DeFi Ecosystem Map

DeFi Ecosystem Overview

DeFi is not limited to a single chain. While it started on Ethereum, DeFi protocols now operate on dozens of blockchains. Each chain has unique characteristics, and different protocol ecosystems have developed.

Choosing a chain means choosing that chain's security, fees, speed, and ecosystem. Understanding the chains and protocols that fit your purposes is the first step in utilizing DeFi.

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TVL (Total Value Locked)

What Is TVL

TVL is the total value of assets deposited in a DeFi protocol. It's a key metric for gauging the scale and trustworthiness of a protocol or chain.

For example, if Uniswap's TVL is $5B, it means $5 billion worth of assets are deposited in Uniswap's liquidity pools.

TVL Interpretation Cautions

High TVL doesn't necessarily mean good:

• TVL artificially boosted by incentives (token rewards) drops sharply when incentives end
• TVL composed of protocol's own tokens falls when token price drops
• True "sticky TVL" is money that stays even without incentives

TVL and Market Cap: The ratio of TVL to governance token's market cap (FDV) is also a reference metric.

• High TVL/FDV: Potentially undervalued
• Low TVL/FDV: Potentially overvalued

TVL Tracking Tools

• DeFiLlama: Most comprehensive DeFi data. TVL by chain and protocol
• DeBank: Strong for viewing individual wallet DeFi positions

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Ecosystem by Major Blockchains

Ethereum

Characteristics:

• The original DeFi. Oldest and highest TVL
• Highest security and decentralization
• High gas fees (solved by L2s)

TVL: ~$60~80B (varies by period)

Representative Protocols:

Suitable for: Large assets, security priority, L2-capable users

Arbitrum

Characteristics:

• Largest TVL among Ethereum L2s
• Nearly identical experience to Ethereum, much lower gas fees
• Native ARB token

TVL: ~$10~15B

Representative Protocols:

Suitable for: Prefer Ethereum ecosystem, want low gas fees

Solana

Characteristics:

• Thousands of transactions per second, very low fees (~$0.001)
• Fast transaction finality (hundreds of ms)
• Past network outage issues

TVL: ~$5~8B

Representative Protocols:

Suitable for: Fast trading, low fees, frequent small transactions

BNB Chain (BNB Smart Chain)

Characteristics:

• Operated by Binance
• Ethereum compatible (EVM)
• Centralization controversy, cheap fees

TVL: ~$5~7B

Representative Protocols:

Suitable for: Binance ecosystem users, emerging token trading

Base

Characteristics:

• L2 operated by Coinbase
• Inherits Ethereum security
• Growing rapidly

TVL: ~$3~5B

Representative Protocols:

Suitable for: Coinbase users, exploring new projects

Other Major Chains

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Protocol Classification

DEX (Decentralized Exchange)

Protocols for token swaps. Covered in detail in How DEXs Work.

• AMM type: Uniswap, Curve, Balancer
• Order book type: dYdX, Vertex
• Aggregators: 1inch, Jupiter (find optimal routes across multiple DEXs)

Lending Protocols

Deposit and loan services. Covered in detail in DeFi Lending Structure.

• General lending: Aave, Compound
• Isolated lending: Morpho, Euler
• Undercollateralized: Maple (institutional)

Stablecoin Protocols

Protocols that issue price-stable tokens. Covered in detail in Types of Stablecoins.

• CDP type: MakerDAO (DAI), Liquity (LUSD)
• Algorithmic: FRAX (partially)
• Fiat-backed: USDC, USDT (managed by issuers)

Liquid Staking

Protocols that maintain liquidity while staking. Covered in detail in Liquid Staking.

• Ethereum: Lido (stETH), Rocket Pool (rETH)
• Solana: Jito (JitoSOL), Marinade (mSOL)

Yield Aggregators

Protocols that automate yield optimization. Covered in detail in Yield Aggregators.

• Vault type: Yearn, Beefy
• Yield tokenization: Pendle

Derivatives Protocols

Trading futures, options, and other derivatives.

• Perpetual futures: GMX, dYdX, Vertex
• Options: Dopex, Lyra

Bridges

Cross-chain asset movement. Covered in detail in How Bridges Work.

• Native bridges: Arbitrum Bridge, Optimism Bridge
• Third-party: Across, Stargate, Hop

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Chain Selection Guide

By Asset Size

By Purpose

Risk Considerations

• Ethereum: Most proven. Minimum risk
• L2 (Arbitrum, Optimism): Inherits Ethereum security. Relatively low risk
• Solana: Network outage history. Medium risk
• New chains: Short verification period. High risk

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Multi-chain Strategy

Asset Distribution

Don't put all assets on one chain. Distribute to prepare for chain-level issues (hacks, outages).

Example Distribution:

• Ethereum Mainnet: 50% of long-term held assets
• Arbitrum: 30% for active DeFi activities
• Solana: 15% for fast trading
• Exploration: 5% for new chains

Bridge Usage Caution

Bridges are used for cross-chain asset movement. Since bridges are major hacking targets, use trusted bridges and don't move large amounts at once. Covered in detail in Bridge Risks and Hacking Cases.

Same Protocol, Different Chains

Large protocols like Uniswap and Aave are deployed on multiple chains. Even for the same protocol, liquidity and rates differ by chain, so compare before choosing.

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Ecosystem Exploration Tools

Comprehensive Dashboards

• DeFiLlama: TVL, yields, protocol comparison
• DeBank: Wallet position viewing, protocol exploration
• Dune Analytics: On-chain data analysis

Chain-specific Explorers

• Etherscan: Ethereum
• Arbiscan: Arbitrum
• Solscan: Solana
• Basescan: Base

Yield Comparison

• DeFiLlama Yields: Ecosystem-wide yield comparison
• Vaults.fyi: Vault yield comparison

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Summary

The DeFi ecosystem consists of various chains and protocols centered around Ethereum. TVL is a metric for gauging ecosystem scale, but incentive status and asset composition should also be considered. Chain selection depends on asset size, purpose, and risk tolerance, and multi-chain distribution helps with risk management. Explore the ecosystem using tools like DeFiLlama and DeBank to find the chains and protocols that fit you.

Next article: How DEXs Work - Trading Without Intermediaries