What is TVL: A detailed explanation of the indicator of the total value of cryptocurrency locks

Introduction

In the cryptocurrency market, Total Lock Value (TVL) has become a key indicator of the strength of DeFi projects. Whether it is the market share of top protocols such as Lido and AAVE, or the development potential of emerging platforms, TVL provides an important reference. This article will give you an in-depth understanding of how TVL is calculated, its use cases, and how to use TVL data to make more informed investment decisions.

What is TVL? Understand the total value of cryptocurrency locks in one minute

Total Locked Value (TVL) is an important metric for measuring the size of DeFi projects in the cryptocurrency market and represents the total value of crypto assets locked in a particular protocol or platform. When a user deposits assets into a DeFi protocol for staking, lending, or providing liquidity, those assets are counted in the protocol’s TVL. By analyzing TVL data, investors can better understand the market position and development potential of DeFi protocols.

In-depth analysis of the DeFi TVL calculation formula: key metrics to avoid being misled

The calculation of the total DeFi hedged position is relatively intuitive, and the basic formula is: the number of coins multiplied by the current market price. However, there are several factors to consider in practice. The first is the problem of double counting of cross-chain assets, and the same asset may be repeatedly pledged on different chains; The second is the impact of price fluctuations on TVL, and the high volatility of the cryptocurrency market will lead to large changes in TVL data. Therefore, investors need to consider these factors comprehensively when referring to TVL data.

The world’s top DeFi protocol TVL ranking: Lido, Curve, AAVE Who is the king?

According to the latest data, the TVL rankings of the world’s major DeFi protocols are as follows:

What you must learn about investing in the currency circle: how to use TVL data to make accurate investment judgments

When making DeFi investment decisions, TVL data analysis needs to combine multiple dimensions. First of all, observing the growth trend of protocol TVL, a steadily rising TVL usually indicates that the project has a good development momentum. Secondly, comparing the ratio of TVL to market capitalization, a lower ratio may mean that the project is undervalued. In addition, it is also necessary to pay attention to the number of users of the protocol, transaction volume and other indicators to comprehensively evaluate the real value of the project. Investors can obtain more relevant information and trading opportunities through platforms such as Gate.io.

Conclusion

As the core indicator of the DeFi market, TVL not only reflects the market size of the protocol, but also shows its development potential. From the data of top protocols such as Lido and AAVE, it is important to accurately understand how TVL is calculated and potential biases. Investors should combine multi-dimensional indicators such as TVL growth trend, market capitalization ratio and user activity to make more accurate investment judgments.

*Risk warning: The cryptocurrency market is highly volatile, TVL data may be distorted due to asset price fluctuations and cross-chain double calculation, and investment decisions need to be carefully evaluated. *