The race to dominate the DeFi ecosystem is on

Why Ethereum is losing market share

To believers, open, public blockchains provide a second chance at building a digital economy. The fact that the applications built on top of such blockchains all work with each other, and that the information they store is visible to all, harks back to the idealism of the internet’s early architects, before most users embraced the walled gardens offered by the tech giants. The idea that a new kind of “decentralised” digital economy might be possible has been bolstered over the past year as the numerous applications being built on top of various blockchains have boomed in size and functionality.

Perhaps the most significant part of that economy has been decentralised-finance (DeFi) applications, which enable users to trade assets, get loans and store deposits. Now an intensifying battle for market share is breaking out in this area. Crucially, Ethereum, the leading DeFi platform, seems to be losing its near-monopoly. The struggle shows how DeFi is subject to the standards wars that have broken out in other emerging technologies—think of Sony Betamax versus vhs video cassettes in the 1970s—and illustrates how DeFi technology is improving lightning-fast.