Jack Paul 
DeFi’s gradual recovery continues
Total value locked in decentralized finance protocols has climbed back toward the $140 billion mark, recovering from lows around $115 billion earlier this year. The sector still hasn’t reached its local peak near $170 billion from earlier in 2024, but the direction is positive.
What’s interesting, I think, is how this recovery looks compared to the broader crypto market. Global crypto market cap sits in the multi-trillion dollar range, so DeFi still represents a relatively modest share of total value. Most capital remains concentrated in large assets like Bitcoin and Ethereum.
Derivatives platforms dominate trading activity
The real action seems to be happening in perpetual DEX markets. These platforms are clearing hundreds of billions of dollars in volume each quarter, with some estimates suggesting they might approach the one to two trillion dollar mark annually.
Hyperliquid and a handful of competitors appear to be capturing most of this flow. Their cumulative volumes now exceed many smaller centralized exchanges, which is quite a shift from just a couple years ago. Spot DEXs remain active too, with daily volumes often hitting the ten billion dollar range across various chains.
Stablecoins and protocol concentration
Stablecoins follow a similar pattern to overall TVL. Their global market cap fluctuates in the hundreds of billions, feeding lending markets, restaking strategies, and basis trades. But liquidity seems to be clustering around fewer protocols.
Aave stands out as the only DeFi protocol with over $10 billion in TVL after recent corrections, excluding liquid staking and restaking protocols. Uniswap, PancakeSwap, and newer derivatives platforms are capturing growing shares of capital and order flow. Many smaller protocols are losing relevance as this concentration accelerates.
Fragile sentiment amid structural shifts
Despite the recovery, sentiment remains fragile. Hacks, exploits, or negative regulatory headlines could still erase recent gains in leading tokens. The sector hasn’t fully regained investor confidence, which shows in DeFi index products that still sit below their 2021 peaks while Bitcoin and Ethereum trade closer to their own highs.
At the same time, there are structural shifts happening. Institutional adoption is expanding through on-chain credit, tokenized real-world assets, and ETF-linked flows. Regulatory reports in the United States and Europe now frame DeFi as part of non-bank financial intermediation rather than a fringe activity.
This shift doesn’t remove risk, but it perhaps anchors DeFi more firmly within the global market structure. Volatility inside DeFi indices has started to compress, which might indicate a late-stage shakeout phase. The sector still lags the broader crypto market, but activity in derivatives and spot markets remains strong enough to suggest this recovery has some substance behind it.