Crypto Market Report August 2025: DeFi is breaking all records

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Macroeconomic Context

August 2025 marked a genuine turning point for US monetary policy and, by extension, for global financial markets. After more than four years focused on fighting inflation, the Federal Reserve abruptly changed course by signaling that a rate cut would arrive as soon as September.

Jerome Powell made the announcement at the Jackson Hole symposium on August 22, pointing to one central factor: the rapid deterioration in the labor market. The late-July report was deemed “catastrophic,” with cumulative revisions showing roughly 260,000 jobs removed for May and June, and more than 460,000 jobs lost since the start of the year.

These figures confirmed that the labor market—long the pillar of US resilience—is now breaking down. Powell acknowledged the reversal, noting that “the balance of risks may warrant an adjustment to our policy,” effectively signaling that unemployment has become a bigger threat than inflation.

This shift comes even as inflationary pressures remain far from extinguished. July PCE printed 2.6% and core PCE 2.9%, the highest since February. CPI has stayed above 2% for the 53rd consecutive month, and PPI jumped 0.9% month-over-month, its strongest rise since 2022.

In other words, the Fed is preparing to ease policy while inflation is re-accelerating—an unprecedented setup since the 1970s that raises stagflation risks.

Compounding the backdrop, the new tariffs imposed by the Trump administration took effect on August 1. While the deal with Europe helped cushion the blow in key sectors like autos, semiconductors, pharma, and aerospace, the fallout from the trade war with China is already being felt by giants such as Nvidia.

One of the most concerning elements remains the financial imbalances within the US. Margin debt rose by $14.6 billion in July to $1.02 trillion and has surged by $400 billion (+67%) over the past two years.

Adjusting for inflation makes the picture even starker: margin debt now exceeds dot-com era levels and sits at an all-time high (excluding the October 2021 spike). In short, much of the recent market advance has been fueled by leveraged debt.

Note as well that M2 money supply increased 4.8% year-over-year in July, reaching a new high of $22.12 trillion.

Markets reacted in mixed fashion: US and European equities ended the month higher, with the S&P 500 setting a new record, now up more than 30% from its April low. Gold broke above $3,500/oz, reaffirming its safe-haven role, while crypto performance was more dispersed.

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Crypto Market Analysis

August broke decisively with the pattern established earlier in this bull cycle and confirmed our prior report’s call: Bitcoin (BTC) is pausing, while Ethereum (ETH) and altcoins are regaining strength.

After four straight monthly gains, Bitcoin fell 6.46% in August, slipping from roughly $115,500 to $108,250. BTC set a fresh ATH around $124,500 before correcting on tariff escalation and macro uncertainty, despite a late-month rebound following Powell’s remarks.

BTC’s breather is logical and healthy so long as major supports ($108,000–$111,000) continue to hold firmly.

ETH was the emblem of this month’s altcoin decoupling, rising 18.8% in August and printing a new ATH at $4,926. The ETH/BTC ratio climbed 27%, revisiting levels last seen in August 2024 (~0.04), though still well below the December 2021 peaks (~0.088).

ETH’s resurgence began weeks ago on the back of strong US spot ETF inflows, and has been reinforced by accelerating institutional engagement with crypto—via ETFs, public-equity exposure, crypto treasury companies, and other regulated investment vehicles.

In parallel, BTC dominance fell 5.9% in August, back to levels last observed in October 2024 (~58%). Lifted by ETH, altcoins posted distinctly positive performance, with new all-time highs for several names.

The market is fundamentally different from 2021: there is no broad “altseason” where everything rises in lockstep. Instead, only specific categories outperform—projects with genuine fundamentals, those with a strong marketing catalyst, and those openly manipulated.

Top performers this month illustrate the range of catalysts:

• OKB (OKB): +253.5% — tokenomics overhaul with a massive supply burn (circulating supply divided by 14), triggering a mechanical repricing.
• Cronos (CRO): +112.4% — announcement of a “crypto treasury company” in collaboration with a firm owned by Donald Trump (we cover this later in the report).
• MemeCore (M): +101.5%.
• Mantle (MNT): +67.6% — one of DeFi’s largest treasuries (mostly in MNT), launch of a new on-chain tokenized index, new roadmap with Bybit, and the broader trend of exchanges driving the US narrative.
• Pyth Network (PYTH): +52.4% — integration as the oracle publishing key US macroeconomic indicators on-chain for the Treasury.

