DeFi Markets Face Extreme Volatility After October 11 Flash Crash
Decentralized finance (DeFi) markets saw sharp volatility following the October 11 flash crash. Data from DeFiLlama shows perpetual DEX trading positions dropped from $26 billion to under $14 billion within hours.
At the same time, lending platforms collected over $20 million in fees, a single-day record. Weekly trading volume on decentralized exchanges (DEXs) also hit a new high of $177 billion.
Lending Platforms See Record Fees Amid Market Turmoil
According to DeFiLlama, platforms like Aave V3, Compound V3, and Morpho V1 drove the fee surge. These platforms usually earn between $2 million and $6 million daily. On October 11, fees exceeded $20 million as traders rushed to borrow and repay loans.
Aave V3 led the lending sector, maintaining its strong market position during the crash.
Trading Volume Hits Record High While Borrowing Declines
Weekly DEX trading volume surpassed $177 billion, breaking previous records. This growth accelerated in 2025 after steady increases since mid-2024. By early October, weekly volumes consistently stayed above $160 billion, signaling renewed trader confidence.
Meanwhile, total borrowing on lending platforms fell below $50 billion for the first time since August. This drop indicates traders became cautious about taking on new debt after the crash.
Returns on stETH fluctuated sharply, rising above 7% in early October before settling near 3%. These swings likely reflect sudden market changes and short-term reward strategies.
The October flash crash highlighted how quickly DeFi markets can shift between growth and correction. Despite the volatility, record volumes and high activity show the sector’s ongoing strength and maturing liquidity.
