Research exhibits that Complete Worth Locked (TVL) is a poor metric for constructing crypto portfolios and making funding selections
SINGAPORE, June 10, 2025 /PRNewswire/ — A brand new examine from the Algorand Foundation’s tokenomics group challenges one of many cryptocurrency sector’s most generally cited metrics: Complete Worth Locked. The report supplies among the strongest proof up to now that TVL, regardless of its prominence throughout dashboards, headlines, and investor supplies, has no bearing on a token’s monetary efficiency.
A latest evaluation of over 300 cryptocurrencies (excluding bitcoin and stablecoins) from 2023-2024, led by Dr. Matthew Brigida, Affiliate Professor of Finance at SUNY Polytechnic Institute and Chief Economist on the Algorand Basis, revealed no proof that TVL predicts token efficiency.
The analysis group constructed weekly portfolios that ranked tokens by TVL, holding the highest 25% and shorting the underside 25%, to check whether or not high-minus-low TVL portfolios generated alpha. They didn’t.
“TVL is commonly used to mission credibility or potential upside, however our outcomes present it fails as an funding sign,” mentioned Brigida. “Even after adjusting for identified points like double-counting, TVL-based portfolios didn’t ship irregular returns.”
TVL stays widespread in crypto media headlines, however it may possibly mislead buyers and analysts, based on a examine. Platforms like Messari, Artemis, and Token Terminal now take into account TVL a secondary metric, whereas Blockworks has launched REV (Actual Financial Worth). Neighborhood analytics instruments like Dune and L2BEAT are both decentralizing TVL interpretation or utilizing metrics like Complete Worth Secured (TVS). Nansen provides context to TVL by means of pockets habits and sensible cash flows, whereas Flipside Crypto emphasizes the worth of high-quality customers over TVL.
As crypto integrates extra deeply with international finance, the Algorand Basis encourages platforms, researchers, buyers, and media to undertake metrics that replicate precise utilization and financial demand. This analysis helps Algorand’s function in evolving the crypto market by combining tutorial rigor with real-time blockchain insights for data-driven innovation in Web3.
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New Research from Algorand Foundation: TVL Can Be Too Easily Gamified
