TLDR
- DeFi TVL fell $36 billion (21%) since its October peak.
- Institutional demand (ETFs and DATs) for ETH is also showing signs of slowing down.
- ETH-denominated TVL has steadily declined since April, even as the price was rising.
The decentralized finance (DeFi) segment has experienced an abrupt contraction since early October, erasing more than $36 billion in value. The ecosystem’s Total Value Locked (TVL), which had reached a multi-year high of $172 billion in October, has fallen by more than 21%, settling at $136.26 billion in November.
This sharp drop, combined with a notable decline in institutional interest, has raised serious concerns about the real demand for Ethereum (ETH) and its possible price trajectory this month.
The slowdown is widespread. Major DeFi protocols, including Aave, Lido, EigenLayer, and Ethena, have reported significant drops in their TVL over the past month, with declines ranging from 8% to 40%.
ETH Demand Driven by Factors Outside of DeFi?
Initially, Ethereum’s price correction, which led it to trade near $3,000 in early November, was pointed to as the main driver of the TVL drop. However, data suggests the weakness is deeper.
A key indicator is that the ETH-denominated TVL has been in constant decline since April. This trend held even during periods when the price of ETH was rising, suggesting that Ethereum’s 2025 rally was not driven by DeFi growth.
Analysts point to the demand coming from digital asset treasury funds (DATs) and, crucially, from exchange-traded funds (ETFs). Nonetheless, this institutional accumulation is also slowing down.
Combined DAT and ETF holdings have fallen from 12.95 million ETH in October to 12.75 million ETH in November. Furthermore, ETH ETF flows have been volatile; after six days of outflows, they saw a brief inflow on November 6 ($12.1M), only to reverse with heavy outflows of $46.6 million on November 7.
This weakening on both the retail (DeFi) and institutional (ETF) fronts could leave Ethereum vulnerable to further downward pressure, despite the DeFi TVL contraction. At the time of this writing, ETH is showing a modest recovery of 6.6%, trading at $3,609, but it faces key resistance at $3,700.
