State of DeFi 2025

In these cases, the treasury functions primarily as a strategic supply reserve rather than a diversified balance sheet, and while offchain assets may partially offset this exposure, they are difficult to independently verify. It does not fully capture offchain foundations, banked fiat reserves, endowment structures, or intermediary-managed RWA strategies, which increasingly hold material capital for large ecosystems. Taken together, these elements provide a full picture of the economic foundations and risk profiles DAOs carry into 2026.

New entrants such as Threshold Network ($559.9M) and Lorenzo Protocol ($524.1M) replaced lower-liquidity legacy wrappers, indicating continued churn below the top five and a lack of durable moat among smaller BTC DeFi protocols. Lombard declined from $1.47B to $1.33B, while Solv Protocol fell from $1.99B to $1.05B, signaling weakening momentum in smaller yield-driven BTC wrappers as capital concentrated into fewer, more liquid primitives. This reflects a clear user preference for deep liquidity, operational certainty, and seamless exchange integration during periods of rising onchain BTC deployment. WBTC remained the dominant asset, but its liquidity declined from $12.27B to $11.14B, indicating that Bitcoin DeFi growth did not accrue proportionally to legacy wrapped BTC. In their current form, growth in Bitcoin DeFi continues to express primarily at the asset and wrapper layer rather than through persistent expansion of BTC-native application ecosystems.

This is no longer a market shaped by one or two incumbents but a genuinely competitive derivatives ecosystem. By year-end, Hyperliquid, Aster, Lighter and EdgeX each controlled roughly 15-20% of trading volume, while Jupiter held closer to 10%. This broader spread of OI marks a healthier sector structure, reduced concentration risk and a derivatives landscape that is maturing beyond a single dominant venue. The result is a trading environment that is richer, more diverse and increasingly shaped by abstraction. Execution is determined not by where liquidity resides but by which mechanism can deliver the best possible final price.

• Solana’s MEV market in 2025 is defined by extremely high execution throughput and a revenue model that is structurally concentrated at the validator layer.
• Between 2024 and 2025, Solana saw a large increase in base network activity and monetisation alongside a pullback in peak retail usage.
• Growth slowed in 2025, but the structure of the market changed materially as duration trading matured and competition increased.
• This reallocation of liquidity shows that perps are no longer tied to general-purpose Layer 1s or Layer 2s.
• Trading infrastructure converged into an interconnected stack that links issuance, spot, derivatives, and event-driven markets.

Governance rights, liquidity depth, counterparty risk, and value-capture mechanisms dominated allocation decisions. In practice, permissionless markets became gated by custody integration roadmaps. Custodians, banks, and asset managers became the effective approval layer deciding which assets and applications institutions could use. Dealers such as Marex reported increasing demand for notes with coupons tied to baskets of BTC, ETH, or systematic onchain yield strategies. Horizon required KYC for collateral providers but allowed a broader base of liquidity on the lending side.

Going into 2026, the data supports a regime where Solana operates as a structurally dominant retail and high-frequency spot venue, rather than a temporary liquidity magnet during issuance cycles. This confirms that Solana’s spot market leadership is no longer purely cyclical. That peak marked the moment when Solana became the primary venue for onchain price discovery. This gap explains why Solana’s ecosystem is still dominated by spot and derivatives flow rather than balance-sheet driven activity. This confirms that Solana captured a larger portion of DeFi activity on a sustained basis rather than only during brief speculative surges.

As yields normalised, this group became even more concentrated, with EigenLayer and Babylon absorbing a larger share while most mid-tier platforms experienced steep outflows. The top ten restaking protocols capture nearly the entire market and together saw TVL fall from roughly 24.0B to 18.37B over the period. That growth reflects the continued appeal of exchange-integrated, custodial staking tied to centralised liquidity and structured products. Binance Staked ETH was the major winner, growing from $6.10B to $10.47B and lifting its market share from 12.1% to 22.0%.

Derivatives, CDPs, DEXs, and yield platforms now channel a meaningful portion of their operating surplus to tokenholders. Chains remain the most aggressive distributors of value, with nearly all economic activity ultimately flowing to validators or stakers. Breaking the market into DeFi and non-DeFi categories reveals a more complex picture.

