Summary:
A groundbreaking study by the Algorand Foundation reveals that Total Value Locked (TVL) is an unreliable metric for cryptocurrency investment decisions. Led by Dr. Matthew Brigida, the research analyzed over 300 cryptocurrencies from 2023-2024, finding no correlation between TVL and token performance. This challenges the widespread use of TVL in crypto media and dashboards, urging the adoption of more accurate metrics like Real Economic Value (REV) and Total Value Secured (TVS). The findings emphasize the need for data-driven innovation in Web3 and blockchain ecosystems.
What This Means for You:
- Reevaluate reliance on TVL when assessing crypto investments, as it does not predict returns.
- Explore alternative metrics like REV, TVS, and wallet behavior for more accurate insights.
- Stay informed about evolving crypto analytics tools from platforms like Messari, Nansen, and Flipside Crypto.
- Be cautious of misleading headlines and prioritize metrics that reflect actual usage and economic demand.
TVL Can Be Too Easily Gamified:
Study shows that Total Value Locked (TVL) is a poor metric for building crypto portfolios and making investment decisions.
SINGAPORE, June 10, 2025 /PRNewswire/ — A new study from the Algorand Foundation’s tokenomics team challenges one of the cryptocurrency sector’s most widely cited metrics: Total Value Locked. The report provides some of the strongest evidence to date that TVL, despite its prominence across dashboards, headlines, and investor materials, has no bearing on a token’s financial performance.
A recent analysis of over 300 cryptocurrencies (excluding bitcoin and stablecoins) from 2023-2024, led by Dr. Matthew Brigida, Associate Professor of Finance at SUNY Polytechnic Institute and Chief Economist at the Algorand Foundation, revealed no evidence that TVL predicts token performance.
“TVL is often used to project credibility or potential upside, but our results show it fails as an investment signal,” said Brigida. “Even after adjusting for known issues like double-counting, TVL-based portfolios didn’t deliver abnormal returns.”
TVL remains common in crypto media headlines, but it can mislead investors and analysts, according to a study. Platforms like Messari, Artemis, and Token Terminal now consider TVL a secondary metric, while Blockworks has introduced REV (Real Economic Value). Community analytics tools like Dune and L2BEAT are either decentralizing TVL interpretation or using metrics like Total Value Secured (TVS). Nansen adds context to TVL through wallet behavior and smart money flows, while Flipside Crypto emphasizes the value of high-quality users over TVL.
As crypto integrates more deeply with global finance, the Algorand Foundation encourages platforms, researchers, investors, and media to adopt metrics that reflect actual usage and economic demand. This research supports Algorand’s role in evolving the crypto market by combining academic rigor with real-time blockchain insights for data-driven innovation in Web3.
Read the full press release here.
The full whitepaper is available here.
About Algorand Foundation
Algorand’s mission is to power a world where information has integrity and innovative ideas can scale. The Algorand Foundation supports Algorand’s rapidly growing ecosystem by providing a best-in-class developer environment, supporting key infrastructure and setting technical standards, offering comprehensive support to builders and entrepreneurs, and providing the framework for decentralized governance. To learn more, visit algorand.co.
Extra Information:
For further insights, explore these resources: Messari’s Crypto Research, Nansen’s Wallet Analytics, and Flipside Crypto’s User Metrics. These platforms provide advanced tools for evaluating blockchain ecosystems beyond TVL.
People Also Ask About:
- What is Total Value Locked (TVL)? TVL measures the total assets locked in a decentralized finance (DeFi) protocol.
- Why is TVL misleading? TVL can be manipulated and does not correlate with token performance.
- What are alternatives to TVL? Metrics like REV, TVS, and wallet behavior offer more accurate insights.
- How does Algorand contribute to crypto research? Algorand combines academic rigor with blockchain insights to drive innovation.
Expert Opinion:
Dr. Matthew Brigida emphasizes, “TVL’s limitations highlight the need for more robust metrics in crypto. As the industry matures, investors must prioritize data that reflects real economic activity and user engagement.”
Key Terms:
- Total Value Locked (TVL)
- Real Economic Value (REV)
- Total Value Secured (TVS)
- Cryptocurrency investment metrics
- Web3 analytics tools
- Algorand Foundation research
- Blockchain tokenomics
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