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TVL’s best DeFi projects
Key points:
- Total Value Locked (TVL) measures the money deposited into a DeFi protocol by its users.
- A high TVL indicates a popular and reliable project, while a declining TVL could indicate a struggling company.
- For a comprehensive analysis of DeFi projects for investors, combine TVL with other key metrics, such as daily active users, revenue/fees, market cap, and token price. (Read our guide.)
One of the best ways to find great crypto companies is to measure total value locked, or TVL.
Not all projects have full value locked – only those with the ability for users to store money in the crypto protocol in exchange for a reward. For example, a lending protocol where users can “lock” their cryptocurrency to be lent to other users and receive a reward token in return.
Think of Total Value Locked as money held by a bank or assets under management of an investment company. In general, more TVL = a more reliable project, especially if that amount has grown over time.
Conversely, a weak or declining TVL is like a bank without a lot of cash on hand: it’s best to stay away.
In today’s article, we will analyze the top crypto companies in TVL.
What is Total Value Locked (TVL)?
TVL refers to all assets collateralized in a cryptocurrency company’s decentralized finance (DeFi) protocol. These assets can include cryptocurrencies or funds deposited or staked into the protocol by users. The TVL can consist of all of the following:
- All resources are locked into pools or staking nodes to protect the network.
- Any assets held in liquidity pools for lending, trading, or other similar purposes.
- Any asset used as collateral to secure loans in lending protocols.
- Cryptocurrencies have invested in ongoing sources of income such as yield farming projects.
TVL is usually expressed in US dollars. Investors typically use it to gauge the popularity of a DeFi project.
The best Blockchain projects ranked by TVL
This section has compiled a list of the top five blockchain projects with the highest TVL in Q2 2024. The projects are organized in ascending order of size.
*based on Token Terminal data. Layer-1 protocols are not included in their TVL list.
TVL: $36.21 billion
Launch year: 2020
Segment: Liquid staking
Launched in December 2020, Lido Finance is a DeFi platform that provides liquid staking solutions to cryptocurrency users. Connect individual stakers with Proof-of-Stake (PoS) blockchains such as Ethereum, Solana, Polygon, Polkadot, and Kusama.
Over the years, Lido has emerged as the clear industry leader in ETH staking, accounting for nearly 29% of all ETH staked. The vast majority of the TVL on this project comes from the 9.4 million ETH tokens staked by users (worth approximately $35 billion).
In December 2023, Lido’s market share in ETH staking was even higher at 32%, raising concerns about the future security of the Ethereum blockchain. However, increased competition from other protocols in 2024 has helped reduce Lido’s potential threat to the network.
Meanwhile, the significant increase in the price of ETH starting in 2023 has had a direct impact on Lido’s TVL over the last 12 months. From $13 billion in June 2023, it more than tripled to $40 billion in March 2024.
TVL: $19.23 billion
Launch year: 2023
Segment: ETH remake
EigenLayer is an innovative new project launched in 2023 with an intriguing premise: to create a marketplace where ETH stakeholders can redirect their assets towards additional income streams.
The rearranged assets (liquidly staked ETH tokens) are then deployed to provide network security to other applications and projects being built on Ethereum. Developers can “rent pool security“aggregated on the platform in exchange for commissions.
Because it allows stakers to unlock additional passive rewards, EigenLayer has attracted significant interest from ETH holders. In less than six months it has emerged as the second largest protocol on the market in terms of TVL, indicating a clear case of investor frenzy.
As ETH staking gains new users, EigenLayer could also see further growth in the coming years. While there are other avenues of reformulation, the element of risk is much higher in these protocols than in EigenLayer.
TVL: $12.84 billion
Launch year: 2017
Segment: DeFi Lending
Aave is a DeFi platform that focuses on peer-to-peer lending on the blockchain. Users can add funds to its liquidity pools and earn interest income. They can also borrow funds from the platform by depositing various crypto tokens as collateral.
These two types of transactions add resources that contribute to the protocol’s TVL. Aave has been around since 2017 and has become the largest DeFi lending platform in the blockchain market.
The protocol is based on Ethereum and accepts ETH, popular stablecoins such as Tether and USDC, and other liquid staking tokens and wrapped tokens. The value of net deposits on the platform doubled from $8 billion in June 2023 to $20 billion in the second quarter of 2024.
TVL: $11.92 billion
Launch year: 2021
Segment: ETH Layer 2 scaling
Due to network limitations, the Ethereum blockchain has suffered from high gas fees and slow transaction speeds over time. Layer 2 scaling solutions like Arbitrum Bridge allow users to securely and quickly transfer their assets from Ethereum at affordable rates.
In addition to Ethereum and ERC20 tokens, Arbitrum Bridge supports Avalanche, Polygon, and over a dozen other blockchain networks. Thanks to significantly low transaction costs and excellent security, Arbitrum Bridge’s popularity has soared since its launch in 2021.
The scaling solution also features a rich array of DeFi apps and protocols that offer yield farming and other profitable passive income opportunities. Over the years, many of the ETH and other assets locked on the Bridge are usually collateralized on these projects.
After remaining relatively stagnant for much of 2023, TVL on the platform doubled in 2024 due to broader positive sentiment in cryptocurrency markets. With the growing popularity of Ethereum, L2 scaling solutions like Arbitrum may also witness an influx of users.
TVL: $6.48 billion
Launch year: 2014
Segment: Crypto lending
Maker DAO is a unique protocol that combines a lending platform with a native stablecoin called DAI token. The protocol allows borrowers to deposit ETH and other ERC20 tokens as collateral and obtain loans from the DAI token.
Overcollateralized crypto loans like the one made by MakerDAO are useful if you want to invest in other (potentially high-risk) tokens without directly exposing your ETH. Instead of selling your ETH, you can lock it up as collateral and get DAI.
Borrowers’ security deposits make up the majority of TVLs on the MakerDAO protocol. Users can also invest in MKR governance tokens to gain voting rights on the protocol.
While crypto lending projects often crash and burn during significant market downturns, Maker DAO has been a notable exception. The project’s position in the top 5 in terms of TVL testifies to its popularity and long-term stability.
Takeaway for investors
A careful historical analysis of the TVL metric can help you gain important insights into the reliability, popularity, and potential long-term viability of a DeFi project. However, to get the full picture, it is essential to look at the other important metrics: daily active users, revenue/fees, market cap, and price. Check out our guide on Enhance digital assetsas well as these fantastic pieces:
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