DeFi TVL Plummets: $45B Loss Since 2024 Election
DeFi TVL Takes a $45 Billion Hit
The total value locked (TVL) in decentralized finance (DeFi) protocols has experienced a dramatic decline, shedding $45 billion and erasing all gains made since the November 2024 US presidential election. This significant downturn leaves the DeFi market reeling.
According to analyst Miles Deutscher, DeFi TVL peaked at $138 billion on December 17th, following the election. However, by March 10th, it had plummeted to $92.6 billion.
Solana and Ethereum Bear the Brunt
The impact has been widespread, but Solana and Ethereum have been particularly hard hit. Solana's decline is attributed to waning memecoin popularity, while Ethereum faces challenges despite Bitcoin's surge past $109,000 on January 20th (Trump's inauguration). Ethereum's TVL has dropped by $30.6 billion from its cycle high, according to DefiLlama data.
Despite positive developments like the launch of spot Bitcoin ETFs in the US and President Trump's executive order for a strategic Bitcoin reserve, Ether's all-time high of $4,787 (November 2021) remains unbroken.
Significant Ethereum Outflows
Adding to the concerns, nearly 800,000 ETH (approximately $1.8 billion) left exchanges in the week starting March 3rd. This represents the highest seven-day net outflow since December 2022, signaling potential shifts in investor sentiment. While exchange inflows typically indicate selling pressure, these outflows suggest that investors may be accumulating ETH at current prices, viewing them as a strategic buying opportunity.
Pectra Upgrade Challenges
Ethereum's Pectra upgrade, aimed at improving layer-2 efficiency and interoperability, experienced setbacks on March 5th during its Sepolia testnet launch. While issues were reported and subsequently addressed, this highlights the ongoing challenges in scaling and upgrading complex blockchain networks.
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