Total Value Locked (TVL) is a crucial metric in the DeFi space, representing the aggregate amount of funds locked into a DeFi protocol. Here's what you need to know ¹ ²:
- *What is TVL?*: TVL measures the total value of assets locked in a DeFi protocol, providing insight into the protocol's liquidity and security.
- *Importance of TVL*: A high TVL indicates a large amount of assets are locked in the protocol, making it more secure and less susceptible to hacks or sudden crashes.
- *Calculating TVL*: To calculate TVL, you need to know the number of tokens in circulation, the total number of tokens issued, and the current token price.
- *TVL Ratio*: The TVL ratio compares the market capitalization of a protocol to its revenue, helping investors determine if a protocol is undervalued or overvalued.
- *Where to find TVL*: You can find TVL on websites like DefiLlama, which provides real-time data on DeFi protocols, including their TVL.
According to DefiLlama, the total value locked in DeFi protocols has grown significantly, reaching nearly $100 billion in February 2024. Some popular DeFi protocols with high TVL include:
- *Lido DAO (LDO)*: With a TVL of over $30 billion, Lido DAO is one of the largest DeFi protocols.
- *Rocket Pool*: Another popular protocol with a significant TVL.
When evaluating DeFi protocols, consider TVL alongside other metrics, such as token supply on exchanges, unique address count, and non-speculative usage, to make informed investment$BTC