• DeFi TVL fell from $138B to $92.6B, erasing all gains since Trump’s election.
• Ethereum’s TVL dropped by $30.6B, struggling despite Bitcoin’s record surge.
• Pectra upgrade aims to improve Ethereum’s efficiency but faces technical setbacks.

Total Value Locked (TVL) in decentralized finance (DeFi) experienced a major market decline, resulting in a $45 billion loss from its peak. The market trend now shows an opposite trajectory from the time after President Donald Trump won the U.S. election in November 2024.

The decline of DeFi TVL from $138 billion to $92.6 billion in March 2025 represents a dramatic market correction which Miles Deutscher and other analysts view as evidence of DeFi’s high volatility levels.

The reduction in DeFi TVL has become so pronounced that it erased all gains achieved after Donald Trump won the presidential election. DeFi TVL experienced substantial growth after the election, reaching its peak at $138 billion on December 17, 2024, but soon dropped dramatically. The rapid increase in TVL was brief as the value has decreased by $45 billion. Market fluctuations throughout the crypto market have negatively impacted investor confidence and this decline in DeFi TVL follows the wider market pattern.

Ethereum, which comprises a large portion of the DeFi ecosystem, has also faced challenges. According to DefiLlama data, its TVL has dropped $30.6 billion from its cycle highs. Ethereum’s struggle is compounded by Ether (ETH) ‘s inability to surpass its 2021 all-time high of $4,787 despite various positive industry developments. The U.S. has already launched Bitcoin spot exchange-traded funds (ETFs), and President Trump issued an executive order to create a Bitcoin reserve.

The continuous drop in DeFi TVL forces analysts to doubt the sustainability of decentralized financial assets. The spike in DeFi TVL metrics in December 2024 no longer justifies investors’ long-term confidence in decentralized financial platforms. The market dip uncertainly affects DeFi’s path toward future development.

Ethereum plays a pivotal role in the DeFi market, but its performance has been less than stellar in recent cycles. Despite positive industry news, the failure to reach new all-time highs indicates that Ethereum faces significant hurdles. The Ethereum network has made progress with updates like the rollup-centric roadmap, which aims to reduce gas fees and congestion. However, challenges like liquidity fragmentation remain a concern, which could hinder the long-term scalability of the network.

The Pectra upgrade set to arrive for Ethereum seeks to fix current network problems by enhancing both layer-2 performance and inter-network connections. The upcoming network enhancement will lower fees while uniting liquidity pools to help secure its growth potential. The March 2025 Pectra testnet launch faced technical difficulties that created uncertainty about the future implementation success of its critical improvements. The developer team behind Ethereum continues to tackle existing problems but the outcome of their upgrade will determine Ethereum’s success in reclaiming DeFi market dominance.

Despite recent technical difficulties Ethereum’s ongoing transition to advanced account abstraction features gives it the potential to strengthen its position in the DeFi market. These innovations seek to enhance cross-network fund management processes while possibly appealing to developers and end-users. However the platform must resolve existing challenges for Ethereum to achieve these potential benefits.