Thanks to a boost from rising crypto values, the total value locked in DeFi reached new heights. On 14 November, Total Value Locked (TVL) nearly broke $14 billion, but a sharp drop saw it fall to $13.47 billion two days later. A week later, TVL hit $14 billion on 21 November before setting a high of $14.39 billion the next day.
This amount has since decreased marginally to its current level of $14.3 billion. The increase in the locked total value over the past few days has been driven by the increasing price of Bitcoin and Ethereum. Ethereum saw the largest leap in its price, growing by 54% since the month’s start. Bitcoin has reported a 34% price upswing in the same period.
There’s a fly in the ointment, though, that shadows TVL’s progress. The sum of Ethereum kept in the protocols of DeFi has been dipping and is currently 25% lower than last month. Over two million ETHs have left the DeFi market, DeFi Pulse reports. However, the number of Bitcoins in the DeFi ecosystem has remained nearly the same, moving from 164,500 on 20 October to 168,500 today.
The ETH outflow is most likely the result of investors rushing to help the upcoming launch of the Ethereum 2.0 network. To cause Ethereum’s most ambitious update yet, these investors may have taken out their deposits from DeFi, hence the downturn.
Around 525,000 ETH had to be submitted to a deposit contract address for Ethereum 2.0, expected to launch on 1 December. This goal was met yesterday after the injection of more than 150,000 ETH in 24 hours.
There is also a risk that when many hacks are being published, DeFi users feel the need to be more cautious about their crypto properties. Hackers exploited DeFi’s Worth DeFi and Akropolis projects in November alone. Also, Pickle Finance was hacked, losing millions due to the incident. In another event, Harvest Finance experienced a loss of over $34 million late in October. DeFi users may have agreed, fearful of these hacks, to take out some of their savings.