Ethereum DeFi’s TVL Declines 76%, But Its Dominance Grows 2%

• The bear market has hit Ethereum decentralized finance (DeFi) hard, resulting in a 76% decline in the total value locked in the sector.
• The “total value locked” metric measures the total amount of capital that has been deposited by users in DeFi protocols.
• Despite the decline in the total value locked, Ethereum DeFi’s dominance has actually risen by 2% this year.

The past year has seen a significant decline in the cryptocurrency market, with Ethereum decentralized finance (DeFi) being one of the hardest hit sectors. According to Arcane Research’s 2022 – Year in Review, the total value locked in Ethereum DeFi has decreased by 76%, now standing at around $23.1 billion.

The “total value locked” (TVL) is a metric that measures the total amount of capital that has currently been deposited by users in DeFi protocols. The below chart shows how the TVL of DeFi built on the Ethereum blockchain has changed over the course of the year 2022:

Looks like the value of the metric has seen a significant drawdown | Source: Arcane Research’s 2022 – Year in Review

At the start of the year, the TVL of Ethereum DeFi was more than $95 billion, but as the bear market has grown deeper, capital has been steadily exiting the sector. This has resulted in a dramatic decline in the total value locked, with the metric now standing at just $23 billion.

However, despite the decline in the total value locked, Ethereum DeFi’s dominance has actually observed a rise of more than 2% this year. This means that while the total value locked has decreased, the percentage share of the total DeFi TVL across all blockchains has actually increased.

The decline in TVL is a reflection of the bear market that has been seen across the entire crypto space over the course of the year. Despite the decline, Ethereum remains the leading platform for decentralized finance and its dominance shows no signs of slowing any time soon.