DeFi Analytics
Understand DeFi protocols through metrics like TVL, yields, revenue, and risk indicators. Make informed decisions about where to deploy capital.
Key DeFi Metrics
Total Value Locked (TVL)
Total value of assets deposited in a protocol. The most common measure of DeFi protocol size.
Calculation
Sum of all assets deposited × their current prices
Interpretation
- • Higher TVL = more trust and usage
- • Rapid TVL drops can signal problems
- • Compare TVL to Market Cap for valuation
Protocol Revenue
Fees generated by the protocol from user activity (swaps, borrows, trades).
Calculation
Trading fees + Borrowing fees + Other fees
Interpretation
- • Revenue indicates real usage
- • Revenue/TVL = capital efficiency
- • Compare to token FDV for P/E ratio
Yield / APY
Annualized return for providing liquidity or staking assets.
Calculation
(1 + periodic_rate)^periods - 1
Interpretation
- • Higher APY = higher risk usually
- • Check if yield is sustainable
- • Beware of inflationary token rewards
Utilization Rate
Percentage of deposited assets being borrowed (for lending protocols).
Calculation
Total Borrowed / Total Supplied × 100
Interpretation
- • 80-90% is typically optimal
- • Too high = liquidity risk
- • Too low = inefficient capital
Understanding TVL
TVL Growth Signals
- Organic growth from user deposits
- New feature launches attracting capital
- Integration with other protocols
- Institutional adoption
TVL Decline Warnings
- Rapid withdrawals (potential exploit)
- End of liquidity mining programs
- Competition from newer protocols
- Security concerns or FUD
TVL Can Be Misleading
TVL includes borrowed assets (double counting), doesn't account for risk, and can be inflated by mercenary capital chasing yield. Always look at TVL trends and composition, not just absolute numbers.
DeFi Protocol Types
DEXes
Decentralized exchanges for token swaps
Examples
Key Metrics
Risks
- Impermanent Loss
- Smart Contract Risk
- Liquidity Fragmentation
Lending
Protocols for borrowing and lending assets
Examples
Key Metrics
Risks
- Liquidation Risk
- Oracle Manipulation
- Bank Run
Liquid Staking
Stake ETH while maintaining liquidity
Examples
Key Metrics
Risks
- Slashing
- Depeg Risk
- Centralization
Yield Aggregators
Auto-compound and optimize yields
Examples
Key Metrics
Risks
- Strategy Risk
- Smart Contract Risk
- Composability Risk
Yield Analysis
Types of Yield
Real Yield
Yield from actual protocol revenue (fees, interest). Sustainable and valuable.
Token Emissions
Yield from new token minting. Dilutive and often unsustainable.
Ponzi Yield
Yield from new depositor funds. Unsustainable, eventually collapses.
Yield Evaluation Checklist
Where does the yield come from?
Fees, interest, or token emissions?
Is the APY realistic?
100%+ APY is rarely sustainable
What are the risks?
Smart contract, oracle, impermanent loss
Is there a lock-up period?
Can you withdraw if something goes wrong?
Risk Assessment Metrics
| Metric | Description | Safe Threshold |
|---|---|---|
| Health Factor | Collateralization ratio. Below 1 = liquidation | > 1.5 safe |
| Collateral Ratio | Value of collateral vs borrowed | > 150% typical |
| Protocol Age | Time since launch and audit | > 1 year preferred |
| Audit Coverage | Multiple audits from reputable firms | 2+ audits |
| TVL Volatility | How much TVL fluctuates | Low is better |
| Oracle Dependency | Reliance on price feeds | Chainlink preferred |