Total value locked (TVL) is a key metric in the world of decentralized finance (DeFi) that measures the amount of value (usually in the form of cryptocurrency) that is currently locked in a particular DeFi protocol or platform. This metric is important for a variety of reasons, but one of the key reasons it is so important is that it is a key indicator of the health and growth of the DeFi ecosystem.
When it comes to marketing for a DeFi platform, TVL is often a KPI (key performance indicator) that many Web3 marketers will focus on. Let’s dive into a bit more about why that is.
The Importance of TVL in DeFi Marketing
It Reflects Protocol Trust
One of the main reasons why TVL is such an important metric is because it reflects the level of trust and confidence that users have in a particular DeFi protocol or platform. When users lock their funds in a DeFi protocol or platform, they are essentially trusting that protocol or platform to securely manage their funds and provide them with a return on their investment. The more value that is locked in a particular protocol or platform, the more trust and confidence users have in it, and the more likely it is that it will continue to grow and thrive.
It Measures Activity & Engagement
In addition to reflecting the level of trust and confidence that users have in a particular DeFi protocol or platform, TVL is also an important indicator of the level of activity and engagement within the DeFi ecosystem. The more value that is locked in a particular protocol or platform, the more activity and engagement there is likely to be, as users are more likely to use the platform and its various services. This in turn can help drive further growth and adoption of the platform, as well as the overall DeFi ecosystem.
Conclusion
When it comes time to start spending resources on growing the awareness and use of a DeFi product or service, TVL is a super valuable KPI to benchmark your success against. As your marketing efforts increase, you should focus on activities that then boost your TVL.
For help with this, you may want to hire a DeFi marketing agency like Coinbound which has a strong understanding of the Web3 ecosystem and how to grow products in the crypto space.
