Looking at the DeFi ecosystem in the bear market, many people are feeling uneasy. On one side, the narrative that "DeFi is dead" is everywhere; on the other side, funds are quietly positioning themselves. Want to buy the dip? Afraid of踩雷 (踩雷 means "踩到雷" or "stepping on a landmine"). Not moving? Fear of missing the rebound. This kind of dilemma is indeed quite frustrating.

Instead of obsessing over it, why not look at the data? Comparing the DeFi TVL (Total Value Locked) in 2021 and 2025, you will see a very clear phenomenon: capital has cast a vote with real actions, and surprisingly, the voting results are consistent.

**Let's put the conclusion upfront: DeFi is far from being completely cooled off. The problem is, funds have become extremely selective.**

The old strategy of "casting a wide net and investing in whoever is hot" is now completely ineffective. Capital flows are becoming more concentrated; top projects are eating the pie, while smaller protocols can't even get a sip of soup. This phenomenon is as intense as the divergence of platform tokens. Under this pattern, randomly touching small projects in a bear market is basically like digging your own grave.

**How extreme is the head effect?**

Compare it and you'll see. Back in 2021, a little incentive and a "high yield" story would attract funds like bees. Project teams didn't have to work hard. But now? After several rounds of bear and bull markets, surviving investors have become smarter—they only recognize strength and security, and are immune to flowery words.

Looking at specific data, although DeFi in 2025 experienced fluctuations in Q4, with total TVL dropping from a peak of 277.6 billion to 189.3 billion, interestingly, the concentration among top projects has become even stronger. The top 14 protocols dominate 75.64% of the market share. What does this mean? It means the remaining hundreds of small projects only share less than a quarter of the funds combined.

In plain language: the winner-takes-all situation has already formed. Top protocols are maintaining profits, while small projects find it hard just to survive.

**Where is the "smart money" now?**

Look at the flow of funds. Capital is no longer evenly distributed; instead, it accumulates in protocols that have proven their real strength—those with guaranteed security, mature mechanism design, and reliable operational teams. These top projects are like "safe harbors" in the market, attracting a large number of institutions and smart retail investors during the high uncertainty of a bear market.

Compared to the 2021 rankings, the top names remain largely the same, but the market share gap is widening. The lower-ranked projects are suffering more, which is a direct reflection of the head effect.

**Investment logic needs to change**

If you're still using the 2021 mindset of "opportunities everywhere" to view DeFi, you're way out of date. The current game rules are: either focus on the long-term value of top projects or just wait and see. Betting on rebounds of small projects? In this pattern, the returns are unlikely to cover the risks.

The bear market is actually a good time to see the ecosystem clearly. Those DeFi protocols with real competitiveness, after this round of cleansing, can better demonstrate their value. Projects built on incentives alone are gradually being abandoned by the market.

DeFi is not cooled off; it has entered a more rational and brutal stage. Funds are voting with their feet, choosing those protocols that can survive longer and generate real value. Other projects? Sorry, the hype has passed.