DeFi TVL has fallen from $172B in early October to $112B this week — a 34.9% drawdown.

But the important signal is where liquidity is disappearing first.
Outflows are not uniform, and the hierarchy tells you how the system behaves under stress.

1. Emission-driven TVL is exiting first:

This is the least sticky liquidity.
When incentives weaken or market volatility rises, it moves immediately.
This exposes which protocols were sustaining usage vs inflating TVL.

2. Chains with weak stablecoin depth show outsized percentage drawdowns:

Stablecoins act as base-layer liquidity.
When the foundation is thin, every dollar exiting produces amplified effects across DEXs, lending, and collateral markets.

3. Early L2s without mature money markets or perps leak the fastest:

Users may stay active, but capital has nowhere productive to sit.
TVL flows toward L2s with lending + perps + stablecoin liquidity already in place.

4. Sticky liquidity concentrates in protocols with real revenue:

Perps and lending markets with consistent fee generation hold TVL longer.
This shift reinforces a structural trend: yield from usage > token incentives.

TVL contraction isn’t a single event.
It’s a sorting mechanism that shows which ecosystems have structural liquidity, and which were relying on transient capital.