DeFi drained $20B in Q2, but stablecoins and stubborn wallets are already RSVPing to the Q3 afterparty 📈

More than $20 billion exited decentralized finance protocols during Q2, pushing total value locked down to roughly $70 billion from its pre-October 2025 high of around $150 billion and marking the sharpest quarter-over-quarter TVL decline since 2021, according to data tracked by DefiLlama. The drawdown followed back-to-back protocol exploits that resulted in more than $600 million in cumulative losses, triggering widespread capital outflows as users rushed to unstake assets and reduce exposure to DeFi protocols.

Aave [AAVE], the largest lending protocol, illustrated the trend. Following the KelpDAO exploit, Aave's TVL dropped roughly 18% to $17.8 billion within 24 hours, as users rapidly withdrew liquidity. The selling pressure extended beyond Aave, with Ethereum's TVL declining by more than $10 billion as fear spread across the sector.

Early Q3 indicators suggest the rotation may be reversing. Aave on Ethereum recently recorded 1,806 new wallet addresses in a single day, its strongest network growth since October 2021. Stablecoin liquidity has also been building across major networks, with Solana ending Q2 2026 with a record $16.6 billion in stablecoin supply. Stellar's 30-day stablecoin transfer volume rose 32.6%, and Cardano's native stablecoin supply has grown more than 20% over the past week, according to DefiLlama.

The shift is further reflected in centralized lending markets. CryptoQuant's latest report showed CeFi lending contracted 6% quarter-over-quarter to $23.3 billion, its first decline since Q3 2024, indicating that capital is moving back on-chain as DeFi activity and TVL begin to recover from the Q2 trough.