DeFi looks vast with $160B in TVL but capital concentrates in a handful of protocols

Stablecoins and perpetual markets are keeping the system liquid, even as most collateral remains concentrated in a few lending and staking layers.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

The DeFi landscape is experiencing a seismic shift, shaping how capital flows and market power consolidate. While the total value locked remains steady at over $160 billion, it's the distribution that reveals intrigue. A large portion is concentrated in powerhouses like Aave and Lido, reflecting a consolidation in traditional lending and staking roles. But there's more than meets the eye, stablecoins such as Tether are not just dominating market share but acting as quasi-central banks within DeFi. This centralization raises a pivotal question: how will DeFi's dependency on a handful of influential protocols and issuers shape its future and can it sustain this precarious balance?