For all its talk of transparency, DeFi still hides in plain sight. Data is public, but understanding it takes serious work.

The data is public, but it’s not accessible. It’s scattered across 400+ chains, kept within 6,000+ protocols, and buried under layers of complex smart contracts.

Getting a simple, accurate answer to a complex question has been nearly impossible. Users either get rigid dashboards that can’t answer their specific question, or they turn to new AI models that confidently “hallucinate” answers based on six-month-old, scraped data.

In an industry where millions move in seconds and trade volumes reach up to $200 billion, “stale” and “wrong” are fatal flaws.

But what if users could have a conversation with the entire on-chain market? What if they could simply ask, in plain English, “Which protocols have the most stable revenue streams?” or “Chart the total value lost to hacks versus capital raised,” and get an accurate, live-data chart in seconds?

LlamaAI is the analyst that makes this possible. Built by the team at DefiLlama, It is a fundamental redesign of how onchain intelligence is accessed.

The AI Insight Gap

The problem has been a two-front failure, leaving an over $3.80 trillion market to operate with compromised tools.

Large language models are impressive at writing and reasoning. But when it comes to finance, they’re unreliable. They operate on static data from an old snapshot of the internet. They can’t access what’s happening right now. Worse, they are prone to “hallucinations,” “making up” facts, figures, and even protocols that don’t exist. You can’t trust them for financial analysis.

On the other side, rigid data platforms. Tools like the Bloomberg Terminal can cost up to $25,000 per user per year. They are accurate but limited.

Users get pre-set charts for TVL, volume, and fees, but what if they want to ask a new question? What if they want to find the “capital efficiency” of a chain by dividing its total fees by its TVL? They would have to export multiple CSVs and spend hours in a spreadsheet.

LlamaAI: An Analyst, Not an Oracle

LlamaAI closes this gap. The concept is revolutionary in its simplicity: LlamaAI is the first LLM directly connected to DefiLlama’s complete and live database.

When users ask LlamaAI a question, it doesn’t “guess” the answer. It translates their natural-language prompt into a structured query. It then runs that query directly against DefiLlama’s entire dataset, the most comprehensive in the world, covering more than 6,000 protocols and 400+ chains.

The result is returned to you as a ranked table, a custom chart, or a precise analysis. It’s a calculation and AI’s flexibility combined with the precision of verifiable SQL, with zero hallucinations.

Prompt in Action: Finding True Capital Efficiency

Let’s see it at work. A common, but shallow, metric in DeFi is Total Value Locked (TVL). It’s a measure of hype. A much better question is: “Which chains are the most efficient with their capital?”

We can ask LlamaAI: “Which chains have the highest innovation ratio (original protocol TVL / forked protocol TVL)?”

• The Idea: We want to find ecosystems that are building new, original products.
• The Execution: LlamaAI parses this, identifying “chains,” “TVL,” and the concepts of “original” vs. “forked” protocols. It queries its database, sums the TVL for both categories on every chain, and calculates the ratio.
• The Finding: In seconds, LlamaAI generates a ranked table. This insight shows you which ecosystems are driven by genuine innovation and which are just echo chambers.

Prompt in Action: Correlating Risk and Reward

Let’s try something more complex. A cross-metric analysis that would normally take a research desk a week to compile.

We ask: “Create a chart of total capital raised vs total value lost to hacks by year.”

• The Idea: We want to visually correlate the industry’s funding booms with its security failures. Are we getting better at security as more money flows in?
• The Execution: LlamaAI uses two datasets: DefiLlama’s “Raises” and “Hacks” databases. It aggregates both metrics by year and plots them on a dual-axis chart.
• The Finding: It might show, for example, that as VC funding peaked, hacks followed suit, revealing that security practices lagged far behind capital deployment. This is a verifiable fact, generated in a moment.

