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In April, the skies in the DeFi ecosystem turned dark. According to data from DefiLlama, Total Value Locked (TVL) retreated by $10 billion, marking a 7% decline in just one month. It was a huge blow to the crypto sector, which ended April with $138.6 billion in liquidity. Behind these alarming global numbers, certain blockchains have been hit particularly hard.
Avalanche and Solana will completely dry up in the cryptocurrency ecosystem
Specifically, very few DeFi projects managed to hold on in April. In fact, among the 10 most important blockchains by TVL, Avalanche and Solana have experienced major challenges.
For Avalanche, the crash was severe, with 31.5% of the funds committed to the blockchain being lost. It's a shock for an otherwise promising crypto ecosystem that is now struggling to recover.
Solana's financial situation has shown little improvement, with nearly 30% of its DeFi liquidity flowing out last month. An alarming performance drop that calls into question the resilience of this high-profile crypto project.
Ethereum maintains its position, Bitcoin and certain L2 advances
Although the overall trend in cryptocurrencies in April was very gloomy, some resistance forces emerged nonetheless. Leading the pack, Ethereum has managed to maintain its position as the dominant DeFi blockchain despite a 14.2% drop in TVL. As evidence of its strength, the leading network still captures almost 69% of the sector's liquidity.
Another ray of hope is that Bitcoin and some Ethereum Layer 2 (L2) projects are gaining increasing appeal among crypto investors. Driven by renewed ambitions for Bitcoin, the queen of cryptocurrencies has seen its TVL rise by 39%, passing the $1 billion mark.
At the same time, L2 blockchains such as BASE (+18.4%), BLAST (+4.4%) or Arbitrum are confirming an upward trend. The crypto ecosystem is increasingly preferred by developers who want to benefit from a low-cost, high-performance environment.
Ultimately, this setback in TVL in April may be a much-needed shock to the entire decentralized finance industry. While this is certainly an important challenge, it is also an opportunity to clean up, cleanse, and start anew on a stronger foundation.
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Disclaimer
The views, ideas and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Please do your own research before making any investment decisions.
