In the world of cryptocurrencies, there are many indicators that help assess the state of the market and understand which projects are worth investing in. One of the key elements is:#TVL , or total locked volume. Why do investors pay attention to this indicator in the first place? What is TVL, how to calculate it and which coins are suitable for this purpose?
TVL Value in Cryptocurrency
#TVL is the total amount of assets, such as tokens, that capital providers lock in a platform’s or protocol’s smart contracts. You have the option to allocate these amounts for staking, farming, or participating in other programs #DeFi . Generally, the higher a project’s TVL, the more secure and valuable it is. Simply put, the total locked value is a measure of users’ trust in the platform. The more funds users lock, the higher their trust in the platform. To appreciate the significance of TVL in the cryptocurrency market, it is important to understand that this metric matters not only to the platforms themselves, but also to investors. A high TVL indicates that users are willing to “freeze” their funds in anticipation of potential profits. It can also reflect the liquidity of the protocol and its resilience to market fluctuations. In real numbers, TVL can reach billions of dollars, depending on the popularity of the platform. For example, the total blockchain volume in the decentralized finance market has been consistently growing in recent years. This reflects the growing interest in DeFi services and cryptocurrencies in general. The value fluctuates depending on the price movement of the underlying token.When it becomes more expensive, TVL increases and vice versa.$BTC
How to check TVL?
If you want to keep track of changes and choose the best projects to invest in, it is important to know how to check the current TVL of a specific project. You calculate the total volume locked on the blockchain by summing up the total value of digital assets. They can be on a decentralized platform or in an application. Among the most popular tools, you can find specialized websites for monitoring cryptocurrencies and DeFi protocols.
To calculate TVL, follow these simple steps:
Determine the total value of all assets currently locked on the platform. This includes all assets such as collateral, staked and borrowed.
Convert the value of assets into a standard unit such as USD or another fiat currency.
Add up the total cost to determine the TVL.
Great job! You have successfully calculated the data.$BNB
Why is TVL important?
TVL plays a key role in the crypto world, not only as an indicator of DeFi activity but also as a benchmark for everyday users and investors. It has multifaceted implications for all market participants, from individual traders to large players. Market value reflects the valuation of a protocol by both active and passive investors. They allocate funds to a protocol for long-term profits but do not use them.
In addition, TVL is one of the important indicators of the overall health of the ecosystem and the market. In essence, it shows the amount of funds that users have locked in various protocols and smart contracts. The higher the TVL, the more investment is attracted to the cryptocurrency space.
For regular users, TVL is important because it indicates how much demand there is for certain cryptocurrencies and platforms. When a large amount of savings is locked, it can indicate that the project is very popular and secure. This means that users can trust it.
For investors, TVL serves as a useful tool for analyzing opportunities in the market. A high TVL demonstrates demand and can signal strong investment potential. Investors often look at TVL to assess the profitability of certain crypto projects and their future prospects.
Increasing the volume of coins allows projects to maintain high liquidity and stability, especially during market fluctuations. Platforms with high TVL can offer better conditions for staking and farming, as well as attract new assets and users, which contributes to the further development of the ecosystem. $YFI
Top Tokens by TVL
They hold billions of dollars in their protocols. Here they are:
Ethereum — The clear leader in TVL, thanks to its widespread use in dApps and interaction with smart contracts. ETH continues to hold the top position as the basis for many DeFi projects.
Binance Coin is the native token of Binance Smart Chain, widely used for staking and farming. The high TVL in the Binance ecosystem reflects the significant interest in trading on this platform.
Tron is a popular coin due to its high transaction speed. Its TVL has been increasing significantly recently.
Avalanche is a cryptocurrency that is rapidly gaining popularity due to its scalability.
Polygon is a network with high speed and low fees, making it attractive to DeFi developers. Additionally, its coin, MATIC, is growing rapidly thanks to many programs using Polygon.
Solana is one of the fast growing networks that is gaining attention due to its high throughput.
Arbitrum is a Layer 2 solution for ETH that reduces gas costs and speeds up transactions.
Optimism is another Layer 2 solution for Ethereum. It focuses on improving efficiency and reducing operational costs.
Fantom is a smart contract platform offering high performance and low fees.
Cosmos - Allows blockchains to interact with each other, creating a scalable ecosystem.
These projects highlight the importance of TVL as a key metric for assessing the stability and popularity of platforms. A high TVL shows that these projects are attracting significant capital, indicating successful development and long-term potential.
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