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Liquidity Crisis: $12B in DeFi Liquidity Sits Idle as 95% of Capital Goes Unused

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Source: CryptoNewsNet Original Title: ‘Liquidity Crisis’: $12B in DeFi Liquidity Sits Idle as 95% of Capital Goes Unused Original Link: A new report from decentralized exchange aggregator 1inch has shown a growing crisis in decentralized finance (DeFi): the vast majority of capital deployed in major DeFi liquidity pools is not being used effectively.

According to data presented at Devconnect Buenos Aires, between 83% and 95% of liquidity in top pools, including certain DEX platforms (v2, v3, and v4), as well as Curve, remains idle for most of the year. That means billions of dollars sit in smart contracts without earning fees or generating meaningful returns.

In one major DEX platform alone, only 0.5% of liquidity typically falls within active trading price ranges, rendering nearly $1.8 billion ineffective according to the report.

This inefficiency hits retail participants the hardest. Research cited in the report shows that 50% of liquidity providers (LPs) are losing money when factoring in impermanent loss, with net liquidity provider deficits exceeding $60 million. In one notable example, a single DEX v3 pool saw over $30 million in lost profits due to Just-in-Time liquidity manipulation.

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BearMarketNoodlervip
· 14h ago
95% of capital is idle, that's why retail investors always lose money – Liquidity Trap, understand?
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TokenVelocityvip
· 14h ago
95% of capital is idle? This is the real Decentralized Finance joke, where did the money go?
View OriginalReply0
LiquiditySurfervip
· 14h ago
95% of capital is idle? Isn't this just LPs waiting for the surfing entry point, a typical disaster of capital efficiency...
View OriginalReply0
AlphaBrainvip
· 14h ago
95% of capital is idle? Isn't this the common problem with DeFi—liquidity pools piled up like mountains but no one is using them... It's long overdue for a shake-up.
View OriginalReply0
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