A report released by Binance Research on July 30 stated that there was no significant rotation of funds in the on-chain market during the first half of 2026, with DeFi, lending, and mainstream public chains all experiencing simultaneous valuation weakening. The report summarized this period as a broad contraction, rather than a simple switch between different sectors.
DeFi locked value decreased by $43.4 billion
The report shows that the total value locked (TVL) in DeFi decreased by $43.4 billion in the first half of the year, a drop of approximately 38%. During the same period, the total market capitalization of the six major Layer 1 public chains—Ethereum, BNB, Solana, Tron, Sui, and NEAR—decreased by a combined $246.5 billion, a drop of approximately 42%.
Active lending volume decreased by 38% year-on-year. April became the month with the most concentrated pressure, with multiple large-scale security incidents weakening market confidence in on-chain liquidity supply and accelerating the outflow of DeFi funds.
Based on the report's estimates, DeFi TVL was approximately $70.8 billion at the end of June. DefiLlama's figure for July 31 was approximately $74.9 billion, indicating a slight rebound in July, but not enough to suggest that the market has completed its reversal.
Security incidents and declining L2 usage
According to TRM Labs statistics, 207 security incidents occurred in the first half of 2026, with total losses amounting to approximately $972 million, a significant increase compared to the same period last year. Of these, 125 incidents involved smart contract vulnerabilities, while infrastructure and operational errors accounted for approximately 76% of the stolen value.
Compared to the Ethereum mainnet, Layer 2 usage declined much faster. From January to June, L2 user activity decreased by approximately 77%, while the Ethereum mainnet saw a 9% drop during the same period. In June, the L2 network collected approximately $15 million in transaction fees, but paid only about $66,400 to Ethereum for data availability.
The report also noted that Ethereum's holding structure is adjusting. Spot ETF holdings decreased from over 6 million ETH to 5.2 million, while holdings by Digital Asset Treasury increased from 6 million to 7.7 million.
RWA and prediction markets are still expanding.
The real economic value on the Solana blockchain fell from $40 million in January to $14 million in June, a decrease of approximately 64.5%. The report attributes this change in part to a cooling of meme coin trading. During the same period, Pump.fun trading volume decreased from $30 billion to $17 billion, but meme coins still accounted for 25% of Solana DEX trading volume in June.
BNB is the only major L1 token covered in the report that remains deflationary, with an annualized burn rate of approximately 5.05%. Meanwhile, the market capitalization of tokenized reality assets (RWA) on the BNB Chain grew by 107% in the first half of the year, reaching $3.8 billion, but this increase was still insufficient to offset the overall ecosystem decline.
A few sectors bucked the trend and expanded. The total size of tokenized real-world assets increased from approximately $22 billion in January to approximately $34 billion by mid-July. Prediction markets also saw a surge in volume during the 2026 World Cup, with monthly notional trading volume rising to $51.6 billion in June, an 86% increase from January. Of this, Kalshi accounted for approximately $33 billion, and Polymarket accounted for approximately $14.5 billion, together representing 92% of the total for that month.
Additional information:The report also mentioned that BNB Chain has scheduled the Pasteur hard fork for August 25th at 02:30 (UTC), Ethereum has included the Glamsterdam upgrade in its agenda for the second half of 2026, and the latest official information from Solana shows that Alpenglow will be enabled with Agave 4.3 in October.
