In Which Specific DeFi Sub-Sectors Is TVL Considered a More Relevant Metric? ▴ Learn

In Which Specific DeFi Sub-Sectors Is TVL Considered a More Relevant Metric?

TVL is considered a more relevant metric in sub-sectors where the primary utility is directly tied to the size of the asset base. This includes decentralized lending protocols (where TVL represents the collateral pool), decentralized stablecoin protocols (where TVL is the backing collateral), and insurance protocols (where TVL is the underwriting capital).

In these areas, the ability to service large loans or cover large claims is directly proportional to the TVL.

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