Ether (Eth) Put a new one all the time high at $ 4,946 earlier this week, but the fuel from financing on chain looks weaker than in previous cycles.
However, locked up the total value (Tvl) across the network’s decentralized funding (Defi) The ecosystem stopped at $ 91 billion, significantly below the $ 108 billion record in November 2021, according to Defillama Data.
In ETH expressions, the gorge is sharper: Almost 21 million ETH is locked on Tuesday compared to 29.2 million ETH in July 2021. Even earlier this year the figure peaked 26 million ETH. This means that fewer tokens are actively bound in defi than at any time when the protocol hit its pricing heights.
Charts show the interruption. DEX volumes and perps streams remain active, but they have not returned to previous tops, even with prices that break fresh items.
Layer 2s shelves the liquidity
Part of the shift is structural when LAG 2S draws influx. Coinbase-supported Base’s Defi Tvl stands high at $ 4.7 billion along with the growth of arbitration and optimism. Capital efficiency has also changed the equation with action protocols such as Lido Concentrate Liquidity without requiring the same bulk deposits that once inflated Raw Tvl.
“Despite ETH reaching Record New Highs, its Tvl remains under previous items due to a combination of more effective protocols and infrastructure as well as increased competition from other chains in the middle of a break in retail participation,” said Nick Ruck, director of LVRG Research, in a telegram resort.
“To regain these Tvl peaks, we need a resurgence in retail supply, wider adoption of Ethereum-native dividend options, and a slowdown in capital migration to competing chains or off-chain investments. Ethereum’s scaling solutions also have to balance efficiency with incentive on TV growth, “Ruck added.
Back in 2020 and 2021, Tvl was the market’s preferred growth metrics. “Defi Summer” made the yield of agriculture a speculative loop, with tokens flooding to producer, aave, connection and curve in search of double and triple-digit returns.
The rapid increase in Tvl became a concise for Ethereum’s dominance and finally a signal of prismomentum. But the dynamic looks weaker out of this cycle. Quantities on DEXS and Eternal remain stable, but they have not returned to levels that once defined Ethereum’s breakout.
Structural shifts hit defi
Part of the shift is structural. The increase of fluid poor protocols such as Lido has made capital more efficient and concentrated liquidity without demanding the bulk deposits that were once inflated Tvl.
The divergence also reflects how this cycle is driven. ETF flow, institutional assignments and macropositioning have been the dominant catalysts of ETH’s record price, with net assets on such products jumping from $ 8 billion in January to over $ 28 billion from this week.
Detail Defi activity, fuel from previous booms, has not yet followed. It seems Ethe looks less as the center of grassroots -crypto speculation and more like a macro asset.
For Eth Bulls, hope is that record prices will eventually reintroduce experimentation on chain and withdraw capital in defi.
Until then, the gap between token value and protocol uses as a reminder that this cycle is unfolding differently. If commitment on the chain does not return, ETH’s record prices may end up leaning on thinner foundations than bulls would like to admit.
