DeFi Overview in March: Latest Developments and Trends

Stablecoin Market Hits New High

According to DefiLlama data, on March 20, the global stablecoin market reached a historic milestone, surpassing $230 billion in total market value. Over the past seven days, the market grew by $2.3 billion, representing a 56% year-on-year increase. Tether (USDT) continues to dominate the stablecoin market, with a market cap of nearly $144 billion, accounting for 62.6% of the total market share. Circle (USDC) follows in second place with a market cap of $59 billion.

The stablecoin market previously peaked at $190 billion in April 2022 but experienced a significant downturn later that year due to the collapse of the Terra-Luna ecosystem and the bankruptcies of major crypto institutions like FTX, Celsius, and BlockFi. The market continued to decline until mid-2023 but has since shown signs of recovery, reflecting renewed demand for stablecoins.

One of the key drivers behind this resurgence is the increased involvement of institutional investors. Major financial technology companies, including PayPal, have launched their own stablecoins, promoting their use in cross-border payments and on-chain transactions. This institutional adoption has provided new momentum for the stablecoin market, underscoring its value as both a payment medium and a liquidity tool.

Policy developments have also bolstered market confidence. U.S. President Donald Trump recently reiterated his support for dollar-pegged stablecoins, emphasizing their role in maintaining the U.S. dollar’s global dominance. Since Trump took office on January 20, 2025, the stablecoin market has grown by approximately $20 billion, signaling that favorable policy conditions could lead to broader adoption in corporate payments and cross-border settlements, further solidifying stablecoins’ role in the global financial system.

Total market capitalization of the latest stablecoin market (Image source:https://defillama.com/stablecoins）

Cryptocurrency Market Experiences Broad Correction

Data from SoSoValue indicates that on March 20, the cryptocurrency market underwent a general correction. Ethereum (ETH) fell by 2.02% in 24 hours, dropping below the $2,000 mark. However, the SocialFi and CeFi sectors remained relatively resilient. The SocialFi sector rose by 1.44%, with Toncoin (TON) and Galxe (GAL) gaining 2.14% and 3.10%, respectively. The CeFi sector also saw a modest increase of 0.67%.

Other sectors, however, faced declines. The Layer1 sector fell by 1.08%, while the Meme sector dropped by 1.12%. Despite this, some meme coins like Pepe, Bonk, and dogwifhat saw gains of 4.90%, 2.85%, and 3.39%, respectively. The PayFi, DeFi, Layer2, and RWA sectors also experienced declines, with Plume, a recent high performer, falling by 14.88%.

Latest Cryptocurrency Sector Index (Image Source: SoSoValue Index (SSI)）

Overall, the market’s short-term correction reflects cautious investor sentiment. However, the resilience of the SocialFi and CeFi sectors suggests that projects with strong use cases and financial backing continue to attract investor interest. The rise of certain meme coins also indicates that institutional funds are still seeking short-term speculative opportunities, particularly in a market environment where sentiment is weakening.

Ethereum Supply Hits Decade Low

On March 20, Santiment reported that the available supply of Ethereum on exchanges had dropped to 8.97 million ETH, the lowest level since November 2015. This trend is driven by the growing popularity of DeFi protocols and the increasing adoption of Ethereum staking, as more investors move their ETH off exchanges to earn higher yields through staking or DeFi participation.

Over the past seven weeks, the supply of ETH on exchanges has decreased by 16.4%, a trend that could reduce selling pressure and provide price support for Ethereum. As the Ethereum ecosystem continues to evolve and Layer2 solutions mature, the circulation structure of ETH is expected to improve further. The ongoing decline in exchange reserves will remain a key indicator for market observers.

ETH available supply hits a new low in the crypto exchange (Source:https://x.com/santimentfeed/status/1902851984182669545）

DeFi Market Risk Warning

While DeFi emphasizes decentralization, many platforms still incorporate centralized elements in their governance structures or key functions. This hybrid approach increases the risk of single points of failure, as any centralized control in a critical area undermines the platform’s overall decentralization. In the current market, many DeFi projects remain in a state of “nominal decentralization,” relying on centralized governance models or architectures.

To mitigate these risks, industry participants must push for deeper decentralization in DeFi protocols. This would enhance security, transparency, and resistance to censorship, ultimately creating a more robust and trustworthy financial ecosystem. Investors should carefully evaluate the decentralization levels of DeFi projects, paying close attention to governance mechanisms, fund custody methods, and smart contract transparency. Ensuring that platforms have decentralized governance and permissionless access control is crucial for minimizing risks.

Conclusion

The cryptocurrency market remains highly volatile, but the growing institutional adoption of stablecoins is expected to deepen their role in global payment systems. Meanwhile, the declining supply of major cryptocurrencies like Ethereum on exchanges could alleviate selling pressure, providing long-term price support. As the DeFi sector continues to evolve, the focus on decentralized governance and regulatory compliance will be critical. Investors should remain vigilant and seize the long-term growth opportunities within the DeFi ecosystem.