Ethereum TVL Drops 34% Since Trump's Election, Outflows Surge 800,000 ETH

The total value locked (TVL) in decentralized finance (DeFi) protocols has experienced a significant decline, erasing all gains made since Donald Trump's election as US President in November 2024. The TVL in DeFi protocols reached a peak of $138 billion on December 17, 2024, but has since decreased to $92.6 billion by March 10, 2025. This downturn is particularly evident in the Ethereum ecosystem, where the TVL has decreased by $45 billion from its cycle highs, as indicated by data from DefiLlama.

Solana, another key player in the DeFi space, has also encountered difficulties as the popularity of its memecoins has diminished. Despite positive developments in the industry, such as the introduction of spot exchange-traded funds (ETFs) in the US and Trump's executive order for a strategic Bitcoin reserve, Ethereum has struggled to achieve new all-time highs. Ethereum's price remains below its record high of $4,787, set in November 2021, even as Bitcoin surged past $109,000 on January 20, 2025, the day Trump took office.

The recent decline in Ethereum's TVL has been accompanied by unusual exchange outflows. Nearly 800,000 Ether, valued at approximately $1.8 billion, exited exchanges in the week starting March 3, 2025. This marked the highest seven-day net outflow recorded since December 2022, according to data from IntoTheBlock. Despite a 10% price decline for Ethereum during this period, the outflows suggest that many holders view current price levels as a strategic buying opportunity. Typically, exchange outflows indicate long-term holding or movement into DeFi applications such as staking or yield farming.

Ethereum's rollup-centric roadmap, designed to reduce congestion and gas fees, has introduced liquidity fragmentation. The upcoming Pectra upgrade aims to address these issues by enhancing layer 2 efficiency and interoperability. By doubling the number of blobs, the upgrade seeks to reduce transaction costs and consolidate liquidity. Additionally, account abstraction will enable smart contract wallets to function more seamlessly across Ethereum and layer-2 networks, simplifying bridging and fund management. However,