Total value locked (TVL) in DeFi protocols has seen significant volatility over the past week, falling from $140.95 billion on December 17 to $117.76 billion on December 20 before partially recovering to 122 .06 billion dollars on December 26.
Meanwhile, the stablecoin’s market cap has remained remarkably stable, hovering around $240 billion with minimal fluctuations since December 17.
The divergence between the market capitalization of TVL and that of the stablecoin is significant because it demonstrates that the decline in TVL was primarily due to the depreciation of crypto asset prices rather than a fundamental change in user behavior or a flight from crypto assets. capital of DeFi protocols. If users had actively withdrawn capital from DeFi, we likely would have seen corresponding movements in the stablecoin’s market cap.
The stable market cap stability suggests that users have maintained their positions rather than converting to fiat currency, showing that traders are still locked into the broader DeFi market despite price volatility. It also indicates that traders view price declines as temporary market movements rather than systemic risks. The slight recovery in TVL from December 20 to 26 (+3.6%), while cryptocurrency prices remained under control, further supports this interpretation, suggesting an opportunistic deployment of capital at lower valuations.
