DeFi Daily Volume Dwindles to 7-Month Lows as Sector Endures Downswing

The decentralized finance (DeFi) sector has endured a troubling month due to plummeting transaction volume and a series of hacks and exploits.

On Sunday, the entire DeFi market racked up just $1.12 billion in transactional volume, marking the lowest daily total since January 1, according to DefiLlama.

Total value locked (TVL), which measures the amount of capital that is held across all DeFi protocols, slumped from $45.3 billion to $42.9 billion in July as the sector failed to turn the tide against falling asset prices. During this period, ether (ETH) traded down from $1,920 to $1,850 whilst bitcoin (BTC) failed to break through resistance at $31,500.

In July, the biggest loser has been Conic Finance, a yield-generating protocol that lost 1,700 ether in a reentrancy exploit last week. The protocol's individual TVL has plunged 65% to $42 million from $125 million.

Conic was not alone in its exploit-induced plight, on Tuesday zkSync's largest lending protocol, EraLend, was struck by another reentrancy attack resulting in a $3.4 million loss.

Several other DeFi protocols have experienced outflows this month, with liquid staking protocol Ankr, NFT-lending service BendDAO and Arbitrum-based decentralized exchange Chronos dealing with up to a 50% drop in TVL.

The likes of Curve Finance, Blur and MakerDAO have also all lost more than 15% of their respective TVL in the past month.

Despite the majority of DeFi failing to capitalize on a relatively stable wider market, there has been a couple of winners. EigenLayer is generating fresh inflows after it rolled out its restaking protocol, whilst Lybra Finance and Solana-based Marinade Finance continue to show strong growth with their TVL rising by 73% and 45% respectively.