Total Value Locked (TVL) in Cryptocurrency!
TVL stands for Total Value Locked. This is important for various projects especially those based on blockchain and crypto. Because the higher the TVL of a project, the more secure and valuable it is considered to be. This is very important and it measures the US dollar value of the assets locked in the blockchain. This is an important indicator of investor and developer interest in or using a blockchain or decentralized application. This is much like a bank deposit for a decentralized financing project.
Total Value Locked (TVL) is used to determine the total US dollar value of digital assets locked or staked in a particular blockchain network. Simply put, it is a metric that determines the total US dollar value of digital assets locked or staked in a particular blockchain network. That is why it accomplishes such processes through decentralized finance (DeFi) platforms or decentralized applications (dApps) in the cryptocurrency sector.
We all know that the main or central currency of cryptocurrency is Bitcoin. Because it is through its creation that other cryptocurrencies come. It was designed in such a way that it overcomes the disadvantages of centralized systems and can offer decentralized benefits. Because it is designed to be used as a peer-to-peer currency using digital ledger technology. This leads to a DeFi boom in 2020-2022. It also provides dApps with digital financial services, such as lending, that do not rely on traditional financial intermediaries such as brokerages, exchanges or banks. All these benefits are provided to get out of the centralized system and people can enjoy the benefits of the decentralized platform.
In order to gain access to a loan, users must typically share digital assets or tokens with the same application. We know that in all these cases a mortgage borrower makes a down payment with the lender. But the important thing here is that in the case of cryptocurrencies, all these staked deposits are "locked" to a specific network. But we know that digital assets cannot be used when they are staked. And based on this, Total Value Locked term is created. It can give users a snapshot of the importance of an application or network. A snapshot in this case could be based on the value of the asset locked or staked on the chain.
We often see lending platforms offering an attractive APR yield when a loan is offered. One of the reasons for offering such APRs is to attract investors. And any digital asset locked into the network to achieve that goal will increase the network's TVL number. But an important point here is that locking is usually done by attaching tokens to the blockchain. And these locks usually give token stakers the ability to verify transactions and collect fees.
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