Ethereum’s Total Value Locked Drops in February

Ethereum’s total value locked dropped 27% to $97 billion in February, as the broader decentralized finance sector fell from $217 billion to $168 billion amid liquidity outflows.

Decentralized finance’s total value locked fell by nearly 23% in February due to market volatility, liquidity shifts, and capital outflows impacting key protocols, according to DappRadar analyst Sara Gherghelas.

In a recent research report, Gherghelas noted that Ethereum (ETH), which holds nearly 60% of DeFi’s liquidity, saw its TVL fall 27% to $97 billion in February. The decrease was mainly attributed to lower liquidity in liquid staking protocols. However, she emphasized that Ethereum’s dominance in this space “remains unchallenged.”

TVL of the Top Networks

Solana (SOL) faced the largest losses in February, with its TVL dropping more than 30% to $15.4 billion after a strong January. This decline was likely due to “profit-taking and liquidity migration toward more stable DeFi environments,” according to Gherghelas. Furthermore, activity slowed on key Solana-based platforms like crypto exchange Jupiter and Raydium.

While most major chains faced challenges, Berachain (BERA) emerged as a rare winner, reaching a TVL of $5.05 billion. Gherghelas attributes this rise to its proof-of-liquidity model, which has attracted users through lucrative liquid staking and yield farming incentives. As users seek high returns despite broader market declines, Berachain is positioning itself as a key player in the evolving DeFi landscape.

> “The chain’s rise is fueled by its proof-of-liquidity model…” – Sara Gherghelas

BNB Chain (BNB) experienced a smaller drop of 11%, aided by stablecoin trading. Meanwhile, TRON’s (TRX) TVL fell 29%, likely due to weakened demand for Tether’s (USDT) transactions. Aptos (APT) was one of the few exceptions, increasing its TVL by 6% to $1.83 billion.

Ethereum’s decline in TVL coincides with a sharp drop in futures open interest for key cryptocurrencies. As reported by crypto.news, traders have begun to cut long positions, leading to reduced open interest amid fears of a trade war and the Fed’s tough stance. Analysts at Matrixport suggest many traders are waiting for clearer signals before re-entering the market.

While the upcoming Pectra upgrade, aimed at improving network functionality and fee efficiency, may provide a short-term boost, it remains uncertain whether these upgrades will be sufficient to reverse the decline in DeFi activity.

Read more: Crypto.com joins CF Benchmarks, enhancing Bitcoin and Ethereum indices