Institutional-Grade Insight for Everyone

For the end-user, the experience is effortless because pre-made dashboards no longer limit them. They have an on-demand on-chain analyst at your fingertips. More than 19,800 pools, 1,300 protocols, 900 exchanges, and their support metrics can be tracked with LlamaAI. It unifies the analytic workflow, allowing a user to analyse many different charts and datasets from DefiLlama in a single session without ever leaving the interface.

The goal is all about democratising data. For years, the team has remained fiercely neutral, refusing to charge for listings or accept pay-to-play data.

LlamaAI extends that philosophy. It takes the kind of custom analysis previously available only to high-end quant funds and research desks, and makes it accessible to everyone. Retail traders and developers now have the same power to query the market, find alpha, and manage risk.

The Bottom Line: From Static Data to Live Intelligence

LlamaAI changes how we interact with onchain data. For AI, it solves the “truth” problem, grounding a flexible LLM in a verifiable database. For DeFi, it solves the “access” problem, making the transparent ledger truly readable for the first time.

The barrier to entry for deep on-chain analysis is no longer about the ability to code or build complex data pipelines. When a user asks a good question about any data, they will get an excellent answer to it.

LlamaAI represents the moment DeFi analytics grows up, moving from static, delayed reports to a live and intelligent relationship with the market. LlamaAI is available now to all DefiLlama Pro subscribers.

The mania has cooled in recent weeks. Companies that saw their stock soar after announcing multimillion-dollar crypto purchases are now trading at a discount relative to that crypto.

Still, some are holding strong, with their mNAV — short for market-cap-to-net-asset-value multiple — comfortably in the black.

How do the do it? In the LlamaU article below, pseudonymous DefiLlama analyst Meta explains the drivers of mNAV premiums, as well as examples where the logic behind those premiums “breaks.” (Read Meta’s previous article: What is mNAV? How to calculate and trade it? Your DefiLlama guide to the metric for digital asset treasuries)

Handbook for DAT Strategy

DATs are no longer just holding crypto — they’re leveraged to actively expand their own holdings and valuations.

They aren’t just ‘hodl’ing tokens; it has become a competitive game of accumulation. DATs are trading their own market caps against themselves, turning investor sentiment into capital and capital into narrative fuel.

This new species of equity, known as Digital Asset Treasuries (DATs), sits at the intersection of corporate finance and crypto reflexivity.

Their fundamentals are blockchain-based, their premiums narrative-driven, and their strategies systematic: print, buy, compound, repeat.

What began as an experiment with MicroStrategy’s Bitcoin accumulation model has evolved into a broader movement spanning Bitcoin, Ethereum, Solana, and beyond.

Today, SBET, BMNR, and others have creatively applied the same reflexive mechanics to staking yield, token diversification, and capital recycling; transforming what used to be static balance sheets into market engines.

What Is an mNAV Premium?

mNAV = Fully Diluted Market Cap ÷ Treasury Value (USD)

1.0x → equity equals treasury value (fair)

> 1.0x → investors pay a premium for leverage, yield, or access

< 1.0x → the stock trades at a discount to its underlying crypto

If you’re new to mNAV or want a step-by-step breakdown of how it’s calculated, “HYPE DAT Ecosystem: A Clean Case Study for mNAV” is where you want to start.

A premium can be narrative-driven, structural, engineered, or yield-supported. When these align, mNAV becomes less a ratio and more a reaction: a positive feedback loop between equity and treasury that refines sentiment into capital.

MicroStrategy: The Blueprint for Capital Reflexivity

MicroStrategy pioneered the quintessential DAT model; they codified, refined, and evolved their procedure making them the gold standard. Below is the company’s official equity guidance slide from Exhibit 99.1 (August 2025):

Its strategy slide divides valuation into mNAV zones, each dictating a different capital playbook:

- Active: issue equity aggressively to buy more Bitcoin

- Opportunistic: issue selectively during favorable sentiment

- Tactical: issue sparingly for debt or liquidity needs

- Defensive: may use credit to repurchase stock

Active issuance expands Bitcoin holdings through ATMs (At-the-Market equity offering, where companies sell newly issued shares directly on to the open market), convertibles, and secondary offerings. Opportunistic issuance occurs briefly, often above 3x mNAV, allowing controlled compounding with minimal dilution. Tactical issuance covers debt or dividends without selling BTC. Defensive stance slows issuance or uses credit to repurchase shares, supporting the stock’s floor and resetting the flywheel.

