The decentralized finance (DeFi) sector experienced a significant downturn, with its Total Value Locked (TVL) plummeting by over 30% from October to December 2025. This massive decline resulted in a staggering $57 billion reduction in value, significantly affecting major DeFi protocols like Lido, EigenLayer, and Ethena. While the TVL drop reflects asset price depreciation rather than user withdrawals, its impact on the cryptocurrency market is undeniable, with Ethereum’s (ETH) value affected, and DeFi tokens experiencing losses of 38–50%. However, institutional players remain active in the space, demonstrating confidence in DeFi’s long-term potential. Notably, BlackRock and JPMorgan continue to engage, suggesting a positive outlook on the sector’s stability and future growth.