Foreign media report that while the total value locked in DeFi continues to decline, the supply of stablecoins has not contracted in tandem. This divergence suggests that liquidity in the crypto market has not significantly vanished; rather, the shift is primarily in the allocation of funds.
Over the past period, the total value locked in DeFi has declined from nearly $178 billion to approximately $7.25 billion, continuing the downward trend since the peak at the end of 2025. The decline was not limited to a single sector—lending, liquid staking, and cross-chain bridge protocols all showed weakening activity, indicating an overall reduction in protocol-level participation.
There are still many stablecoins, but less capital is flowing into protocols.
In contrast to the decline in TVL, the total supply of stablecoins remains close to $315 billion. The article suggests this indicates that funds are still available in the market, but investors have become more cautious about how they deploy them.
Funds have not fully exited the crypto market but are instead flowing less toward DeFi protocols that require bearing smart contract, liquidity, and liquidation risks. In other words, the issue is more a decline in risk appetite than an infrastructure failure.
- DeFi TVL: Approximately $72.5 billion
- Stablecoin supply: Nearly $315 billion
- TVL peak reference: close to $178 billion
Borrowing returns have declined, and security incidents have increased.
The article notes that stablecoin lending rates on major platforms are currently between 3.5% and 9%, reflecting reduced borrowing demand. With lower yields, the attractiveness of assuming the risks associated with on-chain protocols has also diminished for capital providers.
Meanwhile, nearly 70 protocols experienced attacks or vulnerabilities in the second quarter of 2026, resulting in total losses of approximately $746 million. Although most incidents were smaller in scale compared to past major hacks, their high frequency has heightened market concerns.
Amid combined pressures from yield compression and security concerns, more capital is shifting toward conservative allocations, prioritizing capital preservation over pursuing additional returns.
ETH and SOL staking remain stable
Despite weakened DeFi participation, underlying confidence in Ethereum and Solana holdings has not significantly wavered. The article notes that approximately one-third of Ethereum’s supply remains staked, while Solana’s staking participation rate holds steady at around 68%.
This indicates that some investors still recognize the value of the underlying blockchain, but are no longer actively allocating funds to more complex yield strategies such as lending and liquid staking. Capital is becoming more concentrated, remaining primarily at the level of holding and staking tokens.
Overall, this review suggests that the current decline in DeFi locked value is more a result of reduced risk appetite than a systemic collapse of on-chain infrastructure.