Ethereum, once the undisputed king of Layer 1s, is now losing ground fast. Despite a recovering Total Value Locked (TVL), $ETH dominance continues to collapse — dropping to 7.35%, its lowest level since 2020.
Is this the final phase for Ethereum's market dominance?
Let’s break down the data and what it could mean next:
The Fall of $ETH Dominance – By the Numbers
♦️ In 2021, when DeFi peaked with $144B TVL, ETH Dominance was only ~13%
♦️ In mid-2022, TVL fell to $90B, but dominance rose to 22% — indicating a flight to "quality"
♦️ During the entire bear market, $ETH maintained 20–22% dominance, even while altcoins crashed
Now?
♦️ As of April 2025, ETH Dominance is down to 7.35%
♦️ TVL is rebounding, but ETH’s share of the market is not
♦️ Despite Ethereum L2s growing, the core asset itself is bleeding interest
Why Is Ethereum Losing Dominance?
♦️ Altcoin proliferation — 1000s of new L1s, meme coins, and niche chains are diluting capital
♦️ AI, RWA, and DePIN narratives are pulling capital away to newer chains
♦️ Solana, TON, and Tron are gaining traction due to lower fees and faster UX
♦️ Ethereum gas fees are still an issue for many new users
L2 Growth ≠ ETH Price Strength
While Arbitrum, Optimism, and Base are booming, that capital isn't lifting ETH price or dominance.
In fact:
♦️ ETH is now just a "settlement layer" for value — not the front-end of innovation
♦️ Users and capital are flocking to chains where activity is cheap, fast, and visible
Is There Any Sign of Comeback?
As of now:
♦️ No major ETH narrative is driving excitement
♦️ Spot ETH ETFs are delayed or facing uncertainty
♦️ Even large holders like Justin Sun aren’t accumulating more
♦️ The $ETH/BTC chart is near multi-year lows — and breaking support
What Happens Next?
Unless a major Ethereum catalyst appears — like successful ETF approval, a new tokenomics shift, or mass L2 integration — Ethereum risks becoming just another backend protocol.
Is it the end? Probably not.
But is this a changing of the guard? Possibly yes.