Liquidity Provider Incentives

In a future where perps, spot, and issuance all lean on the same data backbone, what kind of failures or feedback loops worry you most at the oracle layer, and how can the industry preempt them? A critical design choice involves the aggregation algorithm used to produce the final onchain price from multiple data inputs. Whether prices come from traditional order books, RFQ systems, intent-based protocols, off-chain TrafFi systems, or proprietary routing algorithms, they ultimately represent yet another input format for price discovery. RedStone’s modular approach has proven our technology can ingest data in various formats from different providers, making it adaptable to evolving market structures. Most DeFi users won’t directly interact with or even notice oracle infrastructure, yet specialized teams will continue innovating on these complex, multi-layered systems.

At the same time, activity at the searcher layer remained extremely high. This pattern indicates that the bulk of Solana’s MEV revenue in 2025 was generated during periods of elevated volatility and launch-driven activity in early Q1. In 2025, Solana validators received a total of 4,252,425 SOL in Jito tips, equivalent to $543.45 million, establishing the gross scale of onchain MEV revenue transferred directly to block proposers over the year. Most importantly, the share of blocks containing sandwich trades stops rising structurally in 2024 and stabilises into 2025, even as DEX trading remains ubiquitous. The weekly count of active sandwich bots remains elevated relative to early DeFi history but is meaningfully below its speculative-cycle peaks and far less explosive than in prior bull markets.

Aave V3 strengthened its leadership position, expanding its share from 50% to 57%. Capital remains highly concentrated, with the top ten https://ssaac.org/ protocols holding $57.00 billion, or 89.0% of total lending TVL. They should also include ongoing, automated monitoring, so that risk is not merely evaluated at inception but continuously supervised throughout the life of the asset.

Governance Health and Power Concentration

Tokenized Treasuries, private credit, and institutional fund wrappers scaled quickly, and leadership increasingly rotated toward recognizable asset managers and regulated issuers. With less obvious incremental reward for added complexity, capital rotated out and consolidated into the most established venues. As incentives normalized, the sector faced a tougher risk-return trade. Market design, risk calibration, and borrower demand increasingly determined fee outcomes. On the balance-sheet side of DeFi, 2025 was defined by maturation and repricing. The sector rotated away from early vault-based or vAMM-style designs and toward exchange-grade matching, deeper orderbooks, unified collateral, cross-margin, and more robust liquidation pathways.

DEXs: From AMMs to Intent-Based Execution

As real-world integrations expanded throughout the year, stablecoins increasingly moved beyond passive storage and into everyday payments. What began as a trading convenience now operates at the centre of payments, remittances and onchain finance. Plasma is not alone, other projects are following the same direction like Stable, Arc (Circle) and Tempo (Stripe) all signal that stablecoin-first settlement layers are becoming a strategic priority. For institutions, this model resembles a global settlement network allowing fintechs, exchanges and payment platforms to treat stablecoins as infrastructure.

DeFi continues to produce most of the ecosystem’s fees but still lags behind chains and other categories in the share of revenue distributed to tokenholders. That is a small share in absolute terms but represents a clear improvement from 2024, when only a fraction of protocols had active value capture. A growing share of protocol fees was finally redirected to tokenholders, and the market began rewarding those tokens whose economic design translated operating performance into actual financial return. For most of the past cycle, DeFi tokens carried large market capitalisations without a clear path for value to flow back to holders.

Many aggregators offer customizable solutions that allow other protocols to integrate stablecoin bridging capabilities without building infrastructure from scratch. With 90% of surveyed firms taking action on stablecoins, aggregators provide the infrastructure necessary for enterprise-scale adoption. Traditional financial institutions increasingly recognize stablecoins’ potential for treasury management. Advanced traders and institutional investors use stablecoin aggregators to optimize their DeFi strategies across multiple chains. Research shows that 71% of Latin American firms use stablecoins for cross-border payments, with speed being the top cited benefit at 48%.