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DeFi’s quiet strength: Value locked on platforms holds as market selloff tests traders

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DeFi’s quiet strength: Value locked on platforms holds as market selloff tests traders

Even as major cryptocurrencies plunge to multi-year lows and forced liquidations ripple across the market, DeFi’s total value locked has only slipped modestly.

By Oliver Knight|Edited by Shaurya Malwa
Feb 3, 2026, 11:31 a.m.
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Farming (James Baltz/Unsplash)

What to know:

  • DeFi TVL fell just 12% from $120 billion to $105 billion, outperforming the broader crypto market decline driven largely by falling asset prices rather than user outflows.
  • Ether deployed in DeFi has continued to rise, with 1.6 million ETH added in the past week alone, signaling ongoing confidence from yield farmers.
  • Onchain liquidation risk remains muted, with only $53 million in positions near danger levels — a sign of stronger collateralization and a more mature DeFi sector compared with past cycles.

Despite broad market weakness and waves of forced liquidations across crypto, DeFi’s total value locked (TVL) has proven surprisingly resilient — a signal that traders are still attempting to generate yields despite bearish sentiment flooding the crypto market.

Over the past week crypto majors BTC, ETH, XRP and SOL fell to multi-year lows, with ETH now losing 21% of its value over the past seven days alone.

STORY CONTINUES BELOW
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But that drop off didn't translate into outflows from DeFi protocols. Total value locked fell from $120 billion to $105 billion, a 12% downturn as it outperformed the market.

The 12% drop off can be attributed to dwindling asset prices as opposed to yield farmers rushing for the exits. The amount of ether deployed across the DeFi market has increased from 22.6 million ETH at the start of the year to 25.3 million, with 1.6 million ETH being added in the last week alone, according to DefiLlama.

Chart showing staked ether (DefiLlama)

Onchain liquidations muted

In February last year the crypto market experienced a similar drop following Donald Trumps ascent to becoming U.S. president. Then, the DeFi market was far more fragile, with a mammoth set of $340 million in onchain liquidations on the cusp of being triggered.

This time around, the DeFi market is better collateralized with just $53 million in liquidatable positions within 20% of the current price. Positions on algorithmic interest rate protocol Compound only become at risk if ETH slides below $1,800, although the largest danger zone is between $1,200 and $1,400 — which contains $1 billion worth of liquidatable positions, DefiLlama data shows.

Resilience shows maturing sector

In previous cycles, the DeFi market was the first to implode. In 2022 investors succumbed to overly tempting yields on the Terra blockchain by staking the algorithmic UST stablecoin, only for the entire ecosystem to collapse months later during a market plunge that reduced the value of crypto assets backing the stablecoin.

This led to contagion across all DeFi markets, with TVL dropping from $142 billion to $52 billion between April and June of that year.

This time around the downside risk is minimal, yields are steady and inflows are quietly increasing — suggesting the sector has matured along a backdrop of institutional adoption and broader market volatility.

DeFiDecentralized FinanceTVL
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