The total blocked value has been the most important metric in the DeFi space for some time, but has been criticized frequently. DappRadar argues that the total dollar value could give a distorted picture of the DeFi ecosystem.
As part of this review, we will analyze one of the largest DeFi protocols right now, MakerDAO. Blocked total cost adjusted for inflation will be taken into account.
Inflation-adjusted TVL can reveal real growth in the protocol, excluding token price fluctuations.
Key findings
The total cost of MakerDAO has exceeded $ 1.5 billion.
ETH is 73% of the total value locked on MakerDAO.
The 3 main tokens (ETH, MKR and WBTC) account for 97% of TVL.
The total value of the three main tokens on MakerDAO has increased by nearly $ 800 million.
The inflation-adjusted cost showed an increase of only $ 200 million.
75% of the total increase in locked-in value on MakerDAO was due to price increases for the 3 core tokens.
Methodology
Two metrics will be analyzed. The total cost is locked and the inflation-adjusted total cost is locked.
In this article, the inflation-adjusted total locked value is calculated by locking the token price value at the same level as it was ninety days before August 17, 2020. Prices are collected at coinmarketcap.com.
MakerDAO TVL Exceeds $ 1.5 Billion
MakerDAO is responsible for 24% of the total value generated in the DeFi space right now, according to DappRadar. Over the past month, the protocol has regained its leading position, surpassing $ 1 billion in total blocked value.
We see the value rising steadily and is at $ 1.5 billion at the time of writing, up 110% over a 30 day period.
ETH is 73% of TVL on MakerDAO
Although MakerDAO has already included 9 collateral, ETH is still the most used. ETH is about 73% of the total value locked in MakerDAO right now.
MKR and wBTC tokens are the other two main tokens locked on MakerDAO. MKR owns 17% and wBTC owns 8% of the total.
Looking at the development of each of the three major tokens, we see a huge peak from mid-July 2020. Notably, the blocked value of ETH increased by 131%, or more than $ 620 million in 30 days.
The other two tokens were followed by similar spikes, but not much. WBTC increased by $ 94 million and MKR by about $ 78 million in 30 days.
While the numbers look impressive, there are some doubts. The value of all three tokens increased within 30 days. The question arises how much the price of the token affected the TVL indicator.
TVL adjusted for inflation - ETH
ETH is the number one collateral and the oldest asset in MakerDAO. The asset is now having a huge impact on TVL.
As we mentioned above, the total value of ETH increased to over $ 620 million in just 30 days. If you look at the locked-down total cost, adjusted for inflation, growth is six times less. The inflation-adjusted lock-in value increase is only about $ 111 million.
Apparently, the price of ETH has a much larger impact on value. ETH price rose from $ 232 to $ 434. Almost double what it was 30 days ago.
TVL adjusted for inflation - MKR
MKR was one of the first governance tokens in the blockchain industry. The token helps maintain the stability of the DAI token and make key protocol decisions. To be eligible to vote, MKR must be blocked.
As stated, the total locked dollar value increased by $ 78 million within 30 days. On the other hand, inflation-adjusted TVL appears to be declining. The cost decreased by $ 15 million, or 12% in 30 days.
Obviously, within 30 days, MKR TVL was only affected by the price spike. The MKR was priced at $ 449 30 days ago and is now $ 689.
TVL adjusted for inflation - wBTC
In early May 2020, wBTC was added as the fourth collateral asset in MakerDAO. It is used in addition to ETH, BAT, and USDC to open Maker Vaults vaults to generate DAI.
Unlike the other two top tokens, the adjusted wBTC value tends to increase. After the adjustment, the total locked value increased by 170%. Within 30 days, another 7,000 BTC was blocked in MakerDAO.
While the price has some effect on the locked-in value, the extra assets added to the protocol have had the biggest impact.
Findings
The total value recorded in dollars can give a distorted picture of the development taking place in the DeFi category.
Using TVL alone, we are seeing an increase of roughly $ 800 million in the three main tokens (ETH, MKR and WBTC) on MakerDAO.
Adjusted for TVL, adjusted for inflation. The increase was no more than $ 200 million. Which is 4 times lower than reported.
75% of the total increase in locked-in value on MakerDAO was due to price increases for the 3 core tokens.
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