New study finds $1.6 billion in DeFi liquidity idle

Billions of dollars of liquidity sit idle in the DeFi pool, doing nothing

Recent research by on-chain analytics platform Dune commissioned by 1inch shows that 85% of the concentrated liquidity on decentralized exchanges-approximately $1.6 billion of the $1.84 billion tracked-is underutilized at any given moment. Of that, on average, about $542 million is completely idle every week, producing no revenue or providing any market depth.

1inch is a decentralized trading platform with 27 million users that converges market liquidity to exchange crypto assets at competitive prices. Its research on liquidity efficiency is directly related to an issue the platform is currently trying to solve for its users.

"Due to DeFi's structural inefficiencies, liquidity providers are idle billions of dollars and missing millions of dollars in fees," said Sergej Kunz, co-founder of 1inch."If the industry really wants to bring trillion-dollar assets of traditional finance onto the chain, solving this problem must be a top priority."

How the research was conducted

Dune tracked four major centralized liquidity platforms-Uniswap v3 and v4, PancakeSwap v3, and Aerodrome Slipstream-across seven blockchains, taking weekly snapshots from January 6 to June 30, 2026. The study covered the top 200 pools of funds ranked by transaction volume for each platform and kept this group unchanged for all 26 weeks to provide a consistent panel of samples with an average tracked capital of $1.84 billion. In addition, three simpler liquidity models were analyzed separately as a benchmark for comparison.

What does "idle" mean here?

In DeFi, liquidity providers deposit funds in the price range where they expect transactions to occur, and they earn fees every time a transaction occurs in that range. When market prices move outside of that range, the funds deposited stop making profits and just sit idle and cannot be used until the price returns to the range or the provider adjusts its position.

During the 26 weeks tracked, an average of 29.5% of liquidity was in this completely idle state, soaring to about 41% in early February. The financial costs of this situation are considerable, and Dune estimates that liquidity providers outside the price range miss approximately $150 million a year in transaction fees they could have earned.

"Decentralized exchanges have developed into one of the deepest and most liquid markets in the crypto space and are now competing with centralized exchanges and traditional trading venues," said Filippo Armani, head of research at Dune."Our research shows that it has reached this scale even though most of its liquidity is not yet fully utilized."

Where is the idle capital?

Research found a pattern that contradicted many people's expectations. Small positions under $1000 remain idle for approximately 54% of the time, while large positions over $1 million are idle for much less time, at approximately 26%. But because of the huge amount of capital held by large positions, they still account for the majority of idle funds-positions over $1 million account for approximately 47% of all idle capital, while positions over $100,000 account for approximately 76%.

The distance to which prices fluctuate during the week, rather than volatility itself, proved to be the more critical factor. During a week when prices fluctuate significantly but eventually return to near where they started, liquidity tends to remain within the price range. A stable but continuous drift in one direction is more likely to push liquidity completely out of range.

No single platform design can avoid this problem. When comparing the same trading pairs on different exchanges, the idle rate will vary by trading pair rather than bias towards a particular agreement. Even the latest Uniswap v4 in the research platform has an idle rate of about 30%, similar to its predecessor. Even stablecoin pairs-where prices are expected to remain stable-have experienced an idle rate of about 30%, as liquidity providers tend to concentrate funds in extremely narrow bands.

Research also found that the vast majority of idle capital is held in personal wallets rather than automated systems. On Uniswap v3, personal wallets account for 82% to 94% of total idle funds across the chains studied, while capital managed by contract-based systems and active market makers is more reliably maintained within the price range.

What happens next

Armani points out the value of having real-time liquidity data in the future. "It's easy to imagine what will happen to these trading venues as efficiency improves and institutional capital continues to flow in," he said."Achieving this depends on being able to accurately measure liquidity in each trading venue and on each chain, preferably in real time-and that's what Dune has been building on-chain visibility."

Kunz pointed to shared liquidity models and artificial intelligence as potential paths to more efficient systems, and mentioned that 1inch plans to launch a product called Aqua that aims to help liquidity providers maximize their capital utilization.