Has Bitcoin DeFi’s Sovryn project really outperformed Uniswap v3 by TVL?

Sovryn, a BTC money market protocol built on the Bitcoin-based RSK smart contract platform, recently appeared to skyrocket in decentralized finance rankings.

On June 9, Bitcoin commentator Anthony Pompliano shared data with his 1 million followers of decentralized financial data aggregator, DeFi Llama, indicating that the protocol had accumulated a total locked value (TVL) of $ 1.95 billion. , ranking it 14th in the industry and beating out DeFi beloved Uniswap v3.

Pomp and many of his followers are aggrieved that Ethereum-focused platforms like DeFi Pulse don’t include Bitcoin DeFi projects like Sovryn and Stacks, with the influencer stating:

“One would be in the top 15 on TVL’s list and the other would be in the top 25. Why aren’t they included?”

Pomp’s post on Sovryn has received criticism from proponents of the Ethereum ecosystem who refuted the idea that Sovryn had amassed a ten-figure TVL. “ChainLinkGod” suggests that the governance tokens staked may have contributed to an exaggerated TVL estimate.

Since the original Pomp post, DeFi Llama 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 himself. wiki.

In a June 10 statement, DeFi Llama confirmed that its previous estimate that Sovryn’s TVL was nearly $ 2 billion had been the result of including the capitalization of staked assets. The data aggregator added that it will soon issue an update on its website that will allow users to choose whether or not staked assets are included in the TVL data.

Since decentralized finance exploded in popularity during 2020, TVL has become the dominant metric by which a protocol’s success is measured.

However, many analysts have argued that TVL is reductionist and should not be treated as the only measure of the progress of a DeFi project.

Speaking to Cointelegraph, CoinGecko co-founder Bobby Ong stated that just as market capitalization has become the primary measure of a token or coin’s success, TVL has gained popularity due to its simplicity, emphasizing the desirability of set “one number to compare all DeFi protocols”.

“It is not the perfect measure […], but it is the simplest measure to understand and use as a reference point ”, he added.

Ong believes that total trading volume should be the primary metric by which decentralized exchanges (DEX) are measured, noting that volume “drives revenue from the protocol.” For the same reason, he argued that loan volume should be the main measure of money market protocols.

Ong also recommended that analysts place greater emphasis on combining TVL with other key metrics to illustrate the capital efficiency of liquidity locked in a given protocol:

“For a DEX, looking at the trading volume / TVL will give a measure of how efficiently liquidity is used to generate fees for the protocol and LPs.”

Ong also argued that dividing a project’s TVL by its market capitalization or fully diluted valuation (FDV) is useful for comparing DeFi protocols operating in the same segment.