The crypto market’s latest drawdown has seen demand shifting toward decentralized apps. The renewed interest in DeFi is boosting some of the hot lending protocols.
DeFi is the next narrative heating up, as meme tokens and Pump.fun lost mindshare. Top DeFi protocols are seeing an inflow of fees in the past week, signaling increased usage. The DeFi space also got a boost from the recent end of the US Securities and Exchange Commission case against Uniswap, opening the door to further decentralized innovation.
DeFi protocols post gains
While some of the lending protocols saw outflows of value locked, other apps had more active inflows. Top earners briefly included Ondo Finance and Franklin Templeton, showing demand for RWA tokenization.
DeFi Saver and Ethena saw peak revenues, even after going through the stress test of market turbulence. | Source: TokenTerminal
DeFi Saver, however, was the leader in 7-day revenues, reflecting its key role in forestalling liquidations. After Ethereum (ETH) slid under $2,400, DeFi loans were at risk of liquidation without automated position protections. The role of DeFi Saver was key in preventing contagion and a liquidation cascade after the market drawdown.
According to TokenTerminal, DeFi Saver was a leader both in terms of revenues and retained earnings.
Ethena (ENA) had the second-best earnings growth in the past week. The protocol survived the Bybit hack without contagion despite the drop of Ethereum (ETH) price in the past week. The DeFi protocol was also not affected by the loss of ETH from the exchange, as its collateral was kept with the Copper custodian.
Ethena earns its fees from Ethereum trade funding but can be challenged on its USDe peg during market turbulence. The latest market moves passed without causing a USDe de-peg or the need to stop the USDe-sUSDe trading. Ethena’s success was also an exhibition for DeFi surviving market drawdowns with limited contagion effects.
The DeFi sector still holds over $102B in total value locked, mostly hinging on the value of ETH and BTC as collateral. The inflow of stablecoins also boosted demand for passive income. The lack of a liquid altcoin market put some of the legacy assets to work, as they served the role of collaterals for stablecoin loans.
DeFi increases mindshare in February
DeFi has been growing its mindshare since the beginning of February. DeFi flipped the mindshare on memes on February 7 and has been growing against the AI narrative since then. For the last time, DeFi flipped meme tokens in June 2024, a rare occurrence during the last bull cycle according to Kaito’s data.
Despite the market drawdowns, DeFi turns out to be one of the resilient developments in crypto space. After the short-term rally of memes and AI agents, DeFi shows it is still the infrastructure behind liquidity allocation, stablecoin availability, and DEX swaps.
The trend continues.
Market down, DeFi mindshare up. pic.twitter.com/BF0vc2zYT5
— Kaito AI 🌊 (@KaitoAI) February 25, 2025
According to Kaito, DeFi turned into the second-biggest narrative in February, still surpassed by general AI talk. However, AI social media presence reflected the presence of agents on social media. DeFi, on the other hand, showed some protocols managed to bring in liquidity.
In the past week, all narrative tokens slowed down and posted losses for the period. However, DeFi 1.0 and DeFi 2.0 protocols managed to limit those losses to around 10%.
DeFi tokens as a sector are still valued at over $102B, far surpassing the value locked in meme tokens. While the market puts pressure on all assets, some DeFi tokens still had short-term rallies. Maker (MKR) was among the top gainers, expanding by over 42% in the past week, rising to $1,688.52. MKR also gets a boost from being listed among RWA tokenization assets.
ThorChain (RUNE) was also among the top DeFi gainers in the past week, rallying by over 31%. RUNE traded at $1.56, despite being one of the chains used to launder the funds from the Bybit hack.
