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Ethereum Dominance Climbs Up, While DeFi Sector Getting Close to ATH of Total Value Locked

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Thu, 08/19/2021 - 11:04
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Arman Shirinyan
Ethereum dominance follows the increasing capitalization of the DeFi and NFT industry
Ethereum Dominance Climbs Up, While DeFi Sector Getting Close to ATH of Total Value Locked
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According to the CoinMarketCap and DeFi Pulse tracking services, Ethereum market dominance has risen by more than seven percent in the last five months. Meanwhile, the DeFi market capitalization stays at $120 billion with $80 billion in locked funds.

Ethereum’s run to "flippening" has been one of the main topics of discussion among crypto enthusiasts since "ICO Era", when Ethereum's market capitalization was extremely close to Bitcoin's. Whenever the trending ethereum-based technology appears on the market, capitalization of the second-biggest cryptocurrency rises, bringing market dominance with it. 

CoinmarketCap dominance
Source: Coinmarketcap.com

After the increasing popularity of the DeFi and NFT services, Ethereum has received two more usecases that initiate large funds inflow. There are more than 200 DeFi projects released on the Ethereum blockchain that bring more valuation to the coin. 

Another strong driver of the coin’s price is the NFT market that was the reason for extremely elevated fees at periods of high network congestion like we witnessed on the day of the CryptoPunks launch. 

DeFi Market Cap
Source: CoinGecko

Additional interest from investors also appeared after the release of the EIP-1559 that brought up chances of Ethereum becoming a deflationary asset, making it more attractive as a long-term investment.

Related
Ethereum’s EIP-1559: Comprehensive Guide to London Hardfork

The upgrade brought up the fee-burning mechanism to the network. Previously, fees were going directly to miners as a reward for moving the chain through. In periods of network congestion fees were getting 5-10x times higher than normal. With the new base fee introduced even when the network is getting highly congested, fees shouldn’t get too much higher than normal.

At press time, Ethereum dominance stays at 18.5 percent with the 37 percent ATH during the “ICO era”.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.