DeFi protocols have soared to $136.9 billion in total value locked (TVL) as of July 22, 2025, hitting a peak of $138 billion earlier this month—a 57% jump from April’s $87 billion. This rapid growth marks a new DeFi Summer for 2025, with Ethereum leading the charge and investors moving funds from Bitcoin to Ethereum, a trend called “ETH rotation.”
What is DeFi Summer? It’s a period when DeFi—apps for lending, trading, and earning on blockchain—sees massive growth in usage and funds, much like 2020 when TVL grew from $1 billion to $10 billion. This article explores what’s driving this 2025 surge, explains ETH rotation, and shares Phemex trading strategies to help beginners and pros alike grow profits.
Why DeFi Summer is Heating Up in July 2025
DeFi hasn’t been this hot since May 2022, pulling in both new and experienced investors. Here’s why:
Ethereum’s Leadership
Ethereum powers most DeFi with over $80 billion in TVL. Its app Aave hit $51 billion, a record for any DeFi platform. Upgrades to Ethereum’s speed and $3.4 billion in ETF investments in July 2025 fuel this growth. Solana ($10 billion TVL) and Tron also play big roles.
Big Players and New Rules Driving Growth
New U.S. laws like the GENIUS Act and CLARITY Act make DeFi more trusted, boosting stablecoin use and yield products. Big firms like BlackRock (with $9.17 billion in its ETHA ETF) and companies like SharpLink Gaming and Bitmine are buying Ethereum. Bitcoin-based DeFi grew 1,971% from $307 million to $6.36 billion since December 2024, as investors chase higher returns.
Altcoin and Layer-2 Momentum
Solana’s DeFi TVL reached $10 billion, its highest in six months, thanks to upgrades like Jito BAM for faster transactions. The overall DeFi market cap jumped 41% to $123.6 billion, led by Ethereum, Solana, and Tron.
This isn’t just hype—real demand drives it. With Bitcoin at record highs near $123,000, investors are shifting to DeFi for better yields, with some platforms offering 20-30% annual returns.
Understanding the ETH Rotation in July 2025
ETH rotation is when money moves from Bitcoin to Ethereum and its apps, often sparked by big news like ETF approvals. In July 2025:
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Ethereum’s price hit $3,040, a five-month high, with traders betting big on further rises.
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ETH ETFs see $296 million in daily investments, boosting DeFi’s TVL.
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Bitcoin’s 25% year-to-date gain to $115,000+ frees up cash for investors to grow profits in Ethereum.
Does ETH rotation suggest an altcoin season? Yes, market analysts indicate that ETH outperforming BTC often signals the second phase of altcoin season, where capital flows to smaller alts like SOL, XRP, and ADA. With Bitcoin’s dominance at around 61%—down from recent highs like 65.8% earlier in July—we’re seeing early signs of this in mid-2025, possibly lasting into 2026.
Phemex sees higher trading in ETH contracts and pairs, with tools like 100x leverage and low fees to help you act fast.
Advanced Yield Strategies on Phemex
To boost profits in this DeFi Summer, try these general trading strategies used in crypto markets. Always test in Phemex’s demo mode and manage risks.
Stablecoin Yield Farming with Leverage
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Deposit USDT into Phemex (offering up to 10% APY on stablecoins) and use it as collateral for leveraged ETH trades.
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Strategy: Buy ETH/USDT futures when Ethereum rises to capture gains, pairing with external DeFi yields from platforms like Aave ($51B TVL).
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Risk Management: Set stop-losses 5% below your entry; aim for twice the profit versus risk. Trade ETH/USDT on Phemex for fast execution.
ETH Rotation Arbitrage
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Watch for Bitcoin’s dominance dropping (now around 61%) and shift to ETH or coins like SOL ($10B TVL)
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On Phemex: Use grid bots to auto-trade spot ETH/USDT and SOL/USDT pairs, catching 5-10% daily price swings. Use Phemex for token swaps to support arbitrage strategies.
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Example: Buy ETH spot at $3,500 support, if it climbs (e.g., to $3,700), sell for profit. To protect against a drop, buy a Phemex put option to sell ETH at $3,500 if it falls. Test in demo mode first.
DeFi-Backed Perpetual Trading
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Use Phemex’s low-fee spot trading for DeFi tokens (e.g., AAVE, UNI) and switch to perpetual contracts for bigger gains.
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Advanced Tip: Test delta-neutral trading in Phemex’s demo mode—borrow externally on Aave, stake for yields, and short perps on Phemex to limit risk.
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Target: Aim for 20-30% yearly returns during ETH surges, based on DeFiLlama trends.
Phemex offers lightning-fast trades, up to 100x leverage, and token swap support. Always spread investments and use tools like take-profit orders.
Conclusion: Position Yourself for DeFi Summer’s Next Leg Up
With DeFi TVL at $136.9 billion, peaking at $138 billion earlier, and ETH rotation in full swing, 2025 is a prime year for yield seekers in this DeFi Summer. Phemex’s tools can help you turn market trends into gains. Start exploring Phemex or set up a futures trade today – DeFi Summer won’t wait.
Disclaimer: Trading involves risks. Past performance is not indicative of future results. Conduct your own research.
For more insights, check out our guides on Phemex Blog.
