Ethereum's ecosystem faces challenges but remains dominant in DeFi due to its robust infrastructure, extensive developer community, and first-mover advantage. With over 70% of DeFi's total value locked, Ethereum's smart contracts and dApps set the standard. Innovations like Layer 2 scaling (e.g., Optimism, Arbitrum) address high gas fees and scalability, enhancing user experience. However, competitors like Solana and Binance Smart Chain offer faster transactions and lower costs, attracting some projects. Ethereum's transition to Proof-of-Stake via the Merge improves energy efficiency, but it must continue upgrading (e.g., sharding) to maintain its edge. The ecosystem's network effects, liquidity, and developer tools create a high barrier for rivals. While challenges persist, Ethereum's adaptability and entrenched position make it likely to sustain DeFi leadership in the near term.