The DeFi lending market has contracted significantly, with total deposits dropping by $45 billion since October, according to data from Artemis. The market's value fell 36% to $79.6 billion from a peak of $125 billion. Aave led the decline with a $27.6 billion reduction, followed by Spark, Euler, Fluid, and Compound, which together accounted for $40 billion of the overall decrease. The contraction is attributed to falling collateral values and the unwinding of leveraged positions, as the broader crypto market experienced a steep decline. Bitcoin's price fell from a high of $126,000 in October 2025 to under $60,000 in early February 2026, before recovering to above $70,000. Despite the downturn, stablecoin borrowing remains robust, according to GC Cooke, founder of Brava. Aave, the largest DeFi lending platform, also faced capital flight beyond the impact of lower token prices. Ethereum deposits on Aave dropped from 14.5 million to 12.07 million tokens, influenced by market conditions and governance disputes within the Aave DAO, raising concerns about the platform's model and processes.