Cryptocurrency DeFi Loses $1.6 Billion in Liquidity

Research from Dune, commissioned by decentralized exchange platform 1inch, found that $1.6 billion in liquidity went idle in the first half of 2026. This amount represents 85% of the $1.84 billion in liquidity tracked in focused liquidity pools on Uniswap, PancakeSwap, and Aerodrome.

Approximately $542 million, or 29.5%, was out of range for a average week. Although the liquidity remained within the DeFi ecosystem, it couldn't be utilized due to its high price. This lack of liquidity usage is mainly due to positions outside trading ranges not generating returns, while actively managed positions involve transaction costs and execution risks.

While the DeFi ecosystem continues to grow, the lack of liquidity usage could become more costly as liquidity scarcity increases. According to Filippo Armani, Dune's head of research, 'Decentralized exchanges have grown to become one of the deepest and most liquid markets in crypto, but it's curious that this has happened even though much of its liquidity is still not functioning at full potential.'

Focused liquidity pools allow providers to place assets within a selected price range. Capital supports more trading and collects more fees as long as the market remains within that range, but once the price moves beyond it, the position stops generating fees until the provider adjusts the range or the market returns to its original setting.