Massive Increase Of DeFi TVL May Be Overvalued By $3.0 Billion

August 20, 2020 4:29 PM UTC

Decentralized finance has fabricated meteoric growth so far in 2020. Market indicators for DeFi protocols are showing no signs of stopping soon. Enthusiasm for DeFi protocols is mainly lifted by the introduction of Compound token and yield farming. As per the report, DeFi total value locked has passed a significant threshold.

Several crypto experts are considering DeFi as the future of finance. According to the industry inside data, there is a penalty of space available for growth. The value locked figure will progress as yield farming and other lending services gain support.

Overestimate Claims For DeFi TVL Denied

Since the DeFi sector had achieved the target of $1 billion, the figure has jumped approximately six times. Currently, the total value lock in the Defi sphere stands at $6.32 billion. Commenting on DeFi growth, some analysts are assuming that the decentralized finance ecosystem is overvalued. Damir Bandalo, the founder of Encode Club, stated that the value locked in the leading DeFi protocols is better estimated close to $3.0 billion, instead of $6.32 billion.

Possibly different DeFi data resources are exaggerating the figures. As a single dollar can generate value many times, DeFi projects TVL calculation can be really tough, said Bandalo.

However, to clarify the concerns of calculations, the co-founder of DeFi Pulse posted a tweet by highlighting Bandalo errors:

“We work really hard to remove double counted assets from @defipulse exactly to avoid this problem. The TVL only passed $6B today, for the first time ever, and has never sniffed “$6.7B.” If you find one we missed, please let us know.”

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