This structure turns capital markets into a feedback engine. When mNAV rises, MicroStrategy issues to buy BTC. When it falls, issuance tightens or reverses through buybacks. Dilution becomes reflexive compounding.

Profit vs. Cost Basis: The First Premium Driver

The simplest catalyst for premiums or discounts is positioning versus entry cost.

When a DAT’s treasury sits above its average purchase price, the market usually assigns a premium (>1x mNAV). Below cost, the market discounts it.

Across the DeFiLlama Digital Asset Treasuries dashboard, profitable treasuries consistently trade higher while underwater ones remain cheap.

Examples include:

- MSTR (MicroStrategy) — BTC Treasury, Above Basis → Premium (mNAV ~1.5x)

- KIDZ (Classover) — SOL Treasury, Above Basis → Premium (mNAV 2.1x–3.5x)

- UPXI (Upexi) — SOL Treasury, Max FD lens → mNAV ~1.5x

- MARA (Marathon Digital) — BTC + Infrastructure Premium (1.2x–1.7x)

- NAKA (Nakamoto Holdings) — High BTC Entry → Discount (0.5x–0.8x)

- BTBT (Bit Digital) — ETH Treasury w/ Yield → Premium (>1x)

Geopolitical and Structural Premiums

Premiums also form along jurisdictional and regulatory lines — where access or taxation changes valuation dynamics.

Metaplanet Inc. (OTC: MTPLF, TSE: 3350.T) is Japan’s flagship Bitcoin treasury and one of the clearest cases of jurisdictional alchemy.

Under Japan’s tax code, corporations must mark crypto holdings to market annually and pay tax on unrealized gains.

In contrast, capital gains on listed shares are taxed separately at an effective 20.315% (Japan National Tax Agency).

This makes Metaplanet (MTPLF) a tax-deferred Bitcoin proxy, letting investors gain BTC exposure through equity. By holding Bitcoin through equity rather than directly, Metaplanet turns that asymmetry into a structural advantage, maintaining a 1.8x–2.0x mNAV with it at its peak having maintained >8x mNAV for weeks on end. A textbook case of tax alchemy: turning friction into premium.

DATs in regulated markets can tap capital barred from direct token exposure. MicroStrategy succeeded because it epitomized this: a compliant, levered Bitcoin wrapper for institutions.

Formerly CEA Industries, BNB Network Co. (BNC) is one of the few public DATs with direct BNB exposure.

With no BNB ETF or trust in the U.S., it serves as a listed proxy for Binance’s ecosystem; similar to how MSTR fulfilled the role early on as the only institutional onramp for BTC exposure.

It trades near 1.87x mNAV. Given that it is publicly endorsed and heavily invested into BNB DAT by the venture capital entity YZI Labs, formerly Binance Labs, which is officially funded and partnered with Binance itself. Until a formal BNB ETF exists, that scarcity alone supports the premium.

Together, Metaplanet and BNB Network Co. show the geography of premium. Where Metaplanet turns Japan’s crypto tax disadvantage into equity advantage, BNC leverages America’s regulatory bottleneck on BNB exposure.

Both convert policy friction into scarcity. Metaplanet provides the purest example of geopolitical arbitrage in the DAT playbook.

The Yield Flywheel: Turning Assets Into Income

SBET and BMNR pioneered ETH-based treasuries that generate yield natively.

By staking directly on Ethereum, both earn validator-level returns (~3–5% APY) that continuously expand NAV.

