The decentralized finance (DeFi) sector has experienced a significant transformation in the distribution of total value locked (TVL), with a notable shift towards lending, liquid staking, and restaking protocols. This change highlights the evolving preferences of users in the blockchain ecosystem, as these infrastructure protocols now command the majority of locked value, as evidenced since 2021.
Leading the charge in the lending category is Aave, which has witnessed substantial growth in its TVL. This platform, along with Lido Finance, a frontrunner in liquid staking, has effectively utilized capital efficiency mechanics and yield layering strategies to attract significant capital. The ability to maintain liquidity while earning rewards through staking has made liquid staking services increasingly appealing to users.
Moreover, the emergence of restaking protocols has added a new dimension to yield generation. These protocols allow users to monetize assets that are already staked, creating an additional income stream without the need to reallocate capital. The mechanics behind these systems have evolved, showcasing a clear preference for balance-sheet infrastructure over the more active trading approaches that characterized earlier years.
In contrast to 2021, when the DeFi landscape was more diversified across decentralized exchanges (DEXs), collateralized debt positions (CDPs), and yield aggregators, the current environment emphasizes passive earning strategies. Users are now more inclined to deploy capital in ways that do not require constant management, indicating a shift towards reliable yields.
The structural features inherent in lending protocols contribute to an inflated perception of TVL. Overcollateralization mandates borrowers to lock assets that exceed their loan values, establishing a baseline TVL that often surpasses the actual circulating borrowed amounts. Additionally, leverage loops enable users to borrow against their deposited collateral, only to redeposit those borrowed funds, further amplifying the recorded value.
Restaking extends this concept within proof-of-stake networks, allowing users to commit their staked assets to secure additional protocols while simultaneously earning rewards. This dual-purpose functionality is facilitated by liquid staking tokens, which provide tradable representations of staked assets. As such, the majority of DeFi capital is now concentrated in these infrastructure categories, marking a pivotal shift in user strategy and capital allocation.
As the DeFi space continues to mature, this trend towards lending, liquid staking, and restaking protocols underscores a growing preference for long-term capital deployment strategies. Market participants increasingly prioritize infrastructure that offers sustainable returns over speculative trading practices, illustrating the evolving dynamics of decentralized finance.
