The full worth locked (TVL) in DeFi protocols noticed important volatility up to now week, dropping from $140.95 billion on Dec. 17 to $117.76 billion on Dec. 20 earlier than partially recovering to $122.06 billion by Dec.26.
In the meantime, the stablecoin market cap remained remarkably steady, hovering round $240 billion with minimal fluctuation since Dec. 17.
The divergence between TVL and stablecoin market cap is important as a result of it demonstrates that the TVL decline was primarily pushed by the depreciation in crypto asset costs fairly than a elementary shift in consumer conduct or capital flight from DeFi protocols. Had customers been actively withdrawing capital from DeFi, we might possible have seen corresponding actions within the stablecoin market cap.
The steadiness within the stablecoin market cap means that customers maintained their positions fairly than changing to fiat, which reveals merchants are nonetheless locked into the broader DeFi market regardless of value volatility. This additionally signifies that merchants see value drops as momentary market actions fairly than systemic dangers. The slight restoration in TVL from Dec. 20 to 26 (+3.6%), whereas crypto costs remained suppressed, additional helps this interpretation, suggesting some opportunistic capital deployment at decrease valuations.