Decentralized finance (DeFi) has experienced significant growth over the past few years. Originally born as a niche sector offering users an alternative to traditional financial institutions, DeFi has become an important part of the cryptocurrency ecosystem. One of the key indicators of the growth and success of DeFi projects is Total Value Locked (TVL).
How is TVL calculated?
TVL includes all assets locked in the platform’s smart contracts. It can be:
- User Deposits: Assets that users deposit on the platform to obtain various financial services.
- Collateral: Assets used as collateral for loans or participation in other financial products.
- Assets in smart contracts: Funds locked in various earning mechanisms, such as yield farming.
To calculate TVL, the current market values of all these assets are summed up.
In 2020, during a period known as “DeFi Summer,” TVL in the DeFi industry skyrocketed, surpassing the $10 billion mark. This was the first significant jump that brought attention to this metric as an indicator of the success of DeFi projects.
The importance of TVL for DeFi projects
TVL is an important indicator of user trust in the platform. A high TVL indicator indicates that users are willing to deposit and lock their assets on the platform, which, in turn, indicates its reliability and popularity.
In addition, TVL serves as a measure of the platform’s liquidity, which is important for users looking to exchange assets quickly and easily. High TVL also has a positive effect on the valuation and reputation of the project among investors and analysts.
Let’s take a look at this infographic:
Here’s a detailed description of the key insights from the performance of Symbiotic’s TVL by EtherDrops bot:
TVL Achievement: Symbiotic has surpassed the $200M TVL milestone, reaching an impressive $217.8M as of June 12, 2024.
Major Contributions
Wintermute: Contributed significantly with 2,186 wstETH (approximately $9M).
CMS Holdings: Added 461.7 wstETH (around $1.88M).
Big Brain Holdings: Deposited 461.7 wstETH (estimated at $2.6M).
Growth Timeline
- Initial major inflows began around $50M TVL.
- Subsequent influx led to a rapid escalation past $100M and $150M TVL.
- Significant jumps were recorded, culminating in the current $217.8M.
Funding Milestone: Recently secured $5.8M in a Seed funding round from Paradigm and Cyber Fund on June 11, 2024.
Factors contributing to the success of Symbiotic Crosses include innovative product offerings, attractive user experiences and effective marketing strategies. A high TVL also highlights the platform’s liquidity and its ability to attract and hold a significant amount of assets.
This achievement is significant not only for the project itself, but also for the entire DeFi industry, showing that new projects can quickly grow asset volumes if they offer valuable and in-demand services.
