TL;DR
DeFi Liquidity Trends: Total value locked declined around 7% in October, and protocol token market capitalization fell 8.4%, ending a three-month expansion streak.
Bitcoin Growth: Bitcoin-based protocols were the strongest performers, expanding 39.19% to reach $6.19 billion in value.
Protocol Rotation: Base surpassed Solana, Arc grew 21% to $617.8 million, and Morpho expanded through new integrations and collateral options.
DeFi liquidity pulled back in October, reflecting a broader shift in how capital is being allocated across crypto protocols . Data cited in the report shows total value locked declined by around 7% during the month, while the market capitalization of protocol tokens fell 8.4% over the past 30 days . The pullback in DeFi follows three months of expansion that had been supported by activity in Ethereum staking and lending markets.
Bitcoin-Based Protocols Lead Monthly Growth
Despite weaker conditions across the sector, Bitcoin-based DeFi protocols emerged as the strongest performers over the last month . With BTC trading between $80,000 and $85,000, protocols tied to the Bitcoin ecosystem expanded their holdings by 39.19%, reaching a combined $6.19 billion in value. Growth was concentrated in a select group of applications rather than the entire segment.
Surge Credit, Maya Protocol, and Symbiosis posted gains, whereas many other platforms recorded only modest outflows of less than 5%. The report also highlighted an ongoing effort to reduce reliance on wrapped Bitcoin assets . Currently, much of the BTC-based DeFi segment operates through wrapped versions of Bitcoin on Ethereum. However, interest is growing in alternative models that could allow lending activity without requiring users to lock assets into additional smart contract layers, which can introduce extra risk.
Liquidity Rotates Across Chains and Applications
DeFi liquidity also migrated between chains and protocols during October , creating a different competitive landscape. Base overtook Solana to become the third-largest DeFi liquidity venue , ranking behind only Ethereum and Bitcoin. One of the strongest performers was Arc, a recently launched mainnet and liquidity application.
Arc increased its holdings by 21% during the month and reached $617.8 million in total value locked as of October 28 . Meanwhile, some of the largest established protocols experienced declines in notional TVL. Lido and Aave both recorded losses, reflecting the changing flow of capital throughout the market.
Morpho Expands Through New Integrations
Across the DeFi market, Morpho stood out by growing more than 3% over the last 30 days . The protocol maintained around 16.1K daily active users, a level that remains close to its baseline throughout 2026. Recent developments included integration with Ledger , giving users direct access to selected vaults, alongside efforts to onboard tokenized assets as collateral.
These additions may help attract a wider range of activity beyond traditional crypto-backed lending. At the same time, protocol closures across the sector have redirected users and capital . Balancer, Radiant, ZeroLend, and Seamless were among the projects that shut down, making liquidity redistribution a continuing theme. With funds moving toward specific chains, applications, and lending models, changes across DeFi continue to reshape the market.
