The non-EVM alliance could shift the levers in DeFi going forward.
Covered:
- Non-EVM Chains Finally Competing in DeFi
- Milkomeda: Creating the Non-EVM Alliance
- Charles Hints at Major DeFi Growth
Non-EVM Chains Finally Competing in DeFi
Other than Solana and Terra, there are no other non-EVM chains competing in the DeFi space. When I say non-EVM, I mean chains that have their own programming language and their own “virtual machine”. Many argue that any chains that leverage the EVM itself are simply Ethereum scaling solutions because everything is still tethered to Ethereum–think Fantom, Avalanche, Harmony, Tron, and EOS.
Yet Algorand, Cardano, Solana, and Terra all operate wholly and completely outside of the Ethereum environment, which arguably gives them a long-term advantage as they have erected ecosystems which have no Ethereum “affinity” and stand up their own native ‘moats’. Non-EVM chains are not looking to get a slice of, say, Curv Finance’s TVL, AAVE’s, or Sushiswap’s TVL. Rather, they are building competitors to those very protocols. That is the key difference.
Considering the continuous FUD surrounding Cardano, you wouldn’t think they are about to break into the top 25 chains by total-value-locked (TVL), but they are. “When smart contracts” has turned into over 262 million in TVL, placing Cardano #26 in all of crypto. In fact, Cardano is even outperforming Terra in the last 30 days, increasing TVL by 69%, while Terra increased its TVL by 53%.
To put that in perspective, there is no Layer 1 in the top 25 that is doing better than Cardano this month in terms of DeFi growth, according to DeFi Llama. In 2022, under terrible macro conditions, Cardano has grown from under 1 million in TVL to their current high of 262 million. While it had no where to go but up, the hotly debated UTXO model Cardano uses appears to be “much ado about nothing.”
Credit: DefiLlamaMilkomeda: Creating the non-EVM Alliance
Cardano is still 68% down from its all-time highs, and considering the growth of its ecosystem, it may be a steal right now at 79 cents. A growing “non-Ethereum” alliance, which allows interoperability between non-EVM compatible chains, is also set to launch, which includes Cardano, Algorand, and Solana. The project is called Milkomeda and is backed by big players in the space like Arrington Capital, Coinbase, and even Terra.
.@Milkomeda_com bringing EVM sidechains / rollups to:
Cardano 🤝 Algorand 🤝 Solana
Make love, not war
— Arrington Capital (@arringtonXRPcap) January 25, 2022
When looking at the roadmap for Milkomeda, it appears they have already integrated with Cardano, with the “private beta” mainnet concluding in Q4 of 2021 and a limited beta meta mainnet concluding Q1 of 2022. Next up is integrating Algorand and then finishing with Solana. The protocol will allow Solidity programmers to write an EVM smart contract in minutes, which will allow for a seamless transition into these non-EVM environments.
As Milkomeda states: “Tap into the talent and resources of the largest community for smart contracts (Solidity) while building on chains like Cardano, Algorand, Solana, and Terra.” While the protocol will still allow for projects to be ported over from Ethereum, the idea is to allow developers from Ethereum to deploy smart contracts on these non-EVM chains and create interoperability between the three chains.
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Charles Hints at Major DeFi Growth
In terms of Cardano, Charles Hoskinson claims that this recent TVL growth is only a sliver of what is coming with Cardano. The ‘Vasil’ hard fork, coming in June, will allow for “pipelining,” which increases throughput and, thus, volume and liquidity.
What most also don’t understand is that many Cardano DApps are waiting for the Vasil hardfork in June to launch to benefit from pipelining. So it seems we ain’t seen nothing yet on TVL https://t.co/mMHxwRrF96
— Charles Hoskinson (@IOHK_Charles) March 12, 2022
As IOHK put it: “pipelining – or more precisely, diffusion pipelining – is an improvement to the consensus layer that facilitates faster block propagation. It enables even greater gains in headroom, which will enable further increases to Cardano’s performance and competitiveness.” Once Cardano implements their Hydra scaling solution, the network could theoretically handle over 1 million transactions per second. The implementation of Hydra will take another step forward in June.
The Basho phase of #Cardano development is all about scaling and network optimization. The Hydra family of protocols is a key element on this steady path to increased performance and growth.
ICYMI here’s an update from the team👇https://t.co/yvoDZZ2Lif
— Input Output (@InputOutputHK) March 9, 2022
There is no doubt that Cardano is making inroads to become the third-largest non-EVM chain, next to Terra and Solana. With tools like Milkomeda creating an alliance between these chains, expect to see the DeFi competition only heat up, and create true competition with Ethereum.
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