DeFi TVL climbs back toward $140b as Hyperliquid and rivals dominate

DeFi TVL has rebounded to around $140 billion after a sharp drop from near $170 billion, representing a small but growing slice of the multi-trillion dollar crypto market. Perpetual decentralized exchanges (DEXs) and spot DEXs are clearing hundreds of billions in volume, with some perpetual DEXs outpacing many smaller centralized exchanges. Stablecoin and TVL growth is concentrating in blue-chip protocols like AAVE and Uniswap, although overall market sentiment remains fragile due to ongoing hacks and regulatory uncertainty.

DeFi Sector Growth and Market Position

DeFi TVL is currently situated in a band around $140 billion, having recovered from levels near $115 billion following a significant drop from a local peak close to $170 billion earlier in the year. Compared to the global crypto market capitalization, which stands in the multi-trillion dollar range, DeFi still represents a modest share of the total crypto value. This gap highlights that a substantial portion of value in the crypto market remains concentrated in large-cap assets such as Bitcoin (BTC) and Ethereum (ETH).

Activity on Decentralized Exchanges

Trading venue activity within the DeFi sector is intense. Perpetual DEX markets are now clearing hundreds of billions of dollars in a single quarter, with recent estimates pushing toward the one to two trillion dollar mark. Hyperliquid (HYPE) and a small group of rival platforms are dominating this flow, posting cumulative volumes that exceed those of many smaller centralized exchanges. Spot DEXs also continue to exhibit strong activity, with daily volumes frequently reaching the ten billion dollar region across various blockchain networks.

DeFi TVL and Stablecoin Dynamics

Stablecoins are mirroring the DeFi TVL curve. Their global market cap fluctuates in the hundreds of billions of dollars and serves as a primary source of liquidity for lending markets, restaking strategies, and basis trades. Capital liquidity is clustering around a select few protocols. AAVE (AAVE), Uniswap (UNI), PancakeSwap (CAKE), and newer derivatives platforms are capturing an increasing share of capital and order flow, leading to many smaller protocols losing relevance as this concentration accelerates.

DeFi index products from various data providers are showing wide ranges and frequent mean reversion. These indices remain below their 2021 peaks, while BTC and ETH are trading closer to their respective all-time highs. Volatility within these indices has begun to compress. This pattern suggests a late-stage shakeout phase in a sector that has not yet fully regained investor confidence.

Market Sentiment and Regulatory Landscape

Market sentiment remains fragile, with hacks, exploits, or negative regulatory news capable of erasing recent gains in leading tokens. Concurrently, institutional adoption is expanding through on-chain credit, tokenized real-world assets, and ETF-linked flows. Regulatory reports from both the United States and Europe are increasingly framing DeFi as a component of non-bank financial intermediation, rather than a fringe activity. While this shift does not eliminate risk, it is anchoring DeFi more firmly within the global market structure.