Despite the U.S. Securities and Exchange Commission (SEC) classifying Cardano (ADA) as a security, the decentralized finance (DeFi) activity on the Cardano network has seen significant growth. The total value locked (TVL) in Cardano has hit a record 578 million ADA, as per DeFiLlama data. The DeFi sector on Cardano has been thriving, with an increase in the use of decentralized applications (dApps) built on the blockchain. The top 10 protocols on Cardano have seen double-digit growth over the past month. Furthermore, over 1000 Plutus V1 smart contracts have been recorded on Cardano in 2023, indicating increased activity on the network.

However, despite the growth in DeFi activity, many ADA holders are selling at a loss. Blockchain analytics firm Santiment has noted that a significant amount of ADA was sold at a loss over the past week.  Nearly 90% of ADA holders are holding at a loss. The SEC's decision to label ADA as a security in June may have influenced some traders to sell at lower prices. The Cardano Foundation has disputed this classification, but it has undoubtedly affected market sentiment.

The price of ADA has been struggling for several months, hitting a 2-year low of $0.23 after being labeled a security. Consequently, Cardano's TVL in dollars has remained below $200 million since peaking at $326 million in March 2022, despite an increase in ADA locked within the ecosystem. As of now, ADA is trading at $0.286, up by 2.6% in the past 24 hours, but down by about 40% over the past year.