clear leader with $24.6 billion in TVL, followed by Tron’s $5.4 billion and BNB Chain’s $3.3 billion. While Ethereum’s TVL market share declined from 70.5% in June 2021 to 49.5% in May 2022 as Terra and Avalanche gained a combined 20% market share, Ethereum quickly regained a 58% market share following the collapse of the Terra ecosystem in May 2022, which culminated in developers halting network activity.

Ethereum’s Active Developers and Future Contracts

Despite the emergence of DApps on the BNB and Tron blockchains, Ethereum’s leadership has remained uncontested over the past 12 months. The number of unique active wallets (UAW) interacting with smart contracts per chain is irrelevant to Ethereum’s leadership because of the much lower transaction fee that opens room for manipulation.

The Ethereum ecosystem has the highest number of active developers, surpassing 1,870, which is more than the next three competitors — Polkadot (752), Cosmos (511), and Solana (383) — combined. Currently, the Ethereum network has over 700,000 validators, with 99% of the balances locked in staking participating in the process. The 32 ETH threshold limit per validator undoubtedly inflates this number, but Lido, the largest known staking pool, controls 32% of the staking, with Coinbase coming in second with 9.6%. Therefore, Ethereum is far less centralized in terms of development and validation compared with Tron, BNB Chain, and Solana.

Ether’s future contracts are essential for institutional trading practices like hedging and trading with leverage. The Chicago Mercantile Exchange added Ether’s cash-settled futures in February 2021, making Ether the only cryptocurrency, apart from Bitcoin, to reach the world’s largest derivatives exchange. In futures markets, longs and shorts are balanced at all times, but having a larger number of active contracts — open interest — allows the participation of institutional investors who require a minimum market size. Ether futures aggregated open interest stands at $5.4 billion, while competitor BNB hold $380 million and Solana a mere $178 million.

Ethereum’s Dominance in NFTs

Non-fungible tokens (NFTs) are a perfect example of how cheaper, faster transactions do not always translate to increased adoption. Nothing stops NFT projects from shifting between blockchains, whether for new listings or existing collections. In fact, y00ts and DeGods moved to Polygon earlier in 2023. Despite facing gas fees that often break above $10, Ethereum remains the absolute leader in the number of buyers and total sales. According to CryptoSlam, the leading network reached $380 million in sales over the past 30 days, while Solana, Polygon, and BNB Chain totaled a combined $93 million.

The data shows that Ethereum is the clear leader in the smart contract and DApp space. The positive trend in Ether’s dominance might fade over time if the promised network upgrade to allow parallel processing (sharding) does not come to fruition, but for now, Ether’s 20% market capitalization share remains unchallenged.

Analysis

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