DeFi in Retreat: Billions Wiped Out in Just 3 Months

Since the beginning of the year, decentralized finance (DeFi) activity has diminished significantly across multiple indicators. Although the outlook appeared encouraging early on, shifting macroeconomic pressures and market retracements have been central to the downturn.

DeFi Protocols Stumble in 2025

Recent weeks have been particularly turbulent for crypto markets, following President Donald Trump’s imposition of tariffs that disrupted the positive economic forecast for 2025. The result has been a sharp decline in digital asset valuations, with bitcoin ( BTC) falling to $74,588 on Tuesday. The DeFi sector has not been immune to this shift, and the total value locked (TVL) in DeFi has contracted noticeably since January.

Defillama.com

Data from defillama.com show that DeFi’s TVL began the year at $119.638 billion and now rests at $85.441 billion. That marks a 28.59% decrease from Jan. 1 to April 9, 2025. Aave currently holds the top position with $16.287 billion, while Lido’s liquid staking platform follows with $13.622 billion. However, the decline has not been limited to TVL alone.

Defillama.com statistics aggregated by theblock.co also indicate that decentralized exchange (DEX) volumes have steadily dwindled each month since the year began. Beyond the primary causes, broader shifts in narrative have indirectly shaped DeFi participation. Themes such as DeFAI (DeFi + AI), AI agents, and DeSci (Decentralized Science)—which gained traction in late 2024—have notably lost influence in 2025, adding to a retreat in crypto-related funding.

Decentralized exchange volumes have depleted significantly since January.

The only DeFi niche showing signs of vitality is that involving real-world assets (RWAs), such as tokenized treasury bonds. Meanwhile, the non-fungible token (NFT) sector has seen a 50% contraction in sales, with figures declining consistently month over month since January. Amid the uncertainty stirred by Trump’s tariffs, which have shaken both DeFi and traditional finance (TradFi), investors appear to be scaling back their exposure to risk. The steep fall in DeFi activity reflects a climate of caution—how long that hesitation persists remains to be seen.

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