$1.6 Billion of DeFi Liquidity Remains Underutilized, Report Indicates

According to a recent study from Dune Analytics, approximately $1.6 billion in decentralized finance (DeFi) liquidity was underutilized during the first half of 2026. This liquidity fails to generate returns due to a significant portion, about $542 million weekly, residing outside of active trading ranges, thereby earning zero fees and not contributing to market depth.

The research highlights that 85% of the tracked liquidity, or $1.84 billion across centralized exchanges like Uniswap, PancakeSwap, and Aerodrome, remains inactive. Specifically, around 29.5% or $542 million was out of range in any given week, indicating that while the capital has not exited the DeFi ecosystem, it is priced too high for traders to actively utilize.

“Decentralized exchanges have grown into one of the deepest, most liquid markets in crypto,” noted Filippo Armani, research lead at Dune. “What our research shows is that it has reached this scale even though much of its liquidity is not yet fully at work.” As the market expands, 1inch cautions that idle liquidity will incur higher costs, leading to more stranded capital and missed trading fees.

Concentrated liquidity pools allow providers to place their assets within specified price ranges, with the potential to earn more fees as long as trading prices remain within the set limits. However, when prices deviate from these bounds, the positions cease to earn any fees until the range is adjusted or the market returns to the specified prices.

Throughout the study, Dune monitored various platforms, including Uniswap’s v3 and v4, PancakeSwap v3, and Aerodrome, across seven chains from early January to the end of June. The percentage of liquidity sitting out of range fluctuated between 25% and 35%, hitting nearly 41% in early February. The analysis also linked the idleness of capital more closely to steady price movements rather than market volatility; a consistent price direction can lead to more significant capital being left stranded.

Interestingly, while larger positions tend to remain active more often, the study revealed that those accounts still held most of the inactive liquidity. Positions below $1,000 saw about 54% of their liquidity remaining out of range, while only 26% of capital in positions above $1 million experienced the same issue. Nevertheless, pools valued over $1 million encompassed approximately 47% of the total idle capital, around $260 million.

The research also indicated that more than 82% of the attributed idle capital on Uniswap v3 was related to individual user wallets, which are more susceptible to being unattended and falling out of range. Based on a projected annual missed fee around $150 million for out-of-range providers, the study emphasized the potential financial impact of improper liquidity management.

These findings emerge as 1inch prepares to launch Aqua, a new liquidity protocol, aiming to tackle issues associated with idle liquidity and to enhance capital efficiency within decentralized exchanges.