I believe that whether you are a big player like me or a farmer on the chain, you must have a feeling that all public chain projects have chosen to pile up TVL crazily. Let's take a look at why Web3 projects are obsessed with TVL before issuing coins~
1. What is TVL? To put it simply, it is the money bag of the project
TVL (Total Locked Value) is how much money people have deposited into a project. The larger this number is, the more people trust it with real money. It's like opening a milk tea shop - the more people line up at the door, the more people think this shop is reliable, right?
🌰For example:
Although Ethereum’s TVL has fallen by nearly 40% recently, there is still $96 billion locked in it. A lean camel is bigger than a horse, and everyone still recognizes it as the boss.
Berachain attracted more than 5 billion in three months, and the surge in TVL directly doubled the price of its token. This is what we call "where the money flows, there is consensus."
👉So why do project owners keep an eye on TVL? Let me explain in three sentences:
Pretending to be a good thing: A high TVL is like driving a luxury car to meet investors. The bigger the number, the easier it is to fool people... No, it's to attract people.
Testing the water temperature: Users are willing to deposit money into the project, which means that the project is not just for fun, but there is real market demand.
Grabbing territory: The DeFi track is too competitive now, only the top five TVL players can reap the big rewards
2. How does TVL help projects issue coins and make money?
1️⃣A game where money makes money - the project invests the money deposited by users and distributes the profits to everyone. The more people there are, the more money they earn.
For example, the TVL of the Pendle protocol has soared from 80 million to 4.6 billion, and the token has increased 20 times! This means that for every 100 million inflows, the token will increase by 4%.
This is like running a casino. The more gamblers there are, the more money they will take. The dealer (project owner) will make a profit without any loss.
2️⃣Airdrop fishing technique - first make a promise that you will get an airdrop if you deposit money, and then issue coins to reap the rewards when people have saved enough.
Arbitrum used this trick before, and the TVL doubled to 32 billion after the airdrop
Ladder fishing is popular now: the earlier you save, the more rewards you get
3️⃣Commission on transaction fees - the more money you deposit and the greater your transaction volume, the more transaction fees the project will charge.
For example, there is an exchange called Cetus on Sui. With a deposit of 72 million, there are 120 million transactions per day. The commission is very profitable.
This is like running a toll booth on a highway. The more traffic there is, the more tolls you can collect.
