diff --git a/crates/ty_python_semantic/resources/mdtest/pep695_type_aliases.md b/crates/ty_python_semantic/resources/mdtest/pep695_type_aliases.md
index a0f1c3fd8b..167fe4025d 100644
--- a/crates/ty_python_semantic/resources/mdtest/pep695_type_aliases.md
+++ b/crates/ty_python_semantic/resources/mdtest/pep695_type_aliases.md
@@ -313,6 +313,23 @@ static_assert(is_subtype_of(Bottom[JsonDict], Bottom[JsonDict]))
 static_assert(is_subtype_of(Bottom[JsonDict], Top[JsonDict]))
 ```
 
+### Cyclic defaults
+
+```py
+from typing_extensions import Protocol, TypeVar
+
+T = TypeVar("T", default="C", covariant=True)
+
+class P(Protocol[T]):
+    pass
+
+class C(P[T]):
+    pass
+
+reveal_type(C[int]())  # revealed: C[int]
+reveal_type(C())  # revealed: C[Divergent]
+```
+
 ### Union inside generic
 
 #### With old-style union
diff --git a/crates/ty_python_semantic/resources/primer/bad.txt b/crates/ty_python_semantic/resources/primer/bad.txt
index 1a4f3eed3e..45414db491 100644
--- a/crates/ty_python_semantic/resources/primer/bad.txt
+++ b/crates/ty_python_semantic/resources/primer/bad.txt
@@ -1,2 +1,2 @@
 spark  # too many iterations (in `exported_names` query), `should not be able to access instance member `spark` of type variable IndexOpsLike@astype in inferable position`
-steam.py  # dependency graph cycle when querying TypeVarInstance < 'db >::lazy_default_(Id(2e007)), set cycle_fn/cycle_initial to fixpoint iterate.
+steam.py  # too many iterations
diff --git a/crates/ty_python_semantic/src/types.rs b/crates/ty_python_semantic/src/types.rs
index 1c0355862d..91c51c5e83 100644
--- a/crates/ty_python_semantic/src/types.rs
+++ b/crates/ty_python_semantic/src/types.rs
@@ -8344,7 +8344,7 @@ impl<'db> TypeVarInstance<'db> {
         Some(TypeVarBoundOrConstraints::Constraints(ty))
     }
 
-    #[salsa::tracked(heap_size=ruff_memory_usage::heap_size)]
+    #[salsa::tracked(cycle_initial=lazy_default_cycle_initial, heap_size=ruff_memory_usage::heap_size)]
     fn lazy_default(self, db: &'db dyn Db) -> Option<Type<'db>> {
         let definition = self.definition(db)?;
         let module = parsed_module(db, definition.file(db)).load(db);
@@ -8391,6 +8391,13 @@ fn lazy_bound_or_constraints_cycle_initial<'db>(
     None
 }
 
+fn lazy_default_cycle_initial<'db>(
+    _db: &'db dyn Db,
+    _self: TypeVarInstance<'db>,
+) -> Option<Type<'db>> {
+    None
+}
+
 /// Where a type variable is bound and usable.
 #[derive(
     Clone, Copy, Debug, Eq, Hash, Ord, PartialEq, PartialOrd, salsa::Update, get_size2::GetSize,