Regarding Vitalik’s comments, the founder of DefiLlama believes that TVL is a good rating indicator.
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Vitalik Buterin: TVL is a necessary evil
Founder of DefiLlama: TVL reflects trust and risk tolerance
Vitalik Buterin: TVL is a necessary evil
Vitalik posted on Warpcast stating:
Although TVL is not the ultimate goal, it is a necessary evil. Locking funds in (especially immature) protocols instead of secure and convenient wallets can bring about security risks to some extent. Sometimes, in order to gain valuable benefits, we have to take on such risks, but the act of locking just for the sake of locking should be minimized as much as possible.
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The crypto community also agrees that many projects market themselves using TVL, implying that their protocols are compliant and it is safe to invest. However, the previous DeFi bull market has shown that following the TVL trend may not be the best way to mitigate risks.
(What is DeFi TVL? Is it the measure of DeFi’s success?)
Source
Founder of DefiLlama: TVL reflects trust and risk tolerance
In response to this issue, apart from major protocols, it seems that the indicator platform DefiLlama also plays a role in TVL data.
On the same day, the founder of DefiLlama, 0xngmi, tweeted:
TVL is a good rating indicator because the investment of funds represents a trust indicator. If a protocol rug pulls or gets hacked, it will lead to losses and also reflect the risks market participants are willing to take. Moreover, manipulating TVL requires a large amount of funds, making it difficult to achieve. Basically, TVL aggregates the market’s view of the protocol.
The crypto community countered 0xngmi’s statement, citing the case of Solana, where some TVL was inflated due to repeated calculations.
0xngmi explained that assets like Lido’s stETH, which are duplicated in the stETH-ETH pool of Curve, are not included in TVL and therefore do not cause the above situation.
(A Solana developer anonymously created a DeFi ecosystem, announced entry into the public chain Aptos)
TVL
Vitalik Buterin
Further reading
Staking project EigenLayer reopens for staking, TVL surpasses $740 million
$1 TVL ≠ $1, How is the market cap and TVL in the crypto market manipulated?