Sovryn, a Bitcoin (BTC) money market protocol based on the Bitcoin-based smart contract platform RSK, recently it seemed to skyrocket in the rankings of decentralized finance.
On Wednesday, the Bitcoin commentator did Anthony Pompliano shared data from the decentralized financial data aggregator DefiLlama to his one million followers, stating that the protocol has amassed a Total Locked Value (TVL) of $ 1.95 billion. 14th place in the industry and beats DeFi favorite Uniswap v3.
Sovryn has a higher TVL than Uniswap V3. I keep telling everyone that the DeFi infrastructure in Bitcoin is the most underrated opportunity out there.
Do what you want with this information.
to???? Pomp (@APompliano) June 9, 2021
Pompliano and many of his followers are dismayed that Ethereum-centric platforms like DeFi Pulse are not listing Bitcoin DeFi projects like Sovryn and Stacks., and the influencer says:
â ???? One would be in the top 15 on the TVL list and the other would be in the top 25. Why aren’t they included?
Pompliano’s contribution to Sovryn has sparked criticism from proponents of the Ethereum ecosystem who disproved the idea that Sovryn amassed a ten-digit TVL. ChainLinkGod indicated that the governance tokens deployed may have contributed to an exaggerated estimate of the TVL.
How is the market price of the inserted SOVs determined? I can’t find any information about the token price. Https://t.co/T5ILAtYUiz
to???? ChainLinkGod.eth 2.0 (@ChainLinkGod) June 9, 2021
Since Pompliano published his original post, DefiLlama has adjusted its data for Sovryn and now lists the project with a TVL of just $ 52 million. The updated data now matches the TVL provided by Sovryn’s own wiki.
In a statement made on Thursday, DefiLlama confirmed that his previous estimate of Sovryn’s TVL was nearly $ 2 billion, and it actually resulted from factoring in the capitalization of the staked assets.. The data aggregator added that it will soon post an update on its website that will allow users to choose whether or not to include staked assets in the TVL data.
Regarding the recent Sovryn controversy:
1. We have removed the unplugging of your TVL
2. We will post a site update that will allow anyone to choose whether to include staking in the TVL or to exclude it
3. We will add Sovryn Staking again after the update
to???? DefiLlama.com (@DefiLlama) June 9, 2021
When decentralized funding exploded in 2020, TVL has emerged as the dominant metric by which the success of a protocol is measured.
However, Many analysts have argued that the TVL is reductionist and should not be viewed as the sole measure of the progress of a DeFi project.
Speaking to Cointelegraph, CoinGecko co-founder Bobby Ong stated: Just as market capitalization has become the main indicator of the success of a token or coin, the TVL has grown in popularity for its simplicity and emphasized the convenience of creating “a number to compare all DeFi protocols”.
“Not the perfect measure […]but it is easiest for people to understand and use as a reference point “, he added.
Ong thinks so Total trading volume should be the primary metric against which decentralized exchanges (DEX) are measured, keeping in mind that volume “drives log revenue”. For the same reason, he argued that The volume of credit should be the main measure of money market protocols.
Ong also recommended that analysts place more emphasis on combining TVL with other key metrics. To illustrate the capital efficiency of locked liquidity in a specific log:
â ???? In the case of a DEX, looking at the trading volume / TVL gives a measure of how efficiently the liquidity is used to increase the commissions for the protocol and the LPs.
Ong also argued that Dividing a project’s TVL by its market capitalization or fully diluted valuation (FDV) is useful for comparing DeFi logs operating in the same segment.
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