Sharp selloffs tend to expose weak points in financial systems. In traditional markets, liquidity can dry up quickly when volatility spikes. In crypto, the same test applies to decentralized finance, where lending, trading, and borrowing depend entirely on on chain liquidity rather than on central intermediaries.

The latest bout of market turbulence, driven by geopolitical tension and a broader risk off move across global assets, delivered another real time experiment. Prices fell quickly across major tokens, with Bitcoin and Ethereum leading the decline. Yet while prices swung sharply, DeFi liquidity remained relatively stable.

That contrast has drawn attention from traders and analysts…

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