Lastly, the OAK Research Watchlist is our curated selection of the most relevant assets to monitor in the current market context, based on criteria defined by the team. The list has existed for several months and will soon be available on our platform with the V2 launch in September.

Overall, the Watchlist delivered a broadly consistent performance in line with ETH’s +18.8%: Fluid (FLUID) printed +26.3%, Ethena (ENA) +17.3%, Pendle (PENDLE) +17.1%, and Maple (SYRUP) +16.4%. Hyperliquid’s HYPE set a new ATH at $50.7 and ended the month up 16.9%.

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Bitcoin and Ethereum ETFs

August was also mixed on the US spot ETF front: ETH-backed products saw massive inflows, while BTC ETFs turned negative on net. In both cases, the month began under pressure amid the latest tariff debates, followed by a modest improvement as markets began to anticipate a Fed rate cut.

For Bitcoin, the monthly tally was negative: –$0.75 billion (sum of daily flows). August 1 was the weakest day (–$812 million), then we saw intermittent recoveries (+$404 million on Aug 8, +$231 million on Aug 14) before another bout of outflows around Aug 19–21.

For Ether, the picture was strongly positive: +$3.87 billion in net monthly inflows, extending July’s momentum. The stretch from Aug 7–14 was exceptional, led by BlackRock and Fidelity: +$1.02 billion on Aug 11 (monthly record), +$729 million on Aug 13, +$640 million on Aug 14. There were brief pauses around Aug 15 and 19, but the month ended firmly positive (14 “green” days vs. 7 “red”).

In July, BTC still led in absolute terms (+$6.0 billion), while ETH surprised for the first time on a market-cap-adjusted basis. In August, the trend clearly flipped: institutions are rotating toward ETH, mirroring the broader market’s shift toward assets beyond BTC.

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DeFi Analysis

The DeFi sector extended the growth momentum we highlighted in our July 2025 report. The surge in ETH price is the main driver behind this growth, as ETH remains one of the most widely held assets across DeFi. That said, other catalysts are at play too: stablecoins, lending, yield-generating protocols, and staking.

Total Value Locked (TVL) in DeFi reached a new all-time high of $208 billion, surpassing the $200 billion threshold for the first time since December 2021. In August alone, TVL grew by 11.5%, ending the month at $201 billion.

Euler

By the end of August 2025, Euler reported $2.9 billion in Total Deposits, up 18%, while Active Loans hit a new all-time high at nearly $1.5 billion.

With around 60.4% of total capital utilized, the protocol generated $8.5 million in fees, of which nearly $8 million was distributed back to lenders as yield. Total revenue increased by 12.7% compared to July, closing the month at just over half a million dollars.

Among notable developments, Euler expanded its ecosystem with the launch of Euler Earn on August 26, 2025. Designed to simplify complex yield strategies, it offers users a passive approach to yield generation and improves user experience. The goal is to boost stickiness and liquidity, complementing Euler Swap, which has already processed $2.5 billion in trading volume.

→ For a deep dive, read our full Euler Earn analysis:

Euler Earn: The new product to simplify access to Euler Finance yields

EulerEarn is the new product developed by Euler Finance and launched on Tuesday, August 26, 2025. In this analysis, we present what EulerEarn is, how it works, its role, and its significance for the Euler ecosystem.

Aave

In August, Aave set a new all-time high with more than $70 billion in Total Deposits, up 17%. Utilization hovered around 42%, with Active Loans totaling $28.4 billion. This performance further cements its position as the undisputed leader in decentralized lending and DeFi more broadly.

From a financial standpoint, August 2025 was Aave’s best month in history. Protocol revenues in Q3 2025 have already surpassed the entirety of 2024, representing 10.5% year-over-year growth and totaling $483.25 million.

Other notable milestones include Aave’s deployment on Aptos, marking its first venture outside the EVM ecosystem, as well as the launch of an Earn feature directly in Metamask, enabling 100 million users to generate yield on USDC, USDT, and DAI directly from their wallet. In addition, Aave and Ethena announced Aavethena, a collaboration designed to position Aave as a liquidity engine for Ethena’s USDe stablecoin.

Pendle

In a booming stablecoin market dominated by Circle and Tether, it is yield-bearing stablecoins that are gaining the most traction. In this context, Pendle has positioned itself as the go-to platform for sophisticated yield strategies.

In August 2025, Pendle deposits surpassed $10 billion, a 39% increase month-over-month, with 80% in stablecoins. Specifically, Pendle now captures around $8.5 billion of the yield-bearing stablecoin market, most notably Ethena’s USDe and sUSDe.

