How Does the MV=PQ Model Differ from a Simple Comparison of Market Cap to Total Value Locked (TVL)?

The MV=PQ model is a dynamic valuation framework that attempts to link a token's required market cap (M P) to the network's future economic activity (P Q) and the token's turnover rate (V). TVL, conversely, is a static, backward-looking metric that only measures the total value of assets currently deposited in a protocol.

While high TVL suggests strong user trust and collateral base, it does not directly account for the velocity or the ongoing economic output (PQ). TVL is a measure of capital at rest, while MV=PQ is a measure of capital in motion.