The decentralized finance (DeFi) industry has had one of its toughest weeks in recent months, with total value locked (TVL) plummeting across major networks.
According to data from Sentora, DeFi protocols Ethereum, Solana, Arbitrum, BNB Smart Chain, and Base all recorded double-digit declines.
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Ethereum leads DeFi TVL exit
This reflects a significant setback in user activity due to changing market conditions and escalating security incidents.
The TVL of Ethereum, the largest DeFi ecosystem, decreased by about 13% to about $74.2 billion, according to additional data from DeFiLlama. Despite the setback, Ethereum still controls over 62% of the sector.
Solana and Arbitrum experienced even steeper declines, each losing about 14% of their locked value. The companies’ TVLs are currently approximately $10 billion and $3 billion, respectively.
However, Solana maintains its position as the second largest DeFi chain with over 8% of the market share.
BNB Smart Chain and Base were not spared, reducing TVL by approximately 10% and 12%.
As these losses accumulate, the total value of DeFi TVL has declined from nearly $150 billion to $130 billion, marking a notable slowdown in borrowing, lending, and staking activity across the ecosystem.
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Security breaches exacerbate TVL decline
Meanwhile, security breaches further exacerbated the decline in TVL, as a series of high-impact exploits spooked users and further exacerbated an already depressed market.
On November 3, Balancer, one of the industry’s longest-running DeFi platforms, was hit by one of the biggest exploits of the year. The attackers exfiltrated over $120 million from the V2 vault.
In a detailed explanation of X, the team tied the breach to a rounding error in the EXACT_OUT swap upscale function within Vault’s batch Swap function. This feature allows users to bundle multiple swaps into one transaction to reduce gas costs.
“By exploiting a combination of incorrect rounding behavior and the batchSwap functionality, attackers were able to manipulate pool balances and extract value. In many cases, the exploited funds remained within the vault as internal balances before being withdrawn in subsequent transactions,” the report states.
Meanwhile, a second major disruption occurred shortly after Stream Finance announced that approximately $93 million in assets managed by an external fund manager were missing.
In response, the protocol suspended all withdrawals and deposits. It also said that pending deposits would not be processed and began drawing down the rest of its liquid assets.
Elixir, a DeFi liquidity provider, announced that it was forced to reduce its USD-free synthetic dollar stablecoin due to this incident, and the impact spread rapidly.
These events have led to increased scrutiny of the underlying architecture of DeFi.
The series of failures highlighted that sophisticated attackers can still exploit design flaws, governance gaps, and incomplete smart contract logic. These incidents reinforced long-standing concerns about the sector’s structural weaknesses.
