DeFi TVL drops by $45B, erasing gains since Trump election

The total value of cryptocurrencies locked (TVL) in decentralized finance (DeFi) protocols has lost all its gains since Donald Trump was elected US president in November 2024.

Following the US election, DeFi TVL rose to as high as $138 billion on Dec. 17, but had retracted to $92.6 billion by March 10, as noted by analyst Miles Deutscher.

Solana has borne the brunt of criticism as its memecoin popularity fades, but Ethereum has faced its own challenges in recent cycles, with Ether (ETH) failing to reach a new all-time high despite Bitcoin (BTC) soaring past $109,000 on Jan. 20, the day Trump took office. Ethereum’s TVL has also dropped by $30.6 billion from cycle highs, DefiLlama data shows.

Ether’s record high price of $4,787 from November 2021 remains unbroken despite positive industry developments, such as spot exchange-traded funds (ETFs) launching in the US and Trump’s executive order for a strategic Bitcoin reserve.

Related: Bitcoin risks weekly close below $82K on US BTC reserve disappointment

Ethereum’s $1.8 billion weekly net exchange outflow

Nearly 800,000 ETH, worth approximately $1.8 billion, left exchanges in the week starting March 3, resulting in the highest seven-day net outflow recorded since December 2022, according to IntoTheBlock data.

The outflows are unusual given Ether’s 10% price decline during the period, hitting a low of $2,007, per CoinGecko. Typically, exchange inflows signal selling pressure, while outflows suggest long-term holding or movement into decentralized finance (DeFi) applications, such as staking or yield farming.

“Despite ongoing pessimism around Ether prices, this trend suggests many holders see current levels as a strategic buying opportunity,” IntoTheBlock stated in a March 10 X post.

Before March 3, Ethereum experienced net exchange inflows daily, indicating that investors were selling during the downturn, said Juan Pellicer, senior research analyst at IntoTheBlock, in comments to Cointelegraph. He noted that ETH’s drop to $2,100 may have triggered accumulation, which then led investors to withdraw funds from exchanges.

Pectra upgrade meets own road bumps

Ethereum’s rollup-centric roadmap has reduced congestion and gas fees but introduced liquidity fragmentation.

The upcoming Pectra upgrade aims to address this by enhancing layer-2 efficiency and interoperability. By doubling the number of blobs, it reduces transaction costs and helps consolidate liquidity. Additionally, account abstraction allows smart contract wallets to function more seamlessly across Ethereum and layer-2 networks, simplifying bridging and fund management.

The Pectra upgrade rollout encountered setbacks on March 5 when it launched on the Sepolia testnet. Ethereum developer Marius van der Wijden reported errors on Geth nodes and empty blocks being mined due to a deposit contract triggering an incorrect event type. A fix has been deployed.

Magazine: Pectra hard fork explained — Will it get Ethereum back on track?