Even as the value of DeFi assets is falling, Ethereum (ETH) staking has been thriving thanks to protocols like Lido and Coinbase’s staking service.

The crypto industry has suffered a number of setbacks over the past year, including the collapse of centralized crypto exchanges and services, which has also caused capital outflows from the DeFi area.

The total value locked (TVL) under DeFi protocols across different chains, according to statistics from DefiLlama, is currently less than $38 billion, a considerable decline from the TVL’s peak of $178 billion in November 2021.

Notably, the current TVL figure is even lower than the total value locked just after the demise of the centralized exchange FTX in November 2022, which resulted in a two-year low in the assets locked under DeFi protocols.

In April, the market did experience a recovery, with the TVL returning to a level of about $50 billion.

The metric has since reversed to below $38 billion, despite the fact that the underlying crypto prices have not substantially decreased throughout this time.

The $38 billion amount, though, excludes money held in liquid staking methods like Lido.

Lido’s TVL has significantly increased from $6 billion to $13.95 billion since FTX’s demise.

These protocols “deposit into another protocol,” as DeFiLlama claims, which explains why they are not counted in the overall TVL total.

Similarly, since its September 2022 launch, Coinbase’s staking service has amassed an additional $2.1 billion in Ethereum, increasing the total assets held by such services to $20.2 billion.

Through the use of pegged assets such as cbETH and stETH that are issued by the staking provider, investors can stake their assets, earn yield, and still enjoy trading liquidity.

Instead of adopting loan protocols like Aave, which force users to lock their tokens and may expose them to unwelcome protocol risks, this alternative may be more alluring to investors.

The current yield rates for ETH and USDC on Aave are 1.63% and 2.43%, respectively, while ETH and USDC yield rates on Coinbase are 3.65% and 4.5%, respectively.

In the meanwhile, it’s important to take note of the recent decrease in TVL across a number of DeFi systems.

While Curve Finance’s TVL fell by 26% to $2.3 billion, Aave’s TVL dropped by 21% to $4.5 billion.

The hawkish monetary policy of the US Federal Reserve may be one probable explanation behind this drop.

In comparison to stablecoin yields in the DeFi industry, this strategy has increased the yields on short-term government debt, making it a more appealing option for investors.