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

A new report from the decentralized exchange aggregator 1inch highlights a growing "DeFi liquidity crisis," showing that between 83% and 95% of capital in top pools like Uniswap and Curve is unused for most of the year, meaning billions of dollars are not generating fees. This inefficiency severely impacts retail liquidity providers (LPs); 50% are losing money due to impermanent loss, resulting in net deficits exceeding $60 million across the ecosystem. The complexity of over seven million fragmented pools contributes to this dilution and inefficiency. 1inch proposes its Aqua protocol as a solution, which allows developers to create virtual trading positions and share a common capital base across multiple strategies without compromising user custody, enabling LPs to hold assets in their wallets rather than locking them in complex contracts.

(Source：CoinDesk)