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    Gate.io Blog Total Value Locked In DeFi As Billions Are Lost

    Total Value Locked In DeFi As Billions Are Lost

    31 May 12:30

    Total Value Locked means the current value of the deposits in a DeFi protocol.

    The TVL is an important metric for investors and holders of digital assets in DeFi.

    You have to consider the Total Value Locked when assessing whether a DeFi protocol's native token is appropriately valued.

    The unstable dollar value of digital assets automatically leads to the change in the TVL.

    MakerDAO has the highest volume of Total Value Locked in 2021, followed by Aave and Curve.

    2020 and 2021 witnessed an exponential increase in all DeFi protocols combined total value Locked.

    In 2022, there has been a consistent drop in the Total Value Locked of top DeFi protocols.

    The TVL volume of the Decentralized Finance protocols can change overnight.

    The cryptocurrency space is robust and comprises several individuals, brands, and organizations. Among the list above, every one of them has its main aim and target in the cryptocurrency space.

    The crypto space comprises the enthusiasts, the traders, the holders, and the investors, among a host of other people. One major stakeholder that largely determines the price rise and fall is investors.

    The investors in the cryptocurrency purchase digital assets and deposit them in their DeFi protocol for as long as possible. The Decentralized Finance Protocol (DeFi) is the tool or app where you can invest in digital assets by purchasing () native tokens.

    The total of all the digital assets that various investors deposit in the Decentralized Finance (DeFi) protocol is the Total Value Locked (TVL).

    At this juncture, it is expedient to identify the concept of Total Value Locked and proceed to some of the events that led to the loss of Billions locked in DeFi protocols.

    The Total Value Locked (TVL)

    Image: Kirobo
    The Total Value Locked means the current value of the deposits in a DeFi protocol, and it is an important metric that doesn't reflect the yield that the deposits are projected to earn.

    The Total Value Locked (TVL) is an essential metric that investors consider in the crypto industry. Investors consider the TVL when assessing whether a DeFi protocol's native token is appropriately valued.

    A DeFi Total Value Locked (TVL) changes when users make new deposits and withdraw their assets. The fluctuating dollar value of digital assets automatically leads to the change in the TVL.

    The growth of the Total Value Locked is directly proportional to the appreciation in the native token’s value. Sometimes, all or some of a Decentralized Finance protocol’s deposits may be nominated in its native token.

    There are cases where the market cap of a token may be high or low relative to the Total Value Locked (TVL) of the project, and that is normal in the crypto industry.

    In 2020 and 2021, the combined TVL of all Decentralized Finance (DeFi) protocols grew exponentially. According to an analytics firm, DeFi Llama, at the beginning of 2020, the combined Total Value Locked (TVL) of all DeFi platforms was about $630 million.

    MakerDAO, a foremost DeFi protocol, accounted for half of that TVL. By the end of 2021, the MakerDAO protocol had grown to about $241 Billion.

    Some notable Decentralized Finance protocols that crossed the $10 billion TVL valuation in 2021 include MakerDAO, Curve, and Aave.

    The next point of call on our plan is to identify the events that led to the loss of billions in the Total Value Locked in DeFi.

    TVL In Decentralized Finance Loses Billions

    Image: Blockchain news

    The crypto economy has had a bad run in recent times, and it continues to shed billions by the day. The same occurrence is bedeviling the Total Value Locked of Decentralized Finance protocols.

    In the first week of May 2022, the Total Value Locked (TVL) in DeFi protocols slipped to $196.6 billion. The first of such a drop from $200 billion valuations in a short while.

    During the same period, the TVL in DeFi lost about 3.6%. Also, about $592 billion in smart contract protocol tokens dropped by 3.5%.

    The drop in the Total Value Locked of top DeFi protocols has been consistent in recent times. Except for Anchor, all the ten top DeFi protocols have significantly declined their TVL percentage (over 30 days).

    For instance, Aave protocol declined by 22.98%, MakerDAO shed 16.81%, Lido lost 13.73%, Curve Finance dropped by 11.74%, and Convex Finance has lost 10.59% since last month. This statistic shows that the Aave DeFi protocol is the biggest loser while Curve Finance continues to dominate.

    In another statistic, Curve Finance, an Ethereum-based DeFi protocol, still dominates the chart in the first week of May with about 55% dominance. Terra has 14.36% and the second-largest by the Total Value Locked.

    Blockchain protocols such as BSC, Avalanche, and Solana are behind Ethereum in Decentralized Finance TVL size. Curve, Lido, Anchor, MakerDAO, and Convex Finance are the top five DeFi protocols regarding Decentralized Finance Total Value Locked size.


    “At a high level, the Total Value Locked (TVL) indicates the trust that investors have in their various Decentralized Finance Protocols….” This is a statement by Derek Lim, a crypto expert.

    The above statement shows the importance of TVL to crypto investors and enthusiasts. The Total Value Locked will continue to be an important metric to identify how the DeFi protocols are faring and their relationship in the charts.

    This article analyzed various statistics and compared the TVL percentage of the major Decentralized Finance Protocols to understand how billions have been lost in recent times.

    However, these figures change daily and are subject to crypto, blockchain, and DeFi market forces.

    Author: Valentine A., Gate.io Researcher
    This article represents only the researcher's views and does not constitute any investment suggestions.
    Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
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