Total Value Locked

Total Value Locked or TVL, is a measure often used to assess the relative success of a DeFi project. This is the total amount of capital deployed on chain. Indeed, most DeFi trackers use TVL to rank those working in the space.

But while the numbers sound impressive they can be misleading. While there might be billions of dollars deployed, the percentage of that TVL actually being used is much lower than people anticipate. This is because markets have constraints in terms of how much capital can be used at any one time.

For example, if a market can only handle $50 million in deployed capital - investing $200 million doesn’t make much sense, as it would incur huge amounts of slippage - and delay the time it takes to enter and exit trades. So in a marketplace of only $50 million, of the $200 million you have, you can only use $50 million effectively.

That means you have $150 million sat there not doing very much, which makes it inefficient. At AQTIS, efficiency is the name of the game, which is why we’re keeping our TVL at lower levels to ensure maximum efficiency.