Ethereum Loses 2024 Gains, TVL Dominance Falls 6.9% as Solana DEXs Rise 35.3%

In the first quarter of 2025, Ethereum (ETH) faced a significant setback, erasing all the gains it had made throughout 2024. The cryptocurrency closed the quarter at $1,805, a 45.3% decrease from its starting price of $3,336. This decline brought ETH back to levels last seen in 2023, underscoring the volatility and challenges within the cryptocurrency market.

This downturn was accompanied by a broader shift in the decentralized finance (DeFi) landscape. The total value locked (TVL) in DeFi protocols decreased by $48 billion in the first quarter of 2025. Ethereum, which had been a dominant player in the DeFi space, saw its TVL dominance fall from 63.5% to 56.6%. This reduction was partly due to the rise of Solana-based decentralized exchanges (DEXs), which gained traction and captured a larger share of the DeFi market.

Solana's dominance in the DEX space continued from the end of 2024, with its market share hitting 39.6% for the quarter. It grew by 35.3%, from $217.0 billion in Q4 to $293.7 billion in Q1. In January, Solana accounted for 52% of on-chain trades amongst the top 12 blockchains, driven by the ‘political memecoin’ frenzy led by TRUMP. This caused Ethereum’s market share to drop below 20% for the first time. However, as the meme coin trend receded, Ethereum managed to reclaim the top spot in March, with a 30.1% market share compared to Solana’s 23.4%.

Optimism and Polygon were edged out of the top 10 in March by newcomers Sonic and Berachain. However, over the entire quarter, both chains stayed ahead. The dominance of Solana DEXs in the first quarter of 2025 reflects the growing popularity of alternative blockchain platforms that offer faster transaction speeds and lower fees compared to Ethereum. This trend is likely to continue as developers and users seek more efficient and cost-effective solutions for decentralized applications and financial services. The rise of Solana DEXs also underscores the importance of interoperability and scalability in the DeFi ecosystem, as users demand seamless and efficient transactions across different blockchain networks.

The broader weakness across the crypto sector, with the total market capitalization of cryptocurrencies decreasing by 18.6%, was driven by a combination of factors, including regulatory uncertainties, macroeconomic conditions, and the emergence of new competitors. The report highlights the need for Ethereum and other established cryptocurrencies to adapt and innovate to stay competitive in a rapidly changing market. The first quarter of 2025 was a challenging period for Ethereum, as it lost all the gains it had made in 2024 and saw its TVL dominance decline. The rise of Solana DEXs and the broader weakness in the crypto market highlight the need for Ethereum to adapt and innovate to maintain its position in the rapidly evolving DeFi landscape. As the crypto industry continues to evolve, established players like Ethereum will need to focus on improving scalability, interoperability, and user experience to stay competitive.