Make money In DeFi - TVL & Other Metrics

This video explores the significance of Total Value Locked (TVL) as a vital indicator within the decentralized finance (DeFi) sector. TVL measures the cumulative value of assets locked in blockchain platforms, including cryptocurrencies held in smart contracts for liquidity pools, collateral for loans, and other tokenized assets. This metric offers investors insights into a platform's liquidity, with higher TVLs often signaling stronger investment prospects due to the critical role liquidity plays in a platform's growth.
However, the video also addresses the limitations of TVL, particularly its failure to account for price fluctuations in the crypto market, using the example of MakerDAO to illustrate how significant drops in asset prices can misleadingly suggest a decrease in platform engagement.
Beyond TVL, the video delves into additional metrics relevant to assessing DeFi protocols, including the utilization rate, which reflects the risk associated with lending platforms, the number of liquidity providers, which enhances platform stability, and both transaction count and volume, indicating the platform's activity level and popularity. It introduces the TVL/market cap ratio as a means to mitigate the impact of price volatility, offering a more stable metric for evaluating the extent of token supply utilization within DeFi pools. This comprehensive overview aims to arm viewers with the knowledge to more accurately gauge the health and potential of DeFi platforms beyond surface-level figures.

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00:00 Intro
0:11 Total Value Locked
0:55 The Importance Of TVL
1:25 The Biggest Flaw With TVL
2:22 Other Metrics
2:34 Utilization Rate
3:20 Number Of Liquidity Providers
3:52 Transaction Count
4:22 Transaction Volume
4:40 TVL In Ration With Market Cap

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Disclaimer: The information provided in this video is for educational and entertainment purposes only. It is not financial advice.

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