The decentralized finance ecosystem has shed roughly half its total value locked since peaking in October 2025. A 49% decline in TVL represents one of the sharpest contractions the sector has experienced, rivaling the post-FTX collapse that rattled crypto markets in late 2022.

The numbers behind the drawdown

DeFi TVL peaked somewhere between $171.9B and $237B in late 2025, depending on the methodology used. By May 2026, that figure had reportedly dropped to approximately $38B, a level that actually sits below the roughly $43B trough the market hit after the FTX implosion.

Ethereum’s price fell from nearly $4,800 to around $1,600 over the same period. When the underlying asset powering most DeFi protocols loses two-thirds of its value, TVL shrinks even if nobody actually withdraws a single token.

Ethereum’s shrinking dominance