The last few months, several cryptocurrencies have found themselves on the roller-coaster ride of the market. In the midst of this volatile period, several crypto assets saw a pull-out from their investments in decentralised finance (DefI). The total value held by any DeFi platform within its smart contracts is called the Total Value locked or TVL.
TVL is the amount of user funds deposited in a DeFi protocol. These funds could be vested in the project for several functions like staking, liquidity pools, or lending.
While the market cap is indicative of the appreciation of a DeFi from active, passive investors – TVL denotes the popularity of a project with the number of active users. It is a good measure to evaluate the robustness of a project.
If someone wishes to measure the future potential of a DeFi project, then one needs to check its market cap. But if someone wishes to check the current scenario of a project, TVL is the indicator you want to consider.