DeFi’s Resurgence: Key Trends to Watch in 2025 – 2025-02-06
DeFi had a massive 2024, nearly reaching past all-time highs in TVL and market cap. With new regulations and growing synergies with TradFi, 2025 could be even bigger.
Decentralized finance had a great 2024, coming close to the “DeFi summer” peaks in total value locked (TVL) and market cap. The memecoin frenzy and the rise of AI-powered protocols brought fresh momentum, while major airdrops like EigenLayer and Hyperliquid brought in more retail attention.
2025 could be even bigger. With pro-crypto regulations already taking shape in the US and more expected, DeFi could see accelerated growth. This year may also mark a turning point in DeFi’s integration with CeFi and traditional finance, potentially pushing the sector to new all-time highs.
DeFi in 2024
According to DappRadar, DeFi activity surged by 532% in 2024, making it the most dominant category in crypto, with 7 million daily unique active wallets and a 32% market share in the fourth quarter.
The sector delivered one of its most impressive performances, with total value locked (TVL) rising 211% to end the year at $214 billion, just $47 billion short of its December 2021 peak. TVL, a key DeFi metric, reflects the total capital held in smart contracts.
Several factors contributed to DeFi’s strong momentum. The memecoin boom played a big role, with tokens like GOAT and PEPE driving a surge in trading activity and liquidity. In the second half of the year, AI-powered DeFi agents like VIRTUAL introduced automation to trading and governance. This innovation is expected to expand in 2025.
DeFi tokens’ market capitalization followed TVL’s upward trajectory, almost reaching $152 billion by year-end, later correcting to $102 billion. The sector also benefited from the high-profile launches of EigenLayer, a restaking platform, and Hyperliquid, a derivatives DEX.
These launches stood out for their airdrops—free token distributions rewarding early adopters. By targeting retail users, airdrops help jumpstart a protocol’s usage and boost its visibility. EigenLayer’s first airdrop in May distributed approximately 113 million EIGEN, valued at around $475 million when the tokens were listed in October. Hyperliquid’s HYPE airdrop in November was initially worth $1 billion, making it the largest airdrop in crypto history.
Key DeFi blockchains
Ethereum remains the leading blockchain for DeFi, holding $152 billion in TVL. Solana follows, though with a significant gap, reaching $21 billion. However, its remarkable 2,000% surge made it one of the year’s best performers. BNB Chain, Tron, and Bitcoin round out the top five, while newer chains like Sui, Base, and Aptos gained visibility through notable upgrades and increased adoption.
A notable trend in 2024 was the growing interest in DeFi protocols developing their own blockchains, often as Ethereum layer-2s. Uniswap announced Unichain in October, Aave is exploring the creation of Aave Network as part of its v4 upgrade, and MakerDAO’s Rune Christensen has proposed a dedicated blockchain for the protocol. These moves offer several advantages, including new revenue streams, better protection against MEV attacks, and reduced congestion by eliminating competition for block space with other protocols.
DeFi integrating with CeFi and TradFi
DeFi is increasingly merging with traditional financial systems and centralized crypto finance.
In January 2025, Coinbase partnered with Morpho Labs to launch a bitcoin-backed loan service, enabling users to borrow up to $100,000 in USD Coin (USDC) without selling their bitcoin holdings. The structure of this service reflects DeFi’s growing efficiency: Coinbase converts BTC into wrapped BTC (cbBTC) and transfers them to Morpho, which then manages the loan terms and interest rates dynamically on-chain.
Integrating DeFi could be useful and lucrative for traditional fintech companies too. However, regulatory uncertainty in the US has slowed progress so far. That may be changing, though. On January 23, the SEC repealed its controversial SAB 121 guidelines, which had required listed companies to classify client-held crypto as liabilities on their balance sheets. This rule had made it difficult for banks to offer crypto-backed loans, but its repeal opens the door for greater institutional involvement. Now, the crypto industry awaits the repeal of another Biden-era regulation—the U.S. Infrastructure Investment and Jobs Act of 2021—which imposes stringent and nearly unworkable compliance requirements on DeFi protocols.
Finding more synergies with traditional finance may be the next big milestone for DeFi. Speaking on the CoinDesk podcast, Maple co-founder Sid Powell said he expected DeFi to be the “dark horse” for the crypto ETFs, noting that “DeFi is expected to benefit from the changes in the regulatory regime.”