market cap tvl ratio

Unlike stocks, it’s quite difficult to value cryptocurrencies. Publicly listed companies provide products or services to consumers and enterprises that help them generate revenue, cash flows, and profits. Alternatively, blockchain networks aim to provide a platform for developers to create, execute, and run decentralized projects.

However, one ratio that can be used to analyze these digital assets is the market cap to total value locked multiple.

The total value locked (TVL) metric is the value of assets deposited in a particular DeFi (decentralized finance) protocol. It is one of the most important metrics used by investors to analyze investor interest across DeFi protocols.

Market cap tvl ratio crypto

So what exactly are these DeFi protocols that compose TVL, and how can investors benefit from them?

Image source: Getty Images.

How is it calculated?

It’s very simple. Let’s say an investor connects their wallet to a DeFi platform and deposits $1,000 worth of crypto into a money pool to validate transactions on its native blockchain (staking) and receive rewards. Next, he lends out an additional $1,000 in crypto for interest on the same platform.

Afterwards, he deposits $1,000 worth of coins in a money pool to provide trading liquidity for swapping between obscure altcoins and he earns trading commissions. If this were the only business the hypothetical DeFi platform was getting, then its TVL would be $3,000. That’s all there is to it.

Market cap / tvl ratio

If you are only looking at the price of a crypto asset does not say a lot about the coin, you have to look at different metrics to feel if a coin is under or overvalued. Of course, this is just an overview, and we are just scratching the surface here. We will dive deeper in the future.

I hope you enjoyed this piece of content, and if you have any questions or comments, leave a comment and leave your email if you want to get notified about new articles.

Enjoy and stay weird!

Disclaimer

This website includes information about cryptocurrencies and other financial instruments.

All these areas are complex instruments and come with a high risk of losing money. We are NOT giving financial or investment advice; this page is for educational and informational purposes only. Please be careful and make sure that you understand how these instruments work.

Market cap / tvl ratio meaning

The TVL is a metric to assess the health of a protocol and the DeFI and yield market. You can find the links to the tools at the end of the articles in the Resources Section.

In theory, the higher the TVL can help quickly see if an asset tends to be over or undervalued. If the ratio is under 1, it is undervalued in many cases.
In reality, the whole story is a bit more complicated. Here is an excellent article at Messario around the topic.

How is the Total value locked calculated?

The math is relatively easy.

Let’s go through an example: If you buy AAVE in the work of $500 and stake it and receive rewards for it. Max is lending $1000 for a reasonable interest rate on the same platform.
Christa provides liquidity for the trading commission to the liquidity for another $500 the TVL of AAVE would be $2000.

Market cap / tvl ratio coingecko

Many platforms like Aave, Uniswap, PancakeSwap, Spookyswap are providing tokens with the utility that makes this possible.

There is an important ratio to look at to assess a project, the

Market Cap / TVL Ratio

It shows the ratio of the market cap and how much of the market cap is locked up in smart contracts.

Let’s have a look at some examples, with numbers of 29.Nov 2021

AAVE

Market Cap: $3.156.837.340

Fully Diluted Valuation: $3.770.129.516

Total Value Locked (TVL): $15.083.062.952

Market Cap / TVL Ratio: 0.21

Fully Diluted Valuation / TVL Ratio: 0.25

💡 ratio of market capitalization over total value locked of this asset.

Market cap / tvl ratio chart

If you are only looking at the price of a crypto asset does not say a lot about the coin, you have to look at different metrics to feel if a coin is under or overvalued. Of course, this is just an overview, and we are just scratching the surface here. We will dive deeper in the future.

I hope you enjoyed this piece of content, and if you have any questions or comments, leave a comment and leave your email if you want to get notified about new articles.

Enjoy and stay weird!

Disclaimer

This website includes information about cryptocurrencies and other financial instruments.
All these areas are complex instruments and come with a high risk of losing money. We are NOT giving financial or investment advice; this page is for educational and informational purposes only. Please be careful and make sure that you understand how these instruments work.

Market cap / tvl ratio là gì

Marketcap Categorization

To assess the risk and growth potential, it helps categorize by market cap. Usually, there are Categories like:

  • Large-Cap
  • Mid-Cap
  • Small-Cap
  • Micro-Cap
  • Nano-Cap

We will categorize them as follows.

LARGE-CAP

Marketcap $10 Billions

At the moment, there are 22 Coins with a large Marketcap.

Most stable.

MID-CAP

Marketcap: $1 Billion to $10 Billions

At the moment, there are 108 Coins with a midsize Marketcap.

More volatile than Large-Caps but still stable.

SMALL-CAP

Marketcap: $100 Million to $1 Billion

At the moment, there are 389 Coins with a small Marketcap.

Usually, less history and traction in the market are also riskier.

Mkt. cap / tvl ratio

VALUE Price Today

Value DeFi price today is $0.272363 with a 24-hour trading volume of $446,643. VALUE price is down -1.2% in the last 24 hours. It has a circulating supply of 5 Million VALUE coins and a total supply of 5.03 Million. If you are looking to buy or sell Value DeFi, Huobi Global is currently the most active exchange.

What was the highest price for Value DeFi?

Value DeFi hit an all time high of $46.90 on Sep 19, 2020 (almost 2 years).

What was the lowest price for Value DeFi?

Value DeFi had an all time low of $0.095757973308 on May 13, 2022 (3 months).

What was the 24 hour trading volume of Value DeFi?

The 24 hour trading volume of Value DeFi is $446,643.

Where can Value DeFi be traded?

You can trade Value DeFi on Huobi Global, OKX, and Gate.io.

Market cap vs tvl ratio

Market Capitalization

What is Market Capitalization, and how is it Calculated?

The Market Cap is changing every day and is calculated as follows.

Market Cap = Current Price x Circulating Supply of a Token

💡 Circulating Supply is the number of coins (estimated) that are circulating.

Let’s look at an example; I will use Coingecko to get the numbers for our example calculation. Let’s start with Bitcoin for this example since it’s most known, and this is a blogpost for beginners.

Bitcoin Price (26. Nov 2021): $54.182,90

Circulating Supply (26.

Ren market cap tvl ratio

MICRO-CAP

Microcap coin can move 30% in 5 minutes, and nobody even blinks, if BTC moves 3%

Marketcap: $10 Million to $100 Million

Very risky but can be very profitable. (100x+)

At the moment, there are 820 Coins with a Micro Marketcap.

NANO-CAP

Marketcap <$10 Million

Super risky, high growth potential, but it can make you life-changing money. (1000x+)

At the moment, there are thousands of Coins with a nano Marketcap.

Total value locked (TVL)

The TVL in cryptocurrencies is the sum of all assets that are locked up somehow. This could mean that digital assets are currently staked, people are providing liquidity or binding their coins in another smart contract in a specific protocol, which also means that they can not be sold immediately due to lockup times, and so on.

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