TVL’s main DeFi projects

Key Takeaways:

• Total Value Locked (TVL) measures how much money users have deposited into DeFi protocols.
• A high TVL may indicate a popular and trustworthy project, while a decreasing TVL may indicate a troubled company.
• Combine TVL with other key metrics such as daily active users, revenue/fees, market capitalization, and token price for comprehensive investor analysis of DeFi projects. (Read the guide.)

One of the best ways to find a good cryptocurrency company is to measure their Total Value Locked (TVL).

Not all projects have total value locked in. Only projects that have the ability to allow users to store money in a cryptocurrency protocol in return for receiving rewards. For example, there are lending protocols that allow users to “lock” their cryptocurrency to lend it to other users and receive reward tokens in return.

Think of the total value locked up as money held by a bank or assets managed by an investment firm. Generally speaking, more TVL = more reliable project. This is especially true if the amount has increased over time.

Conversely, a weak or declining TVL equates to a bank that does not have much cash on hand. It’s best to stay away.

In today’s feature, we introduce the best cryptocurrency companies selected by TVL.

What is Total Value Locked (TVL)?

TVL refers to all assets secured in the cryptocurrency company’s decentralized finance (DeFi) protocol. These assets may include cryptocurrencies or funds that users have deposited or staked on the protocol. TVL may consist of the following items:

• All assets are locked in staking pools or nodes to ensure network security.
• Any asset deposited into a liquidity pool for lending, trading, or other similar purposes.
• Any asset used as collateral to secure a loan in a lending protocol.
• Cryptocurrencies have been invested in sustainable income streams, such as high-yield farming projects.

TVL is usually expressed in US dollars. Investors typically use this to gauge the popularity of DeFi projects.

Best blockchain project selected by TVL

In this section, we have compiled a list of the top five blockchain projects with the highest TVL as of Q2 2024. Projects are sorted in ascending order of size.

*Based on token terminal data. Layer 1 protocols are not included in the TVL list.

Lido Finance

TVL: USD 362.1 billion

Year of release: 2020

segment: Liquid Staking

Launched in December 2020, Lido Finance is a DeFi platform that provides liquid staking solutions for cryptocurrency users. Connect individual stakers to Proof-of-Stake (PoS) blockchains such as Ethereum, Solana, Polygon, Polkadot, and Kusama.

Over the years, Lido has emerged as the undisputed industry leader in ETH staking, accounting for nearly 29% of all staked ETH. The majority of TVL in the project comes from 9.4 million ETH tokens (worth approximately $35 billion) staked by users.

By December 2023, Lido’s ETH staking market share had grown further to 32%, raising concerns about the future security of the Ethereum blockchain. However, increased competition from other protocols in 2024 has helped reduce Lido’s potential threat to the network.

Meanwhile, the rapid rise in the price of ETH since 2023 has had a direct impact on Lido’s TVL over the past 12 months. It more than tripled from $13 billion in June 2023 to $40 billion in March 2024.

own layer

TVL: $19.23 billion

Year of release: 2023

segment: ETH re-staking

EigenLayer is an innovative new project launched in 2023 with an interesting premise. This means creating a market where ETH stakers can reclaim their assets as an additional source of income.

The re-staked assets (liquid staking ETH tokens) are then distributed to provide network security to other applications and projects building on top of Ethereum. Developers can rent “pooled security” integrated into the platform in exchange for a fee.

EigenLayer has attracted significant interest from ETH holders as it allows stakers to unlock additional passive rewards. In less than six months, it has emerged as the second largest protocol on the market in terms of TVL, which clearly shows how enthusiastic investors are.

EigenLayer could grow even further in the coming years as ETH staking gains new users. Other reclaim methods exist, but the risk factor is much higher with these protocols than with EigenLayer.

ghost

TVL: $12.84 billion

Year of release: 2017

segment: DeFi Lending

Aave is a DeFi platform focused on peer-to-peer lending on blockchain. Users can add funds to liquidity pools and earn interest income. You can also borrow funds from the platform by depositing various cryptocurrency tokens as collateral.

These two types of transactions add assets that contribute to the protocol’s TVL. Aave has been around since 2017 and has become the largest DeFi lending platform in the blockchain market.

The protocol is based on Ethereum and accepts popular stablecoins such as ETH, Tether, and USDC, as well as other liquid staking tokens and wrapped tokens. The platform’s net deposit value doubled from $8 billion in June 2023 to $20 billion as of the second quarter of 2024.

crystal bridge

TVL: $11.92 billion

Year of release: 2021

segment: ETH Layer 2 scaling

Due to network limitations, the Ethereum blockchain has suffered from high gas fees and low transaction speeds over time. Layer 2 scaling solutions like Arbitrum Bridge allow users to securely and quickly transfer assets on and off Ethereum at affordable prices.

In addition to Ethereum and ERC20 tokens, Arbitrum Bridge supports Avalanche, Polygon, and more than a dozen other blockchain networks. Due to its significantly lower transaction costs and superior security, Arbitrum Bridge has seen a surge in popularity since its launch in 2021.

Additionally, scaling solutions include a variety of DeFi apps and protocols that offer yield farming and other lucrative passive income opportunities. Many ETH and other assets that have been locked in Bridge over the years are typically secured in these projects.

After remaining relatively stagnant for most of 2023, the platform’s TVL doubled in 2024 due to broader positive sentiment in the cryptocurrency market. As Ethereum grows in popularity, L2 scaling solutions like Arbitrum may also witness an influx of users.

MakerDAO

TVL: 6.48 billion dollars

Year of release: year 2014

segment: Cryptocurrency loan

Maker DAO is a unique protocol that combines a lending platform and a native stablecoin called the DAI token. The protocol allows borrowers to deposit ETH and other ERC20 tokens as collateral and receive loans in DAI tokens.

Overcollateralized cryptocurrency loans, such as those offered by MakerDAO, are useful if you want to invest in other (potentially riskier) tokens without exposing your ETH directly. Instead of selling your ETH, you can lock it as collateral and get DAI.

Borrowers’ deposits make up the majority of TVL in the MakerDAO protocol. Users can also gain voting rights in the protocol by investing in MKR governance tokens.

Crypto lending projects often crash and burn during severe market downturns, but Maker DAO was a notable exception. The fact that this project ranks in the top five in terms of TVL is a testament to its popularity and long-term stability.

Investor Implications

Careful historical analysis of the TVL indicator can help gain important insights into the credibility, popularity, and potential long-term viability of DeFi projects. However, for a complete picture, it is essential to look at other important metrics such as daily active users, revenue/fees, market capitalization, and price. Check out our digital asset valuation guide and these great resources:

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