DeFi Market Contracts as TVL Slumps $45B
The decentralized finance (DeFi) market has lost incredible momentum, with the total value locked (TVL) in protocols plummeting by $45 billion. This decline erases all the gains since Donald Trump was elected U.S. president in November 2024.
Post-Election Rally Fizzles Out
Following the election, DeFi TVL exploded to $138 billion on Dec. 17 but dropped to $92.6 billion through March 10, according to estimates by analyst Miles Deutscher.
Ethereum and Solana are among the networks hit hardest. Solana’s flourishing memecoin ecosystem business closed shop, while Ethereum’s Ether (ETH) has struggled to break out past its all-time high even after Bitcoin rocketed past $109,000 on Jan. 20, Trump’s first day in office.
Ethereum’s TVL alone has dropped by $30.6 billion from cycle highs, according to DefiLlama.
Ethereum’s $1.8B Weekly Exchange Outflow
Despite the market struggling, Ethereum saw a net outflow of nearly 800,000 ETH—worth around $1.8 billion—out of exchanges in the week ending March 3, the biggest seven-day outflow since December 2022, according to IntoTheBlock.
Unexpectedly, this was during a 10% ETH price drop to $2,007, which could be an indication of long-term accumulation. In general, exchange inflows are indicative of selling pressure, and outflows are an indication of movement towards DeFi applications such as staking and yield farming.
“Despite ongoing negativity about Ether prices, this trend suggests that most holders perceive current levels as a strategic opportunity to buy,” IntoTheBlock said in a March 10 X post.
Pectra Upgrade Faces Challenges
Ethereum’s future Pectra update will see layer-2 efficiency enhanced, transaction fees lowered, and liquidity consolidated.
But the deployment was marred by technical problems on March 5 when it was rolled out on the Sepolia testnet. Developer Marius van der Wijden flagged bugs in Geth nodes, leading to empty blocks as a result of a misfired deposit contract. A patch has since been introduced.
Despite these setbacks, Ethereum’s roadmap remains focused on reducing congestion and gas fees while improving cross-chain interoperability.
Conclusion
DeFi’s recent decline highlights ongoing volatility, with Ethereum and Solana facing significant challenges. While ETH outflows suggest accumulation, market sentiment remains uncertain, hinging on upcoming upgrades and macroeconomic trends.
