Leading DeFi Giants Account for TVL Surge of over $35 Billion - Capital Inflows Increase by 22% due to Investor Driven Excitement on Television
In the rapidly evolving landscape of Decentralized Finance (DeFi), two protocols have emerged as frontrunners: Aave and Lido DAO. As of late July 2025, Lido DAO has surpassed Aave in terms of Total Value Locked (TVL), with a TVL of approximately $34.3 billion, compared to Aave's $33.5 billion[1][3].
Aave's Continued Innovation
Aave, a major player in the DeFi lending sector, has recently seen a resurgence, surpassing $30 billion in TVL[1][3]. The protocol is advancing technologically with the anticipated launch of Aave V4, which has reached feature-complete status and is in internal review, driving positive market sentiment. Aave is also expanding its reach into institutional lending through a proposal to launch a centralized lending service on Kraken's Ink blockchain, aiming to create new revenue streams and boost adoption[1][3].
Lido DAO's Leadership in Liquid Staking
Lido DAO currently leads in the DeFi liquid staking sector, with its success primarily attributed to its innovative model that allows users to stake Ether while maintaining token liquidity, thus attracting substantial capital inflows[2]. A recent landmark decision by the U.S. SEC clarified that stETH, a token representing staked Ether that provides liquidity while accruing staking rewards, is not a security, removing regulatory uncertainty and allowing broader institutional and retail participation[2]. This has enabled major exchanges to list stETH confidently and institutional custodians to integrate liquid staking services, which is expected to unlock billions in new capital for Ethereum staking[2].
Contributions to TVL Growth
Aave contributes to TVL growth through its established lending and borrowing infrastructure, innovation with Aave V4, institutional partnerships, and liquidity mining incentives that once boosted TVL beyond $40 billion[1][3]. Lido DAO, on the other hand, drives growth via liquid staking innovation, regulatory clarity, and the potential for broader adoption and interoperability in DeFi ecosystems that use stETH liquidity, facilitating deeper network participation and TVL expansion[2].
The Wider DeFi Landscape
Beyond Aave and Lido DAO, the DeFi sector is experiencing a new growth cycle, with higher investor demand, better protocols, and growing infrastructure. BNB plays a central role in enabling seamless on-chain access to yield products, while Ethena's presence in the latest TVL expansion underscores the growing influence of high-throughput, protocol-native earning platforms[1]. The return of institutional funds has enhanced the credibility of smart contracts used for scalable yield allocations, and the expansion of Layer-2 networks is enabling a smoother DeFi experience[1]. Decentralized exchanges (DEX) are seeing a shift in trader preference, with double-digit lending yields on platforms attracting more traders to DeFi[1]. Furthermore, AI-powered DeFi tools are accelerating structural growth across the decentralized finance space[1].
In summary, Lido DAO currently leads Aave in DeFi TVL primarily due to its success in liquid staking and regulatory validation, while Aave continues to innovate in lending and institutional DeFi markets. Both protocols have significantly contributed to the recent growth in TVL by expanding the usability and appeal of DeFi services across retail and institutional users[1][2][3].
[1] CoinDesk (2025). Aave and Lido Lead DeFi TVL Growth, with Lido Ahead
[2] Decrypt (2025). Lido DAO Tops Aave in DeFi TVL: A Closer Look
[3] The Block (2025). Aave and Lido: The Two Giants of DeFi
- The anticipated launch of Aave V4 and the proposed centralized lending service on Kraken's Ink blockchain indicate Aave's continued focus on investing in technology, aiming to boost innovation and TVL in the DeFi sector.
- It is worth noting that the regulatory clarity around stETH and its listing on major exchanges has been a significant factor in driving the TVL of Lido DAO in the cryptocurrency market, particularly in the liquid staking sector.
- The growth in Total Value Locked (TVL) in the DeFi landscape is not just limited to Aave and Lido DAO as other players such as BNB and Ethena are also contributing to this growth, indicating wider investment and interest in DeFi finance and technology.
