Crypto & Web3

Ethereum DeFi Market Share Decline, Rise of Specialized Chains

Nowpattern

10 5月 2026 — 3 min read

c Tactical Track

Following reports of Ethereum's DeFi market share decline, will major DeFi protocols (within the top 10 TVL) officially announce an accelerated migration to Ethereum L2?

60%

📅 Judgment: 2026-05-23 🎯 Brier: 0.19

c Strategic Track

By the end of 2026, will Ethereum's DeFi TVL share (DeFiLlama standard) fall below 50%?

50%

YES

📅 Judgment: 2026-12-31 🎯 Brier: 0.19

What Happened

⚡ What Happened

Ethereum's TVL share in the DeFi market has dropped by approximately 10 percentage points, and specialized chains like Hyperliquid are rising. This suggests a structural shift where the DeFi market is fragmenting into L2s and alternative chains optimized for specific use cases. While Ethereum maintains its position as a foundation, its dominance may be challenged due to intensifying competition.

Ethereum's DeFi TVL share has fallen from 63.5% at the beginning of 2025 to approximately 54% as of May 2026, reaching its lowest level since May 2025. This is due to specialized L2s and Alt-L1 chains like BNB Chain and Hyperliquid attracting users and liquidity. Historically, Ethereum was the undisputed leader in DeFi, but high gas fees and scalability limitations have become apparent, increasing demand for more efficient and cheaper alternatives. This decline in share highlights that DeFi innovation is expanding beyond the Ethereum ecosystem, and a multi-chain environment is becoming fully established.

🔍 While reports convey Ethereum's declining share through superficial numbers, its essence lies in the maturation and specialization of the DeFi market. Ethereum provides universal security and decentralization, but it tends to be over-specified and costly for specific financial operations. On the other hand, permissionless order book DEXs like Hyperliquid specialize in specific trading needs, achieving low latency and low fees that are difficult to realize on Ethereum. This suggests an insider's view that DeFi is transitioning from a 'general-purpose' platform to an era of 'specialized optimization', and Ethereum will increasingly specialize in its role as a settlement layer, entrusting the application layer to diverse L2s and Alt-L1s.

📰 Source: CRYPTO TIMES

Causal Analysis

🧭 Why is this happening now?

Causal Map

Referenced Knowledge

entity:ethereumdomain:crypto

entities=ethereum / domain=crypto

This topic is in the `crypto` domain, and Nowpattern's average Brier score is 0.1818. Treat this as an area prone to overconfidence.

Prediction

🔮 Next Scenarios

● Optimistic 20% ● Base 50% ● Pessimistic 30%

🟢 Optimistic 20% Ethereum strengthens its collaboration with the L2 ecosystem, redefining its value as DeFi's security layer. Overall TVL growth boosts Ethereum-based L2s, leading to stabilization and gradual recovery of its share.

🔵 Base 50% Ethereum's share gradually declines, but it remains a major foundation for DeFi. Specialized chains continue to grow in specific niche markets, and multi-chain adoption progresses.

🔴 Pessimistic 30% Ethereum's share decline accelerates. Gas fees and scalability issues remain unresolved, leading to a large-scale migration of major DeFi projects to specialized chains, and Ethereum's presence diminishes.

🎯 Incentive Map

Player	True Incentive	Deep Weakness	Predicted Action
Ethereum (Core Developers)	Maintaining dominance as the foundation of the DeFi market and expanding the ecosystem	Delay in scalability improvements due to adherence to existing legacy structures and decentralization	Continuous investment in EIPs and L2 technology development, but cautious about drastic L1 changes
Hyperliquid and other specialized chains	Gaining market share in specific DeFi use cases and establishing technological superiority	Immature security models, lack of network effects, regulatory risks	Providing fast, low-cost trading experiences, competing for users in specific niche markets
DeFi Users/Protocols	Higher yields, lower transaction costs, superior user experience	Low awareness of security risks, inefficiency due to liquidity fragmentation	Prioritizing performance and cost, moving liquidity to optimal chains and protocols

⚠️ Pre-mortem — Conditions for this prediction to fail

Major DeFi protocols are already advancing L2 migration plans behind the scenes, and will make official announcements all at once following this news.
The Ethereum Foundation suddenly announces a new program that significantly strengthens incentives for L2s, and protocols react to it.
Security issues or bugs on specialized chains are exposed, leading DeFi protocols to declare a return to the Ethereum base for risk avoidance.

Fear-Setting / When this prediction fails

A major DeFi protocol (top 10 TVL) announces an accelerated migration to an Ethereum L2 before the deadline, citing the need to maintain competitiveness.
The Ethereum Foundation or a major L2 solution launches a significant incentive program specifically for existing DeFi protocols to migrate, prompting public announcements.
A critical exploit or security breach occurs on a prominent specialized chain (e.g., Hyperliquid), causing protocols to publicly reaffirm commitment to Ethereum's security.

🎯 Judgment Criteria

Hit Condition: If by May 23, 2026, none of the existing DeFi protocols within the top 10 of the DeFiLlama TVL ranking explicitly officially announce an accelerated migration to an Ethereum L2, it's a HIT.

Judgment Date: 2026-05-23

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