DeFi Total Value Locked Drops 39% in 2025 Amid Hacks and Market Slump
DeFi's total value locked has collapsed 39%, battered by a broad market downturn and high-profile exploits including the Kelp DAO hack.
Decentralized finance took a severe hit in 2025 as total value locked across DeFi protocols plunged 39%, driven by a combination of deteriorating market conditions and a surge in damaging security breaches, according to new data reported by Cointelegraph. The steep decline signals one of the sector's most turbulent stretches in recent memory, raising urgent questions about the resilience of on-chain financial infrastructure.
The Kelp DAO hack emerged as one of the most consequential exploits of the period, contributing to a broader wave of record hack activity that eroded user confidence and accelerated capital flight from DeFi platforms. When major protocols are compromised, liquidity providers and yield seekers tend to pull funds rapidly, compounding losses across interconnected ecosystems.
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The broader crypto market downturn amplified the damage. Falling token prices directly deflate TVL figures — since locked assets are denominated in volatile cryptocurrencies — meaning the actual withdrawal of capital was likely accompanied by significant mark-to-market losses on remaining deposits, creating a compounding effect on the headline number.
The convergence of macro pressure and security failures presents a stress test for DeFi's long-term value proposition. Analysts have long warned that smart contract vulnerabilities and inadequate audit standards leave protocols exposed, and the events of this period appear to validate those concerns at scale. Recovery will likely depend on rebuilding trust through stronger security practices and improved on-chain insurance mechanisms.
Continue reading at Cointelegraph.
