DeFi growth under scrutiny of new metrics


The growth of Decentralized Finance (DeFi), is one of the most striking phenomena of the crypto environment. However, this boom under the measurements with which it has been studied, might not be so accurate.

In this sense, the new metric, published by DappRadar, seeks to show a clearer perspective about the real growth of DeFi. The so-called adjusted TVL, aims to clean the Total Blocked Value (TVL) of any external influence, including price increases.

According to DappRadar, there is an inconsistency with the nominal Bitcoin Trader measurements with which the DeFi sector has been studied. This consists of the fact that, when measuring the LTV with the USD, any increase in the price of the token will increase the LTV, inflating it.

Is DeFi growth being overestimated?

DeFi have become an icon for the entire ecosystem because of their reported growth in 2020. However, as mentioned in the previous paragraph, it could be over or underestimated depending on the increase or decrease of the corresponding tokens.

In other words, even if no new assets are being moved into the protocols, if the token value goes up, the LTV will go up as well. On the other hand, if the value of that token drops in relation to the USD, the Total Locked Value will decrease, even if no new assets are included or removed.

„$4, $6, $7 billion. It seems like records are being broken every week,“ says the DappRadar publication. What is required is a real measure, not an artificial one. Of this second type, DeFi Pulse’s statistics could be considered.