Ethereum DeFi Total Value Locked Falls to $91 Billion Despite Price Surge
Ether (ETH) reached a new all-time high of $4,946, but its on-chain finance momentum appears weaker compared to previous cycles.
- Total value locked (TVL) in the DeFi ecosystem is at $91 billion, down from the record $108 billion in November 2021.
- Approximately 21 million ETH are currently locked, a decline from 29.2 million ETH in July 2021 and 26 million ETH earlier this year.
- DEX volumes and perpetual flows remain active but have not returned to previous peaks despite rising prices.
Layer 2s Attract Liquidity
- Layer 2 solutions like Base, Arbitrum, and Optimism are attracting capital, with Base's TVL at $4.7 billion.
- More efficient staking protocols are concentrating liquidity without requiring large deposits that previously inflated TVL.
- Experts indicate higher efficiency and competition from other chains contribute to decreased TVL.
Shifts in DeFi Landscape
- ETF inflows and institutional investments have driven ETH's price, with net assets in such products increasing from $8 billion in January to over $28 billion now.
- Retail DeFi activity, which previously fueled growth, has not rebounded, positioning ETH more as a macro asset.
- If retail engagement does not return, ETH's high prices may lack solid foundations.
The current dynamics suggest a different unfolding of this market cycle, highlighting a need for renewed on-chain participation to support ETH’s valuation.