Behind the new high in locked value, the amount of ETH locked in DeFi protocols has decreased by 25% in the past month

The total value of tokens locked in DeFi hit a new high on November 24, but surging crypto prices masked a surprising new trend: the amount of ETH locked in DeFi protocols is actually falling.

Since November 20, the total value locked (TVL) in DeFi protocols has grown to over $14 billion, reaching an all-time high of $14.39 billion on November 21. The rising prices of Bitcoin and Ethereum have been the source of the continued growth of TVL. Since the beginning of November, the price of BTC has risen by 34% and ETH has risen by 54%.

However, according to DeBank data, more than 2 million ETH left the DeFi ecosystem in the same time frame, while the number of Bitcoin-pegged coins has remained relatively stable.

ETH locked in DeFi peaked at 9.25 million on October 20, and since then, while TVL has risen by 23%, this is actually due to the rise in ETH prices, and the actual amount of ETH locked has fallen by more than 25%. At the same time, the number of BTC locked has remained basically unchanged, from 164,500 on October 20 to 168,500.

So, what is the reason for all this ETH leaving DeFi?

One of the most likely reasons is the upcoming release of Ethereum 2.0, a new upgrade of Ethereum that will provide interest returns for staked ETH and eventually reconfigure the entire Ethereum blockchain. The launch of Ethereum 2.0 requires the minimum staking requirement to be met, and according to a report by Rhythm this morning, more than 52,500 ETH have been deposited in the deposit contract address of Ethereum 2.0, meeting the minimum staking requirement. According to previous plans, Ethereum 2.0 is expected to be launched on December 1.

The staking requirement of Ethereum 2.0 may be an important reason for users to withdraw funds from DeFi.

On the other hand, DeFi users will also feel more cautious as repeated hacker attacks continue to plague many emerging financial protocols, and many DeFi protocols are powerless to deal with hacker attacks and various losses, which may cool down the entire ecosystem. The emergence of Ethereum 2.0 just gives these users who are not completely new to DeFi a new place to put their funds.