The impact of increased capital efficiency in Ethereum Layer 2 solutions on DeFi protocol TVL involves attracting more liquidity and capital. Higher capital efficiency means lower costs and better returns, encouraging users to lock up their assets in DeFi protocols. For example, improved Layer 2 solutions can reduce gas fees, making DeFi more accessible. This increased participation leads to higher TVL, driving further innovation and growth in the DeFi space.

Lower costs and better returns are key to boosting DeFi growth and innovation. 🔥