DeFi TVL has fallen by 55 billion USD in the past 2 months

Since the beginning of October, the decentralized finance (DeFi) sector has witnessed a total value locked (TVL) fall of 55 billion USD, from 178 billion USD to 123 billion USD. This figure may raise concerns for yield-seeking investors and traders at first glance. However, the reality is that this sharp decline is less concerning than it appears.

The 31% fall in TVL may suggest that the market is cooling down or that participants are gradually decreasing. However, in reality, this decline is even smaller compared to the overall market drop during the same period.

Ethereum (ETH), the leading asset in DeFi, has fallen 38%, while major governance tokens like AAVE and LDO have fallen 40% and 50%, respectively.

This shows that the fall in the TVL of DeFi is mainly due to the decrease in asset prices, rather than a massive outflow of funds. When the price of tokens falls, the value in USD of the locked assets also decreases, even if users do not withdraw funds – a detail that is often overlooked when analyzing TVL.

Looking at the DeFi chart over many years, the upward trend is still clear. Since the end of 2023, DeFi has maintained a series of higher highs and lower lows. The peaks at 107 billion USD, 142 billion USD, and 178 billion USD are accompanied by the troughs at 80 billion USD, 89 billion USD, and currently at 123 billion USD, which is still significantly higher than the lows of the previous cycle. This structure reflects a market that is cooling down, rather than collapsing.

Activity in the ecosystem also shows stability. According to data from DefiLlama, although the inflow into the digital asset (DAT) has slowed compared to the highs of October, the trading volume on decentralized exchanges (DEX) is still rising sharply in 2025. From November 1 to 26, DEXs processed 360 billion USD in transactions, surpassing the total volume for the entire month of June at 332 billion USD.

TVL DeFi | Source: DefilLamaLarge lending protocols remain strong. The TVL of Aave is currently at 32 billion USD, nearly double compared to the same period last year, despite the recent market correction.

The figure of 55 billion USD may lead people to imagine that DeFi is facing difficulties, but in fact, the growth of the sector during this cycle is very stable and has a reasonable pace – quite different from the 2021 cycle, when TVL rose from 13 billion USD to 210 billion USD and then fell below 60 billion USD in just a few months.

This slow growth indicates that DeFi is gradually maturing and has a good resilience to market shocks, unlike previous cycles.

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