The total value locked (TVL) in decentralized finance (DeFi) protocols has erased all gains made since the November 2024 U.S. presidential election, reflecting a broader shift in market sentiment.
Following Donald Trump’s victory, DeFi TVL surged to $138 billion by Dec. 17 but has since retracted to $92.6 billion as of March 10, according to analyst Miles Deutscher. The downturn highlights declining enthusiasm across the sector, with major networks such as Solana and Ethereum experiencing significant capital outflows.
Ethereum has faced persistent challenges despite Bitcoin’s strong performance. While Bitcoin surpassed $109,000 on Jan. 20, the day Trump assumed office, Ether (ETH) has yet to reach a new all-time high, remaining below its November 2021 peak of $4,787. Ethereum’s TVL has declined by $30.6 billion from cycle highs, per DeFiLlama data, further underscoring the network’s struggles.
Ethereum experienced its highest seven-day net exchange outflow since December 2022, with nearly 800,000 ETH—valued at approximately $1.8 billion—leaving exchanges in the week beginning March 3, according to IntoTheBlock data.
Despite a 10% decline in Ether’s price during the period, which dropped to a low of $2,007, these outflows suggest investor confidence in long-term holding or a shift toward decentralized finance applications, such as staking or yield farming. IntoTheBlock noted that the trend indicates many investors view current price levels as a strategic buying opportunity.
Before March 3, Ethereum had experienced net exchange inflows daily, signaling heightened selling pressure. According to Juan Pellicer, senior research analyst at IntoTheBlock, ETH’s decline to $2,100 may have prompted accumulation, leading investors to withdraw assets from exchanges.
Ethereum’s rollup-centric roadmap has aimed to reduce congestion and lower gas fees, though it has also introduced liquidity fragmentation. The upcoming Pectra upgrade is expected to address these inefficiencies by enhancing layer-2 network interoperability and reducing transaction costs through an increase in blob data capacity.
Additionally, the upgrade introduces account abstraction, allowing smart contract wallets to function more seamlessly across Ethereum and its layer-2 ecosystems. This change is designed to simplify bridging and fund management, improving the user experience.
However, Pectra’s rollout on the Sepolia testnet encountered issues on March 5. Ethereum developer Marius van der Wijden reported that Geth nodes experienced errors, leading to empty blocks being mined due to a deposit contract triggering an incorrect event type. A fix has since been implemented.