DeFi Liquidity Crisis: $12B Sits Idle as 95% of Capital Is Unused
Decentralized exchange aggregator 1inch found that most capital deployed in key DeFi liquidity pools is not being used properly, indicating a rising crisis in DeFi.
According to Devconnect Buenos Aires data, 83% to 95% of major pool liquidity, including Uniswap v2, v3, and v4, and Curve, sits idle most of the year. Therefore, billions of funds sit in smart contracts without fees or meaningful returns.
The research states that barely 0.5% of liquidity in Uniswap v2 is active trading price range, rendering roughly $1.8 billion unproductive.
Retailers are especially harmed by inefficiency. According to the survey, 50% of liquidity providers (LPs) lose money when temporary loss is considered, with net losses topping $60 million. One Just-in-Time liquidity manipulation cost Uniswap v3 almost $30 million in earnings.
The ecosystem has almost seven million fractured pools, which contributes to the problem. Complexity dilutes liquidity and makes trade routing tougher, diminishing liquidity provider returns.
Grayscale's XRP and Dogecoin ETFs Get NYSE Approval
Long-running private trusts are converted into fully listed ETFs in both products.
“These approvals certify the listing and registration” of the trusts, NYSE Arca noted, allowing two of the crypto market's most followed assets to become ETFs.
XRP is the fourth-biggest cryptocurrency, whereas Dogecoin, a meme, is the largest memecoin with a dedicated retail following.
Grayscale's latest conversions coincide with a US crypto ETF boom.
That guideline allowed issuers to go public without express approval if they met SEC-approved listing conditions in September.
If launched as planned, Grayscale's Dogecoin ETF will be the second in the US, following REX-Osprey DOGE's September launch under the Investment Company Act of 1940.
Grayscale now offers ETFs for Bitcoin, Ethereum, Dogecoin, Solana, and XRP as demand for cryptocurrency funds rises.
Ethereum ETFs end 8-day outflow, but price fails to recoup $2,800
Ethereum ETFs lost $1.3 billion from 11-20 November. The greatest single-day withdrawal was $261.59 million on November 20, followed by $259.72 million on November 13 and $182.80 million on November 17.
BlackRock's ETHA saw $53.68 million in redemptions on November 21. The fund has $12.89 billion net inflows.
What changed Robert Kiyosaki's mind to sell $2.25M in Bitcoin
He bought Bitcoin at $6,000 years ago and made huge gains.
Kiyosaki will invest in two surgery clinics and a billboard business. He expects tax-free income from the investments of $27,500 per month by February 2026.
