ETHFi has recently experienced a steep 9% drop in its token price, signaling a broader decline in user engagement, liquidity, and overall protocol earnings. This downturn reflects a combination of weakening investor confidence and deteriorating on-chain activity, which could have wider implications for the DeFi platform’s near-term prospects.
One of the most critical indicators of ETHFi’s weakening position is the dramatic fall in user activity. Recent data reveals that daily active users have dropped to just 328 — the lowest number recorded since July 2025. This decline suggests a significant churn in user participation, with many opting out of the platform amid increasing market uncertainty.
This exodus of users has had a direct and negative impact on the protocol’s revenue. Within a single day, fee generation plummeted from $210,500 to $111,700, resulting in a staggering $98,800 drop in income. Such a sharp reduction indicates that fewer transactions are taking place on the platform, which in turn diminishes the incentive for validators and liquidity providers to remain involved.
Liquidity has also taken a hit. According to data from DeFiLlama, ETHFi’s on-chain liquidity currently stands at just $680,000 — its lowest level for the year. This suggests that significant amounts of ETHFi tokens have been withdrawn from decentralized exchanges like Uniswap. The reduction in available liquidity not only inhibits trading but also signals a broader lack of long-term investor commitment.
The protocol’s Total Value Locked (TVL) has also seen a notable contraction, now sitting at $9.92 billion. This decrease mirrors the drop in liquidity and is indicative of investors pulling out their assets in response to the platform’s underperformance and the broader bearish sentiment across the crypto market. TVL is often seen as a measure of trust in a project, and declining figures typically point to growing investor caution.
Compounding these issues is the sharp fall in Net Holder Income (NHI). In the fourth quarter, ETHFi reported earnings of only $464,000 — a significant decrease compared to $3.9 million in the previous quarter. This translates to an average of just $232,000 per bi-weekly period, far below the earlier $650,000 mark. Such a drop significantly reduces the attractiveness of holding ETHFi tokens, as potential earnings for holders continue to shrink.
The combination of reduced income, falling TVL, and declining user activity paints a bleak picture for ETHFi in the short term. These trends indicate not just a lack of interest but a shift in investor strategy, possibly toward platforms offering better yields or more stable returns.
Market sentiment appears to be driving much of this exodus. As liquidity dries up and token prices fall, investors are increasingly opting to divest from riskier assets. The sell pressure is escalating as holders seek to cut losses, further depressing the value of the token and leading to a feedback loop of declining confidence.
Additionally, macroeconomic conditions and regulatory uncertainties may be influencing user behavior. With global markets facing volatility, many crypto investors are rebalancing their portfolios toward more conservative assets, which could explain the massive outflows from ETHFi despite its earlier strong performance.
Another possible contributing factor is the growing competition within the staking and DeFi ecosystem. Newer protocols offering more competitive rates or innovative features may be drawing attention away from ETHFi, which has struggled to maintain its earlier momentum. Without a compelling value proposition or updated incentives, it becomes increasingly difficult for ETHFi to retain users and attract new ones.
Moreover, the usability and scalability of the platform may be under scrutiny. If users find the interface unintuitive or the gas fees associated with interactions too high, they may choose to stake or trade elsewhere. Such technical barriers, though often overlooked, can have a cumulative effect on user retention and overall protocol vitality.
Looking ahead, ETHFi may need to implement significant changes to regain traction. This could include revising its fee structure, launching new staking products, or engaging in marketing campaigns to rebuild community trust. Strategic partnerships and cross-chain integrations could also help revive activity and bring fresh liquidity into the ecosystem.
In the current state, however, the platform faces an uphill battle. Without a clear reversal in user engagement and income generation, ETHFi risks falling further behind its competitors. Investors and users alike will be closely monitoring the protocol’s next moves to determine whether it can recover or continue its downward trajectory in an increasingly competitive DeFi landscape.