Hi everyone !
I hear and see here and there lots of talks about TVL, liquidities, etc.
A good thing would be to exchange altogether about TVL definition per FunctionX understanding.
My understanding is the following :
TVL refers to a specific protocol value… “Overall TVL” would then refer to the sum of all protocol TVLs. For example, FX Swap offers a specific TVL for each pair Liquidity Pool. But Fxcore also offers a specific TVL, referring to all tokens locked for 21 days in staking. But really, what do we mean as TVL ? (locked for how long, how is it measured in FX ecosystem, etc.)
So per my capitalistic understanding, TVL is nothing but the value hold by “banks” or “individuals” at one point. How would that change from circulating value ?
And TVL and liquidities are also tightly linked to custodianship, especially on blockchains (where we think “decentralization”). I remind that 50% of YES to any proposal on FX are sufficient to change anything on the blockchain (even to potentially reset the blockchain). So, there are also conditions to be set before saying the TVL and liquidities are “valid”.
Eventually, for EVM contracts, there is also the issue of the ownership of the contracts, and the power given to these owners in the contracts. We thus need to make sure the owners/deployers of an EVM contract cannot change it unilaterally, because the TVL and associated liquidities could be reaffected unilaterally…
Looking forward to hearing your thoughts…