The total amount of capital that is locked on decentralized finance (Defi) protocols hit $ 170 billion on Thursday, a milestone figure, because now all losses of the collapse of the Terra/Luna Ecosystem were deleted in 2022.
While Ethereum still orders the lion’s share of capital at 59%, newcomers, including layer 2 network base supported by Coinbase, the layer 1 blockchain from hyperliquid and sui started with the dominance of Ethereum, collective more than $ 10 billion locked of the total value (TVL).
Defi TVL by Chain (Defillama)
Trends of investors have shifted in this recent cycle; Institutional acceptance of Ether has led to the outflow of traditional products for deploying liquid such as Lido in institutional deployment products such as Figment, while there is also growth in 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 in TVL with BNB chain behind that with $ 8.2 billion.
A ripening sector
The previous bull market between January 2021 and April 2022 was rapid growth in the Defi Ecosystem, with TVL Sprong from $ 16 billion to $ 202 billion. This cycle has been measured more with a slow but steady profit of $ 42 billion in October 2022 to $ 170 billion in September 2025.
The turnout suggests that crypto investors may learn from their mistakes from 2022 and have created a more mature ecosytem to borrow, borrow and generate proceeds.
Defi TVL since 2017 (Defillama)
The Terra Implosion saw $ 100 billion in TVL almost at night when investors, including bankrupt Crypto Hedgefonds Three Arrows Capital, followed a Gung HO approach on an algorithmic stablecoin that eventually failed -which led to infection and bad debts over the entire industry.
Terra was the crypto form of a traditional ‘dividend trap’, a product that offered yields that were too good to be true, but in the end turned out to be untenable.
Now the yields have been withdrawn with the AAVE loan protocol with a yield of 5.2% on stablecoins while the repeated protocol -ether.fi offers 11.1%, much less than the 20% offered Terra on its Stablecoin.
What for Defi now?
Because the Defi sector is now back where it was before the Terra debacle, albeit with more sustainable yields, critics will ask how the market can continue to grow to do the record of 2021 high in Terms.
The answer is nuanced. Although it is true that institutional adoption and inflow for assets such as Ether and Solana will continue to control a bullish story, the industry still fights with unbridled hacks, scams and carpet connected to memecoins.
Crypto investors lost $ 2.5 billion in hacks and scams in the first half of 2025 and to make the industry really a viable alternative to traditional finances, investors must be protected.
In contrast to traditional finances where deposits are often insured and protected, the essence of cryptocurrencies means that you are alone; If you lose, Phished or Hacked your keys, there is no helpline for calling.
The next iteration of Defi, whether in this cycle or the following, will have to concentrate on security and hack prevention – because the industry is still an important implosion away from another crypto -winter.
