Investment

Did Bitcoin DeFi Sovryn really overtake TVL’s Uniswap v3?

Sovryn, a BTC money market protocol based on a bitcoin-based RSK smart contract platform, appears to have gone through a decentralized financial ladder recently.

June 9, bitcoin commentator Anthony Pompliano, shared data with his million followers from the decentralized financial data aggregator, DeFi Llama, indicating that the protocol had been collected total value locked (TVL) of $ 1.95 billion – ranked 14th in the industry and defeated the darling of DeFi Uniswap v3.

Pomp and many of his followers are saddened that ethereum platforms such as DeFi Pulse do not list bitcoin DeFi projects such as Sovryn and Stacks, with the influencer saying:

“One would be in the top 15 of the TVL list and the other in the top 25. Why aren’t they included?”

Pompe’s contribution to Sovryn has been criticized by proponents of the Ethereum ecosystem, who have refuted the idea that Sovryn had amassed a ten-figure TVL. “ChainLinkGod” indicates that the embedded control tokens may have contributed to an exaggerated estimate of TVL.

Since the original Pompa DeFi contribution, Llama has adjusted its data for Sovryn, now it lists the project as TVL with only $ 52 million. The updated data now coincides with TVL provided by Sovryn itself wiki.

In a statement issued on June 10, DeFi Llama confirmed that Sovryn’s previous estimate of Sovryn’s TVL at nearly $ 2 billion was indeed based on the inclusion of the capitalization of the stakes. The data aggregator added that it will soon release an update to its website, which will allow users to choose whether the included assets are included in the TVL data.

As decentralized finance exploded in popularity during 2020, TVL has become the dominant metric for measuring the success of the protocol.

However, many analysts argue that TVL is reductionist and should not be considered the only measure of DeFi project progress.

In an interview with Cointelegraph, CoinGecko co-founder Bobby Ong said that just as market capitalization became the primary measure of token or coin success, TVL grew in popularity due to its simplicity, with an emphasis on the convenience of introducing “one number to compare all DeFi protocols.” “

“It’s not a perfect measure.” […], but it is the most direct measure that people understand and use as a yardstick, “he added.

Ong believes that total trading volume should be the primary metric used to measure decentralized exchanges (DEXes), and points out that this volume “increases protocol yields.” For the same reason, he argued that the volume of borrowing should be the main measure of money market protocols.

Ong also recommended that analysts place more emphasis on combining TVL with other key metrics for illustration capital efficiency liquidity locked in the protocol:

“For DEX, looking at Trading Volume / TVL, it is possible to determine how effectively liquidity is used to manage protocol and LP fees.”

Ong also argued that dividing a TVL project by its market capitalization or fully diluted valuation (FDV) is useful for comparing DeFi protocols operating in the same segment.


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