Using the data website DeFi Llama to look at Solana and Fantom: Market Cap/TVL, Trading Volume/TVL

Competing with Ethereum in the smart contract public chain space, a trend of alternating increases has been the norm for the past month. In the recent week, Solana has continued to break historical highs, and Fantom has become the cryptocurrency with the highest increase among the top 100 market capitalizations. Let's use the data website DeFi Llama to see what recent changes have occurred in their on-chain data.

Total Value Locked (TVL) Sees Significant Increase

According to the 7-day change data from "Chains" category on DeFi Llama as of 9/10, only Solana and Fantom have experienced over 100% growth in total value locked (TVL), indicating a certain level of asset migration towards these two blockchains.

Overall, TVL is still dominated by Ethereum with a value of $153.58 billion, followed by Binance Smart Chain (BSC), and Solana has quickly surpassed Polygon and Terra to become the third highest TVL smart contract blockchain.

Key Data to Watch: Market Cap / Total Value Locked

As each smart contract blockchain has its native utility token such as ETH for Ethereum, BNB for BSC, and SOL for Solana, serving as gas fees for network transactions, the prices and market caps of these utility tokens often symbolize the prosperity of the ecosystem.

DeFi Llama provides the ratio data of Market Cap (Mcap) / Total Value Locked (TVL) for comparison with other blockchains.

If token market cap is seen as a symbol of "market expectations" and "market demand," while TVL is seen as the actual behavior of asset deployment, using Ethereum's Mcap/TVL ratio of 2.65 as a benchmark; the ratios for BSC, Solana, and Avalanche are higher than Ethereum's, indicating that their market expectations may exceed actual asset deployment behavior. Conversely, Polygon, Terra, and HECO show the opposite scenario.

Blockchains with significant capital inflows require a certain level of trust. By using Ethereum as a benchmark, one can assess whether there is an overheating of market expectations. Based on current values, the ratios for Solana and Avalanche are notably high, indicating the need for more capital inflows to meet Ethereum's standards.

Assessing Blockchain Health Through Automated Market Makers (AMM)

AMM is a type of automated decentralized exchange platform where users provide liquidity and earn transaction fees or mining rewards. Learn more: What is a Liquidity Pool? How do they operate?

Decentralized exchanges are essential infrastructure for blockchains; Ethereum has Curve, Uniswap, and SushiSwap, while BSC has PancakeSwap, offering most of the token trading services on the respective blockchains.

Looking at the data from the past seven days, compared to other top liquidity protocols, Solana's AMM shows significant liquidity increases: Saber at 218%, Raydium at 35%, indicating Solana's popularity. Fantom has yet to have an AMM with over $1 billion in liquidity.

In addition to liquidity in AMM, trading volume is also an important indicator; higher trading volumes mean more reasonable fee income for users providing assets to AMM.

For example, Uniswap v2 had a liquidity of $4.74 billion on 9/10, with a 24-hour trading volume of $481 million, resulting in a "volume/liquidity" ratio of 0.1 = 4.81/47.4. For PancakeSwap on 9/10, liquidity was $5.26 billion, with a 24-hour trading volume of $797 million, resulting in a "volume/liquidity" ratio of 0.15 = 7.97/52.6, slightly higher than Uniswap v2. This shows that, on average, users providing liquidity on PancakeSwap earn slightly higher fee income compared to Uniswap.

Now, let's look at Saber and Raydium.

Saber has a liquidity of $3 billion, but does not provide platform 24-hour trading volume information on the frontend, so it is not included in the calculation. Raydium, with a liquidity of $1.78 billion, has a 24-hour trading volume of $876 million, resulting in a "volume/liquidity" ratio of 0.49, which is quite attractive for liquidity providers.

It is important to note that, aside from Uniswap, the aforementioned AMMs all provide liquidity rewards, so the income for liquidity providers includes not only transaction fees but also liquidity rewards. Therefore, the VOL/TVL ratio alone cannot represent the complete income level of users. However, VOL can represent the usage level of an AMM, and VOL/TVL can indicate its capital utilization rate, serving as a reference.

All Still in Early Stages

According to DeFi Llama registration data, Solana has only 18 protocols listed, while Fantom has 23; compared to Ethereum with 210 and BSC with 84, there is still a significant gap, indicating that they are still in the early stages of ecosystem development.

From the above indicators, SOL's TVL has indeed seen a significant increase, but compared to other blockchains, the scale of TVL still needs to match token market cap. Additionally, Raydium's trading volume appears active, and although the TVL is low, the fee income for liquidity providers is good.