The Total TVL of DeFi

The total TVL of DeFi has collapsed below $90 billion, marking a -35% drop from the $140 billion in December.

The collapse of Ethereum’s price is heavily influencing this decline.

Summary

• Analysis of the TVL of DeFi
• The problem of Ethereum
• The collapse of Ethereum (ETH) price
• The end of the Trump trade

Analysis of the TVL of DeFi

The TVL (Total Value Locked) of DeFi represents the dollar equivalent of all assets locked in various DeFi protocols, across thousands of protocols on various chains.

Most of it is concentrated on Ethereum (51%), while other chains combined do not reach half of this total value. Solana follows in second place (7.5%), experiencing notable growth, and Bitcoin comes third (6%), thanks to the Lightning Network. BSC surpasses 5% as well, while Tron is at 4%, primarily due to USDT. Berachain shows a robust increase with 3.6%.

The all-time high for DeFi TVL was nearly $180 billion in 2021. Following the bear market of 2022/2023, it declined to $36 billion, with fears of a similar collapse in 2025. It reached a peak of $138 billion on December 17, 2024, but has now fallen below $88 billion.

The Problem of Ethereum

As Ethereum dominates the DeFi TVL, the ETH price collapse significantly impacts it. While other assets like USDT, USDC, and DAI are part of the Ethereum TVL, the ETH price’s decline is pivotal. The peak ETH price of $4,100 was reached on December 16, just before the TVL peak. However, the price dropped below $1,900 recently, reflecting a total loss of 53% from recent highs which corresponds with the 35% drop in TVL.

The Collapse of the Ethereum (ETH) Price

A short-term return of ETH below $2,000 seemed unlikely until recent events. After dropping to $3,000 on December 20 and subsequently below $2,500 and then $2,000, ETH has seen substantial decline. Recently it briefly fell below $1,800, and although it bounced back to $1,900, no significant rise seems likely for now. Consequently, DeFi has suffered, with ETH down 28% and SOL down 40% in the last 30 days.

The End of the Trump Trade

This situation is largely attributed to the end of the Trump trade, or the bursting of the bubble that inflated after Donald Trump’s electoral victory. While Bitcoin’s price remains above its starting point of $70,000, Ethereum’s situation has deteriorated significantly, dropping from above $2,000 in late October. Similar trends apply to Solana, which has dropped from over $150 pre-Trump trade to just over $120 now, indicating ongoing difficulties for altcoins, and potential for further losses.