The total amount of capital that is locked in decentralized finance (Defi) Protocols Press $ 170 billion on Thursdaya landmark figure now all losses from 2022 The collapse of the terra/luna ecosystem and subsequent bear market was removed.
While Ethereum is still ordering a lion’s part of 59%, newcomers including Coinbase supported by Layer 2 Network Base, the Hyperliquid layer 1 blockchain and SUI (TVL)representing around 6%.
The trends of the investor have moved to this recent spin; Ether’s institutional adoption leads to flows from traditional liquid staking products such as Lido to institutional staking Products such as figmentWhile there is also the growth of the Solana and BNB chain due to a seismic increase in memecoin activity.
Solana is now the second largest blockchain in terms of DeFI with $ 14.4 billion on TVL with a BNB chain on the back with $ 8.2 billion.
A sector
The previous Bull Market between January 2021 and April 2022 saw the rapid growth throughout the Defi Ecosystem, with TVL jumping from $ 16 billion to $ 202 billion. This cycle was more measured with a slow but steady gain from $ 42 billion in October 2022 to $ 170 billion in September 2025.
The increase suggests crypto investors can learn from their 2022 mistakes and create a more mature ecosytem to lend, borrow and produce yield.
The Terra Implosion has seen a $ 100 billion worth of TVL eliminated overnight while investors, along with the crypto hedge fund losses of three arrow capital, has taken a gung ho approach to an algorithmic stablecoin that eventually failed – leading to contagion and bad debt spread throughout the industry.
Terra is the crypto-form of a classic “Dividend trap,” A product that offers yields that are great to be true but ultimately unnoticed.
Now the produce has withdrawn the lending protocol AAVE offers a 5.2% bear fruit in stablecoins while resting protocol Ether.fi offers 11.1%less than 20% Terra offers its stablecoin.
What’s next for Defi?
With the DeFI sector that is now returned where it was before the Terra debread, even with a more sustainable produce, critics would ask how the market would continue to grow to increase the 2021 record in TVL terms.
The answer to that is nuanced. While it is true that the adoption of institutional and flowing properties such as Ether and Solana will continue to drive a bullish narrative, the industry is still fighting wide hacks, scams and rug pulls connected to Memecoins.
Crypto investors Lost $ 2.5 billion To hack and scam in the first half of 2025 and in order for the industry to actually become a viable alternative to traditional finances, investors need to be protected.
Unlike traditional finances where deposits are often insured and protected, the very essence of cryptocurrencies means that you are in your own; If you lose your keys, get phished or hacked, have No helpline to call.
The next repetition of the defi, whether in this cycle or next, needs to focus on security and hack prevention -as the industry is still a major implosion far from another crypto winter.
