CoinEx Institution | TVL Adjustment on Public Chains and Case Analysis

Figure 1 (data source: ViaBTC Capital, CoinEx, DeFiLlama)

Normal TVL Trends

In terms of the TVL trend, the BSC public chain was clearly hit by the May 19 crash. After around two months of horizontal price movement, its TVL significantly rebounded. As for Solana, the TVL started growing from the early days of July and soared since September. Other public chains, such as Terra and Avalanche, also performed pretty well. However, as mentioned earlier, due to the major fluctuation of token prices and the flaw of normal TVL calculation, the actual TVL concerning the ecosystem of the public chains may not shown properly by the picture.

Introduction to Methods of TVL Adjustment

It is very difficult to measure TVL with one numerical value because the tokens locked on a public chain come in a great variety and are subject to rapid updates. The unified measurement based on the USDT-margined value of all tokens is a comparatively more feasible approach. However, since the USDT-margined value also suffers from great volatility, the TVL determined through such an approach may be distorted. One ideal method of adjustment (Method 1) is to establish a Baseline time point and record the price of all the locked tokens at this time point. Whenever the TVL is calculated, the current TVL will be determined by the number of the various tokens in the present network and the Baseline token price, which is expressed in the following formula:

Case Analysis

Through the TVL trends adjusted using Method 3 as shown in Figure 2, we can tell that the BSC crash may not be as steep as that shown by the regular TVL trend. Furthermore, according to the adjusted values, the sharp and sustained recovery from July to September as per the regular TVL trend did not occur — What happened was merely an interval oscillation. In the case of Solana, the real TVL did not soar in September. Rather, it had stagnated at the end of August, and the rise of TVL that followed was likely to be caused by the impact of the FOMO price.

Figure 2 (data source: ViaBTC Capital, CoinEx, DeFiLlama)
Figure 4 (data source: ViaBTC Capital, CoinEx, DeFiLlama)
Figure 5 (data source: ViaBTC Capital, CoinEx, DeFiLlama)
Figure 6 (data source: ViaBTC Capital, CoinEx, DeFiLlama)

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store