SquareGhostz
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Relearning Cryptocurency

Relearning Cryptocurency

Total value locked (TVL) 1/5 As reference point, you can use to TVL to understand what are the number of assets being staked in a specific protocol.

defi blockchain btc eth

learning Cryptocurencies

2/6 There are three main factors when it comes to looking at specific defi market cap TVL ratio:

1.Circulating Supply

2.Maximum Supply

3.Current Price (USD)

3/6 To calculate the TVL of a project, multiply the number of tokens deposited in the project by its current price in US dollars.

4/6 To get the current market cap, you need to multiply the circulating supply by the current price. In order to get to the TVL ratio, you would need to take that marketcap number and divide it by the TVL of the service.

5/6 Do remember that TVL doesn't include the number of outstanding loans. It is more of the total amount of underlying supply that is secured (bounded by smart contract) on specific DeFi applications. *Will explain more in-depth in future on smart contract.

6/6 One of the easiest ways to implement the TVL ratio is to help determine if a DeFi asset is undervalued or overvalued, and this can be done by looking at the ratio. If it is under 1, it is undervalued in most cases.

This post is based on this twitter thread.

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