DeFi Faces Liquidity Crisis, $12 Billion Idle After October 2025 Structural Shift

The DeFi sector is grappling with a liquidity crisis, with an estimated $12 billion of capital currently sitting idle, representing 95% of total funds being unused. This situation is primarily due to significant structural changes following the October 2025 market crash. The impact of this downturn has been particularly evident in the ETH and BTC markets, leading to liquidity drops and disrupting institutional flows. 75% of Aave’s ETH deposits have witnessed a record surge, while Sky’s governance evolution has also impacted liquidity dynamics.