Data from DefiLlama shows that DeFi TVL currently stands at $95.55 billion. This value has fallen more than 30% from its peak on December 17. The TVL hit a recent low of $88 billion last month before recovering slightly.
Market Trends
DeFi experienced a surge in locked value following the pro-crypto election on November 5. The current TVL is similar to levels seen around that election period previously.
Market uncertainty and economic pressures have led to a steady decline in decentralized finance. Kronos Research CIO Vincent Liu noted that uncertainty has impacted active addresses on Ethereum and Bitcoin.
Investors are losing confidence due to price corrections and rising competition from other blockchains. Decentralized Finance once led the dapp ecosystem with a 532% increase in activity.
By the end of 2024, DeFi held seven million daily unique active wallets globally. It accounted for a 32% market share during the fourth quarter of the year.
Economic Pressures and Tariffs
The Trump-led crypto bull run faded during the first quarter of this year. New reciprocal tariffs and inflation fears have overshadowed earlier pro-crypto policies by the administration.
The Federal Reserve’s pause in rate cuts further worsened investor sentiment across digital markets. Bitcoin is trading at $82,441.72, while its 24-hour trading volume dropped by 26.80%.
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Security Concerns and Hacks
Recent increases in hacks on DeFi platforms have also contributed to the decline in locked value. Frequent security breaches undermine trust and drive investors away from decentralized finance solutions.
These hacks expose vulnerabilities and prompt users to withdraw funds from risky platforms quickly. Rising hack incidents have increased concerns over platform security among investors.
Many users now view security flaws as a major risk factor when choosing DeFi projects. This cautious approach has led to further drops in overall TVL across the market.
Linear Finance Shutdown
DeFi protocol Linear Finance has officially announced that it will cease operations soon. The project faced long-term financial difficulties that hampered its progress in the market.
Despite years of innovation and development, Linear Finance did not sustain profitable returns. It achieved brief profitability during 2019 and 2020 before facing ongoing struggles.
The shutdown of Linear Finance highlights the challenges that many DeFi projects face in the current environment.
The overall decline in DeFi TVL reflects wider market uncertainty and economic pressures today. Rising hacks and security breaches further diminish trust in decentralized finance ecosystems globally.
Also Read: US Senate Repeals Crypto Tax Rule For DeFi Transaction Reporting Requirements, Bill Moves to Trump