Rapid surge in Total Value Locked (TVL) for DeFi on Ethereum: which on-chain initiatives are spearheading this acceleration?

Rapid surge in Total Value Locked (TVL) for DeFi on Ethereum: which on-chain initiatives are spearheading this acceleration?

In the world of decentralized finance (DeFi), Ethereum has been leading the charge with a significant 30% increase in Total Value Locked (TVL) over the past month. This growth has been attributed to several key factors, making Ethereum the preferred layer for DeFi applications.

Firstly, strong institutional participation has played a crucial role. The influx of capital, particularly through spot Ethereum Exchange Traded Funds (ETFs), has attracted over $2.8 billion in a single week, with a notable $1.02 billion inflow on August 11, 2025 [1][2].

The surge in on-chain activity on Ethereum is another significant factor. Nearly 1.8 million daily transactions were recorded in mid-August 2025, setting a new record, along with daily active addresses nearing 600,000 [1][2].

The price rally of Ethereum, reaching $4,776 around mid-August 2025, has also boosted confidence and liquidity in the ecosystem [1][2][3]. This price movement often correlates positively with DeFi TVL.

The growth and innovation within the DeFi ecosystem have also contributed to the surge. Major protocols like Lido, Aave, and Uniswap are expanding cross-chain interoperability and integrating traditional finance, attracting more capital into Ethereum-based DeFi [3].

Network and infrastructure improvements, including the rise of Ethereum Layer 2 solutions, have enhanced scalability and usability, supporting higher TVL [3][4]. Broad crypto market momentum and renewed investor interest have further reinforced Ethereum’s attractiveness for DeFi deployment [3][4].

Projects like Etherfi and Lido are facilitating liquid staking, resolving one of the main drawbacks of traditional staking: illiquidity. The reduction of ETH on exchanges and the increase of funds in self-custody suggest that users prefer to keep their assets in DeFi protocols [1][2][3][4].

Etherfi, with a TVL exceeding $6 billion, is gaining traction due to its non-custodial approach and ability to integrate with multiple DeFi platforms. EigenLayer, with a TVL of over $10 billion, is driving the adoption of liquid staking tokens like eETH through its ability to allow users to reuse their locked assets to earn additional rewards and improve network security [1][2][3][4].

Aave, a decentralized lending protocol, has a TVL of $19 billion, representing over 21% of the DeFi market. Lido, a liquid staking protocol, has a TVL of $23 billion. The total value locked (TVL) in DeFi on Ethereum has increased to approximately $62.59 billion [1][2][3][4].

This trend marks a turning point after months of uncertainty and competition with other blockchains like Solana. The growth occurs in a context where Ethereum dominates the DeFi sector with a share of over 53% of the global TVL [1][2][3][4].

In summary, the 30% TVL increase is primarily powered by institutional ETF inflows, record on-chain activity, price recovery, DeFi protocol development, and Layer 2 infrastructure enhancements — all contributing to heightened capital lockup and ecosystem confidence on Ethereum during this period [1][2][3][4].

Investing in the technology of blockchain finance has seen a significant boost, with Ethereum leading the growth in the decentralized finance (DeFi) sector. The increase in Total Value Locked (TVL) over the past month can be attributed to strong institutional participation, surge in on-chain activity, price rally of Ethereum, growth and innovation within the DeFi ecosystem, and network and infrastructure improvements.

Read also: