TON Coin TVL Drops But Staking Gains Momentum

DeFi activity on the TON blockchain has recently reduced, as seen from the Total Value Locked (TVL) for Ton coin.

The latest CryptoQuant data shows that TON’s TVL reached a $600m high but retraced heavily, implying lower capital engagement in decentralized finance protocols.

This mirrors a larger DeFi industry pattern where DeFi liquidity adjusts to market conditions and evolving investor preferences.

Charts show the downturn is mainly caused by liquid staking. Dropping capital deployment across the network has also happened with DeFi-related sectors like DEXs and lending.

TON coin’s price has also hopped from $8 to $4, and more to the point the TON token price behaved quite erratically. TVL and token price are typically correlated.

However, while still positive, the volume of network transaction activity indicates that the funds may consolidate not into speculative DeFi protocols but into staking pools.

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Staking Participation on the Rise

Despite the overall drop in TVL, staking participation shows a contrasting upward trend.

The TON Staking TVL Ratio has increased significantly. The second chart highlights this shift, demonstrating a rise in staking activity even as the total locked value declines.

As the data suggests, staking has grown from below 20% of total TVL in mid-2023 to a peak of over 80% by early 2024 before stabilizing around the 60-70% range.

This increase indicates that a larger share of network participants prefer staking mechanisms.

This is likely due to the promise of stable rewards compared to the volatile returns in DeFi lending or trading.

The upward trend in staking participation suggests that TON coin holders actively seek ways to earn yield while minimizing exposure to higher-risk DeFi products.

The rise in staking pools and liquid staking solutions allows users to contribute to the network’s security while maintaining some degree of asset liquidity.

How has TON Coin Reacted?

Although TON coin’s price has moved according to market dynamics, it has declined by 28.87% during the past month and currently trades at $3.58.

The downward sentiment is evident on the chart of the CoinMarketCap, which dropped from $5.05 in late January to the present date.

Although the price has fallen, trading volume has risen by 28.56% to $155.22 million, indicating heightened trading activity.

In this case, investors may have otherwise reacted to changes in TVL and staking behavior.

The overall stranglehold that TON is placing on the market cap indicator has been disturbed as the market cap has also tumbled by 2.54% to $8.95 billion.

The significant drop in early February could be a market event that cut sharply, such as a liquidation wave or investor repositioning.

Since then, price action has been rallying back above the $3.50 price point, which has a considerable history here since 2017, meaning that we’re in the early stages of a dynamic new period in price discovery.

There is a correlation between DeFi participation and the valuation of the token. Price movement tracks the change in TVL.