TLDR
Ethereums share of DeFi total value locked has slid to about 53 to 54%, one of its weakest levels in years as other chains absorb more liquidity.
- Ethereums DeFi dominance has dropped from roughly 63.5% in early 2025 to near 53% in mid 2026, even though it still leads in absolute TVL.
- Cheaper rival L1s and fast?growing ecosystems like Solana, BNB Chain, Tron, Base and Hyperliquid are pulling in liquidity and activity that previously defaulted to Ethereum.
- This looks more like a structural shift to multichain DeFi than an outright collapse, but security, fee levels and L2 consolidation will decide whether Ethereum regains share.
Deep Dive
1. How Much Dominance Ethereum Lost
Analytics from DefiLlama cited by several outlets show Ethereums DeFi TVL share falling from around 63.5% in January 2025 to about 53% by May 2026, a multi?year low in market share, even as its TVL is about 45.5 billion dollars in absolute terms. A detailed breakdown shows Solana at about 6.7%, BNB Chain 6.5%, Bitcoin 6.1%, Tron 6.0%, Base 5.3% and Hyperliquid 1.8%, with non?Ethereum chains now holding roughly 47% of DeFi TVL globally.
CryptoSlate similarly reports Ethereums share around 54%, calling it its weakest DeFi market share since 2025 and confirming the same magnitude of decline over roughly a year and a half.
Ethereum is still the single largest DeFi base layer by TVL, but its monopoly position is gone and liquidity is more evenly spread across other chains.
2. Why Ethereum Is Losing Share
Reports attribute the share loss to three main drivers. First, rivals like Solana and BNB Chain attract users with much lower transaction costs and purpose?built DeFi ecosystems, with protocols such as Jupiter, Raydium, Kamino and PancakeSwap drawing billions in liquidity that might once have gone to Ethereum. Second, Ethereum?aligned layer 2s like Base, Arbitrum and Optimism are tracked separately in most TVL dashboards despite ultimately settling to Ethereum, so mainnet dominance understates Ethereums total DeFi stack.
Third, repeated DeFi exploits and bridge hacks in 2025 and 2026 have led to large outflows from some Ethereum?centric restaking and lending platforms, contributing to a sizable drop in TVL even while the core protocol remains unaffected.
Competitive fees and user experience on other chains, plus fragmented L2 accounting and security stress, are all chipping away at Ethereums visible lead.
3. Multichain Shift And What To Watch
Commentary increasingly describes DeFi as structurally multichain, with different networks specializing in areas like high?throughput trading, stablecoin settlement, perpetuals or Bitcoin collateral rather than all of it happening on Ethereum. Some analysts argue that Ethereums declining dominance is not inherently a sign of weakness, but of growing competition and diversification across the ecosystem.
Key things to track from here are whether Ethereums combined mainnet plus L2 share stabilizes, whether fee and UX improvements keep more activity on its stack, and whether the rate of major DeFi exploits drops, which would help rebuild confidence.
For users, the opportunity set is spreading across more chains, and the key edge is understanding where depth, security and incentives are best for the specific DeFi use case.
Conclusion
Ethereums DeFi dominance has clearly retreated, but it remains the largest individual platform while liquidity and innovation migrate to a more multichain landscape. Whether Ethereum regains share will depend on how fast it can align fees, user experience and security across its mainnet and layer 2s relative to fast?moving competitors.
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