Total Value Locked in DeFi Surpasses $14 Billion, What Lies Ahead for DeFi?

DeFi Pulse shows the total value locked in the DeFi sector is rising above $14 billion. The rise of Ethereum is attributing to the TVL breaking the $14 billion mark. While it seems the DeFi sector is once again prospering, the TVL in many DeFi protocols is rather decreasing.

Since the 20^th of November, the total value locked in these protocols has soared above $14 billion. As of November 21^st, the TVL was at $14.39 billion. Many players in the community know that the hike in Bitcoin and Ethereum price contributed immensely to the TVL growth.

User’s Withdrawing ETH from DeFi as total value locked rises

At a time when the TVL in DeFi is going upwards, users are withdrawing their ETH from the DeFi. According to DeFi Pulse, ETH’se value that has left the system is above 2 million ETH.

So the question now is, what’s causing the massive withdrawals of ETH off the Defi ecosystem? According to the reports, one of the reasons for this new trend is the Ethereum 2.0 launch. In another report, it seems that there’s a new upgrade that promises interest rewards on staked ETH.

Once the developers garner the number of ETH necessary for the deposit, the configuration of the Ethereum ecosystem will commence immediately.

According to reports, for there to be a successful launch of the Eth2, up to 525,000 ETH must be sent to a deposit address. Since the proposed date is the 1^st of December, that number of ETH must be complete before then.

As of press time, ETH holders have contributed above 402,000 out of the total ETH, representing 75% of the required number. So, it’s now clear that the enthusiasm over the upcoming upgrade has led many ETH holders to withdraw them from DeFi protocols.

Another reason for the massive withdrawals may be due to the continuous hacks that have become frequent in DeFi protocols. Many users are afraid to lose their funds as many Defi projects have been targeted and exploited in this November alone. 

It seems that users are no longer confident in some of these Defi protocols as it seems that they cannot prevent the exploits from happening.