Total value locked in decentralized finance reached another milestone. However, DeFi advocates should look beyond the effects of the bull market on the gross metric.
Record figures in DeFi
The total value locked in DeFi points to an all-time high with a figure close to $ 40 Billion.
The total value locked in decentralized finance, a measure of the total value of assets dedicated to the DeFi ecosystem, reached a new all-time high of $ 40 billion.
The figure reached $ 39.79 billion on the morning of February 10, according to DeFi Pulse.
While the bullish milestone is undoubtedly a reflection of rising prices in crypto markets, a measurement reveals a somewhat approachable picture of what is actually happening in the DeFi world.
This is because the metric ends largely following the surface effect of the rapid rise in the US dollar value of tokens such as Ethereum (ETH) and related assets locked as collateral in various projects and DeFi applications. When the value of tokens rises, TVL also rises logically, though logically, a high TVL does not necessarily count as a sign of increased participation or activity in the DeFi ecosystem.
So it’s worth looking at a parallel metric called Adjusted TVL, developed by DappRader, that tracks changes in total value locked in the ecosystem and pegs asset prices to the beginning of the specific period under review. This gives more insight into what is happening in the ecosystem without the “impact” of highly volatile and rising or falling token prices.
DappRadar’s chart shows a truly steady increase in net asset entry into the DeFi ecosystem in the first months of 2021, although at first glance less dramatic than the gross TVL figure. As of February 9, their TVL figure was $ 14.91 billion on January 1, now $ 19.15 billion.