Decentralized finance is seeing another shift in capital as total value locked falls below $90 billion and investors move liquidity between major protocols.
DeFi TVL stood near $87.8 billion on October 26, down roughly 1.8% over 24 hours, according to DefiLlama.
The broader decline is being led by large protocols including Lido and Aave, while Morpho has moved in the opposite direction with one of the strongest weekly inflows in DeFi.
DeFi TVL Drops Below $90 Billion
DefiLlama data shows total DeFi TVL at approximately $87.8 billion.
Trading activity has weakened as well. Decentralized exchanges generated roughly $44.1 billion in seven-day volume, down more than 12% week over week.
Perpetual futures activity declined by around 8.6% over the same period.
The numbers point to softer overall onchain activity as Bitcoin trades around $80,000 and broader crypto markets remain cautious ahead of the Federal Reserve meeting.
Morpho Gains $304 Million
Morpho has been one of the clearest exceptions to the decline.
The protocol added approximately $304 million in TVL over the past week, taking its total to roughly $11.4 billion.
That represents an increase of around 2.7%.
Morpho has expanded rapidly by allowing users and professional risk managers to create isolated lending markets and curated vaults rather than relying entirely on a single shared lending pool.
The model has helped it become one of the largest lending protocols in DeFi.
Lido Records the Largest Outflow
Lido remains the largest DeFi protocol by TVL, but it recorded the biggest weekly decline among major platforms.
Around $790 million left Lido during the week, reducing its TVL to approximately $22.6 billion.
Lido continues to dominate liquid staking, allowing users to stake ETH while receiving liquid staking tokens that can be used elsewhere in DeFi.
Its scale means movements in ETH prices and staking flows can have a significant impact on overall DeFi TVL.
Aave TVL Also Declines
Aave remains another major source of DeFi liquidity.
DefiLlama data shows Aave TVL at roughly $17.6 billion on October 26, down from approximately $19.1 billion at the end of September.
Despite the recent decline, Aave continues expanding its infrastructure.
Aave V4 launched on Base earlier this month with a new Equities Hub that supports USDC alongside tokenized shares representing companies including Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla.
That expansion illustrates how DeFi lending is increasingly connecting with tokenized traditional assets.
Lending Remains Central to DeFi
Current rankings show that lending protocols remain among the largest applications in decentralized finance.
Lido leads with approximately $22.6 billion in TVL, followed by major infrastructure and lending platforms including Aave V3 and Morpho Blue.
Morpho’s recent inflows are particularly notable because they are occurring while total DeFi liquidity is declining.
That suggests capital is not simply leaving DeFi. Some of it is being redistributed toward protocols offering different lending structures and yield opportunities.
What to Watch Next
Three indicators could determine whether DeFi TVL stabilizes:
Crypto prices: Falling ETH and other token prices reduce the dollar value of assets locked in DeFi even without withdrawals.
Lending flows: Continued growth at Morpho or renewed deposits into Aave could indicate stronger demand for decentralized credit markets.
Stablecoin liquidity: Stablecoins remain a major source of collateral and trading liquidity across DeFi.
For now, the sector is experiencing a broad contraction rather than a collapse.
The more interesting development is where the remaining capital is moving.
Morpho’s growth while Lido and Aave lose TVL suggests investors are becoming increasingly selective about where they deploy liquidity.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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