🚨🚨🚨 Why high TVL doesn't always mean a good investment 🔍
A DeFi protocol can have billions in TVL and still have a weak token investment case. TVL measures the value of assets deposited into a protocol, not the revenue earned by token holders. That's a very important difference. A protocol might attract deposits through incentives that disappear when rewards end. I would also examine trading fees, protocol revenue, active users and capital retention. Another useful comparison is Market Cap to TVL, although it should never be used alone. Strong TVL growth combined with sustainable fees is more interesting than inflated deposits. Always ask whether the token actually captures economic value from the protocol.
Would you rather invest in high TVL or high protocol revenue?
#CryptoCommunitys #TVL $GNS $HOT #TradFiForBeginners #MarketSentimentToday
$RSR
A DeFi protocol can have billions in TVL and still have a weak token investment case. TVL measures the value of assets deposited into a protocol, not the revenue earned by token holders. That's a very important difference. A protocol might attract deposits through incentives that disappear when rewards end. I would also examine trading fees, protocol revenue, active users and capital retention. Another useful comparison is Market Cap to TVL, although it should never be used alone. Strong TVL growth combined with sustainable fees is more interesting than inflated deposits. Always ask whether the token actually captures economic value from the protocol.
Would you rather invest in high TVL or high protocol revenue?
#CryptoCommunitys #TVL $GNS $HOT #TradFiForBeginners #MarketSentimentToday
$RSR
