This trust, often intangible and elusive, is crucial for successful and secure transactions in digital assets. The TVL for a specific DeFi protocol can also be found on DeFi Pulse, where you can find analysis and rankings of decentralized finance protocols. For example, you can use DeFi Pulse to identify the DeFi protocols with the highest volume of crypto assets staked. The platform tracks the TVL and displays it in USD, which makes it easy to understand.

Next, natural language processing he lends out an additional $1,000 in crypto for interest on the same platform. Afterwards, he deposits $1,000 worth of coins in a money pool to provide trading liquidity for swapping between obscure altcoins and he earns trading commissions. If this were the only business the hypothetical DeFi platform was getting, then its TVL would be $3,000. In order to get the current market cap, you need to multiply the circulating supply by the current price.

What Is the Total Value Locked Check?

Total Value Locked USD is the amount of cryptocurrency locked in defi applications in U.S. dollars. Crypto fans india to ban ownership of cryptocurrencies use TVL to gauge interest in a cryptocurrency app or platform. For this purpose, it is a good metric, but it should also be used with other metrics in an analysis. This is similar to traditional banks, where investors analyze the level of deposits held by an institution.

The industry-wide TVL calculations started in 2017 as the first DeFi projects hit the market. Initially, the numbers were more than humble, at least by today’s standards. At the end of 2017, the TVL of the entire industry stood at just $120 million.

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Lastly, specific market conditions can affect TVL, which may cause the value of the contained assets to dip or experience volatility. Traders should examine how often a blockchain’s TVL is audited to ensure prices are regularly updated and that all corresponding data is correct. TVL works by aggregating the total value of all assets users have staked, lent, or otherwise committed to DeFi platforms. A high TVL typically indicates user confidence and a significant volume of assets managed by a DeFi protocol, potentially signaling its stability and potential for returns.

TVL vs Market Cap

1. A higher TVL implies higher efficiency as well as an adequate supply of liquidity for borrowers in the lending markets.
2. In DeFi, it’s a term that comes up time and again, and it’s been in the news following the revelation that Tornado Cash’s TVL jumped nearly 50% in the month before it was sanctioned by the U.S.
3. All of the chains above are integrated on our DeFi crypto wallet tracker.
4. The overall industry TVL is the sum of the TVLs held by all individual DeFi apps.
5. The total value locked in the crypto market declined from $160 billion in mid-April 2022 to $58.4 billion in September 2022, the lowest level since March 2021.
6. DYdX also offers eligible traders a decentralized exchange to trade crypto perpetual contracts with up to 20x leverage.

Lending platforms will aim to attract investors by offering an attractive APR yield, and any digital assets locked on the network to earn that yield will boost the network’s TVL figure. Locking is generally done by staking tokens on a blockchain, which also serves to give the token staker the ability to earn fees by validating transactions. Crypto trading depends on market trends, asset values, and, most importantly, trust in decentralized finance (DeFi) protocols.

TVL is the most obvious indicator of a DeFi project’s popularity with active users. It serves as a good measure of the project’s business concept robustness. Cryptographic hash functions are vital for online security as well as crypto transactions. Learn more about what hash functions are and how they relate to digital assets. This Article does not offer the purchase or sale of any financial instruments or related services.

But, there are actually a lot of really useful DeFi services out there, and these are the ones you should check out. There also have been cases in which TVL numbers can be artificially inflated by bad actors who want to attract attention to their platform or project.

If a platform has a large amount of assets locked on its network, it gives the impression that it is a secure platform trusted by crypto investors. TVL essentially represents the total value of all the crypto assets that are locked into a protocol’s smart contracts. Total value locked (TVL) is an important metric used to quantify and compare the size and scope of different DeFi protocols. The first step in calculating the what makes bitcoins so valuable TVL of a particular DeFi project is establishing its market cap. You can do this by multiplying the project’s token supply by the current price, usually in US Dollars. The TVL is then calculated by dividing the market cap by the maximum circulating supply.