DeFi TVL Recovers to $170B, Surpassing Pre-Terra Levels
DeFi TVL Rebounds to $170 Billion
The total value locked (TVL) in decentralized finance (DeFi) protocols has surged back to $170 billion, according to DefiLlama data. This milestone marks a complete recovery from the losses incurred during the 2022 Terra/LUNA collapse and the subsequent bear market.
Ethereum's Dominance Faces Challenges
While Ethereum still holds a significant 59% of the DeFi market share, emerging layer-2 networks and layer-1 blockchains are gaining traction:
- Coinbase-backed Base
- HyperLiquid's layer-1 blockchain
- Sui
Collectively, these platforms account for over $10 billion in TVL, representing approximately 6% of the total market.
Investor behavior has also evolved, with increased institutional adoption of Ether, leading to shifts from traditional liquid staking products to institutional staking platforms. Growth in Solana and BNB Chain is fueled by memecoin trading activity.
Currently, Solana holds the second-largest position in DeFi with $14.4 billion in TVL, followed by BNB Chain at $8.2 billion.
A Maturing DeFi Sector
The previous bull run (2021-2022) saw explosive growth, with TVL jumping from $16 billion to $202 billion. This cycle demonstrates more controlled growth, rising steadily from $42 billion in October 2022 to $170 billion in September 2025.
This measured increase suggests that crypto investors have learned from the past, building a more stable ecosystem for lending, borrowing, and yield generation.
The Terra collapse wiped out $100 billion in TVL almost overnight, stemming from an algorithmic stablecoin failure that triggered widespread contagion.
Currently, lending protocol Aave offers a 5.2% yield on stablecoins, while restaking protocol Ether.fi offers 11.1% – substantially lower than the unsustainable 20% offered by Terra.
Future Challenges and Growth
Despite the recovery, the DeFi sector faces challenges in surpassing previous TVL records. While institutional adoption of assets like ETH and SOL drives growth, the industry continues to grapple with hacks, scams, and memecoin-related risks. Crypto investors lost $2.5 billion to these threats in the first half of 2025 alone. The need for investor protection remains critical for DeFi to become a viable alternative to traditional finance.
Unlike traditional finance, cryptocurrency deposits lack insurance. The next phase of DeFi growth requires a strong emphasis on security and hack prevention. A robust security approach is vital to avoid future collapses.