Ether (Et) Set a new all-time high at $ 4,946 earlier this week, but fuel from on-chain finance looks weaker than the previous cycles.
However, the total amount that is locked (TVL) throughout the decentralized finances of the network (Defi) The ecosystem was stuck to $ 91 billion, significantly below the $ 108 billion note set in November 2021, according to Defillama data.
In the terms of the ETH, the gap was sharp: under just 21 million ETH locked on Tuesday, compared to 29.2 million ETHs in July 2021. Even earlier this year, the figure led 26 million ETH. This means that fewer tokens are actively tied to the DeFI than any point because the protocol hit its high prices.
The charts show the connectivity. DEX and Perps volumes remain active, but they have never returned to previous peaks even with prices that destroy fresh notes.
Layer 2s scoop up of liquidity
Part of the shift is structural while layers 2 draw flows. Defi TVL supported by Coinbase stands tall at $ 4.7 billion, along with arbitrum and optimism. Capital efficiency has also changed the equation, with staking protocols such as Lido focusing on liquidity without the need for the same bulk deposits that are sometimes enlarged by raw TVL.
“Despite the ETH reaches new highs, its TVL remains below the previous notes due to a combination of better protocols and infrastructure, as well as increasing competition from other chains amid a serious retail participation,” said Nick Ruck, director of LVRG Research, in a telegram message.
“To recover TVL peaks, we will need a resurgence in contact with the Defi retail, a broader adoption of Ethereum-King-Long-native harvested opportunities, and a slowing of capital transfer to competing chains or off-chain investments.
Back in 2020 and 2021, TVL is the favorite measure of market growth. “Defi Summer” has been harvested farming in an imaginary loop, with tokens flooding manufacturers, AAVE, compounds, and curves in search of double- and triple-digit return.
Quickly climbing TVL has become a Shorthand for Ethereum’s dominance and ultimately a price momentum signal. But that dynamic -new look is weaker this cycle. Volumes in Dex and Perpetuals remain stable, but they do not return to levels that once specified Ethereum’s breakout.
Shift structures hit Defi
Part of the shift is structural. Increasing liquid staking protocols like Lido has become better, focusing on liquidity without asking for bulk deposits that TVL once had.
The difference -also reflects how this cycle is driven. ETF flows, institutional allocation, and Macro positioning are the dominant catalists for the ETH record price, with net assets in such products that jump from $ 8 billion in January to $ 28 billion this week.
Defi’s retail activity, the fuel of the previous booms, has not yet complied. That leaves ETH less like the center of speculation of indigenous crypto and more like a macro asset.
For the Eth Bulls, the hope is that record prices eventually reigned on the on-chain experiment and pull the defi capital.
Until then, the gap between the token value and the use of the protocol serves as a reminder that this cycle has a different presentation. If the on-chain contact does not return, ETH record prices may end with leaning against thinner foundations than the bulls want to admit.
