TVL, or total value locked, is a metric used to track the value of digital assets locked up in DeFi protocols. As of June 2020, the TVL of all Ethereum DeFi protocols was approximately $1.
6 billion. The top 5 DeFi protocols by TVL are Maker, Compound, Synthetix, Aave, and Curve.
The reason why TVL is such an important metric is because it gives us a good indication of how much capital is being allocated to the DeFi space. The higher the TVL, the more money is flowing into DeFi protocols and the more confident investors are in the space.
One of the main reasons why TVL has been growing so rapidly is because of the yield farming craze that has swept across the crypto space in recent months. Yield farming is a process whereby users lock up their digital assets in a protocol in order to earn interest or rewards.
With yield farming, users can earn returns of up to 200% APY (annual percentage yield). This has led to a influx of new users and capital into the DeFi space, which in turn has led to an increase in TVL.
It is important to note that TVL is not just growing because of yield farming. There are many other factors driving growth in the DeFi space such as lending protocols, stablecoins, and token trading platforms.
The DeFi space is still in its early stages and there is a lot of room for growth. We believe that TVL will continue to grow at an explosive rate in the months and years ahead as more users and institutions flock to this exciting new sector of the crypto economy.