This growing adoption and continuous issuance of stablecoins have fueled Pendle’s fee growth. In August, Pendle generated $6.33 million in fees, up an impressive 71.77% month-over-month. In 2025 alone, the protocol has already generated $10.33 million, surpassing the $7.31 million collected in all of 2024, marking a 41.3% year-over-year increase.

On the product side, Pendle launched a new pool for sUSDe with an initial $100 million cap, strengthening its partnership with Ethena—which already represents 60% of Pendle’s total TVL. Notably, Pendle is also the second-largest protocol by TVL in the Hyperliquid ecosystem.

→ Discover our analysis of Boros, Pendle's latest product:

Hyperliquid

With roughly $9.9 billion locked on its layer 1 blockchain, Hyperliquid remains the leading on-chain perpetuals DEX. In August, the exchange processed $405.8 billion in perpetual trading volume, up 2.5% from July, while Open Interest remained stable around $12.5 billion.

Meanwhile, HyperEVM’s TVL grew from $2 billion in July to $2.4 billion in August, a 20% increase. As noted earlier, Pendle is the second-largest protocol in the ecosystem with over $1 billion in TVL, trailing only Kinetiq ($1.9 billion) and ahead of HyperLend ($881 million).

Thanks to its unique model, 97% of fees generated were used for HYPE buybacks, totaling $106 million at an average price of $42.8. HYPE hit a new ATH at $45.88, ending the month at $44.30, up 18.2% month-over-month. The token’s market cap now stands at $12 billion.

In addition, Hyperliquid recently adjusted its buyback mechanism to allocate 99% of fees. Weeks after Phantom, Rabby Wallet also announced the integration of Hyperliquid’s Builder Codes to offer trading functionality directly to its users.

Fluid

Fluid continues to sit at the intersection of lending and decentralized exchange, a hybrid model that is attracting increasing attention. The protocol reached $1.6 billion in TVL in August 2025 and is now the second-largest DEX by trading volume on Ethereum. More than 90% of activity is concentrated in stable-stable pairs, compared to 60% previously.

In August, Fluid generated $7.9 million in fees (+23.7% MoM), with $1.53 million in revenue. While lending TVL remains mostly concentrated on Ethereum, daily activity and deposits on L2s—especially Arbitrum—are on the rise.

One notable development: Fluid has expanded outside the EVM ecosystem by deploying Jupiter Lend on Solana in partnership with the Jupiter exchange. Based on a similar model to Fluid, JupLend already boasts $368 million in TVL, the vast majority in stablecoins.

→ For a complete breakdown of Fluid, read our full presentation:

Ethena

Ethena now shows $12.5 billion in TVL, including $12.7 billion in USDe. That’s a 48% increase in August alone, with more than $4 billion of USDe minted during the month—a new record that even surpassed USDT’s $3.45 billion issuance. USDe has also become the fastest stablecoin to reach the $10 billion market cap milestone.

USDe’s supply grew nearly 50% in a single month, reaching $12.3 billion, making it the third-largest stablecoin by market cap. This explosive growth pushed Ethena into the top 6 DeFi protocols by TVL, further cementing its role in building the on-chain financial system.

From a revenue standpoint, Ethena recorded a 25% increase over the past 31 days, hitting $4 million (after a spectacular +521% in July). Revenues are now at their highest level this year, with growing anticipation around the potential trigger of the Fee Switch.

→ Check out our analysis of the Fee Switch, including forecasts on its impact on Ethena’s ENA token:

Pumpfun

In line with the sector trend of buyback mechanisms funded by protocol revenues, Pumpfun officially launched its aggressive campaign to repurchase PUMP tokens and reduce ongoing sell pressure. In August, a total of 17.6 billion tokens were bought back, worth $44.5 million, at an average price of $0.002782 per token.

As a result, the PUMP token gained 33% month-over-month, ending August at $0.00335. These buybacks are funded through platform revenues (launchpad and Pumpswap fees). During the month, 583,072 new tokens were created, enabling Pumpfun to reclaim the top spot with 83% market share among Solana launchpads.

Additionally, August was one of Pumpfun’s strongest months in 2025, generating $46 million in revenue. More than 70,000 unique addresses now hold PUMP, with small wallets making up 46% of circulating supply.

ByBit is the official sponsor of our monthly market report. If you would like to create an account on ByBit EU (a 100% regulated platform in Europe), we invite you to use our partner link.