That yield compounds through feedback: staking generates rewards, NAV expands, the market reprices equity upward, and higher valuations reinforce the premium.

The difference lies in the ingredients: mindshare, leadership, and visibility. SBET, with Joseph Lubin, cofounder of Ethereum, and Joseph Chalom, former Head of Digital Assets at BlackRock, has top tier pedigree however BMNR’s Tom Lee has a very public presence with his appearances on CNBC. This ends up likening Tom Lee to MSTR’s legendary Saylor whose loud, consistent, charismatic bullishness were undeniable variables in the success of establishing MicroStrategy as a household name.

BMNR paralleled this best for the Ethereum DATS by staying on top via a combination of buybacks, retail engagement, and visible leadership.

BTCS also earns ETH staking yield but trades below parity lending proof that yield alone can’t ignite the flywheel without narrative and conviction.

Ultimately, yield is the base metal, and narrative, leadership, and timing are the reagents that determine whether it compounds or burns off.

Diversification and Moonshots

Some DATs diversify through moonshot allocations: small, high-beta bets meant to amplify upside or hedge decay.

GameSquare (mNAV = ~1.11x) holds ETH, a CryptoPunk, and ANIME token positions. It trades slightly above parity, a modest premium for narrative diversification.

BMNR allocated $20M into ORBS (formerly OCTO), a Worldcoin (WLD) DAT, at $1.46/share. By October 2025, ORBS traded above $10, a 6x gain. Clearly, these moonshots can convert asymmetric exposure into subtle mNAV leverage through optionality.

When the Premium Logic Breaks

Not all DATs follow the “profit = premium” or “association = value” logic.

TRON (Ticker: TRON) – Despite profitable reserves and close ties to the TRON blockchain, the stock trades at a steep discount. TRON, which is the only TRX DAT treasury, trades at a 0.53x max fully diluted mNAV,

Despite TRX hosting ~$77.5B in stablecoins, composed of ~98% USDT (DeFiLlama), and dominating transfers across Asia, Africa, and Latin America, in the West, it’s viewed as a transactional rail, not an investable asset, keeping its mNAV deeply discounted.

Contrast this with BNB Network Co. (BNC). BNB’s exchange linkage and predictable revenue burns make it behave like equity.

Binance uses a share of revenue to buy and burn BNB: a deliberate, showy, aggressive mechanism versus TRX’s passive gas burns.

Traditional finance investors quickly recognize the pattern as an equity-like feedback loop, sustaining BNC’s 1.87x mNAV whereas TRX’s gas burning blockchain hasn’t attracted attention to TRON treasury keeping it below parity. Simply put: BNB’s burn program mirrors corporate buybacks, while TRX’s gas burns are passive and minor in comparison.

BNC maintains premium; TRON does not. In numerical terms, the contrast between the two when examining max mNAV is astronomical: a difference of over 300%!

BTCS, one of the first ETH staking firms, trades around 0.88x mNAV. SBET and BMNR captured attention with clear messaging and buybacks; BTCS remained quieter, focused on infrastructure over narrative. It delivers on-chain results but lacks social reflexivity; proof that legitimacy without visibility still prices like a discount.

These cases show DAT premiums are behavioral, not mechanical. Narrative clarity, investor access, and perceived intentionality decide whether association becomes valuation.

TRX dominates usage but not mindshare translating to a discount for TRON; BNB’s engineered burn loop mirrors equity translating to a premium for BNC as if accounting for revenue generation; and BTCS shows substance alone isn’t enough.

In this market, numbers matter but narratives are the driver for positive multiples.

Fundamentals Meet Reflexivity

In the DAT ecosystem, premiums aren’t random; they’re engineered. Every successful treasury blends fundamentals, narrative, and structure into a reflexive loop: fundamentals anchor value, narrative amplifies it, and capital strategy turns that feedback into growth.

MicroStrategy utilizes financial wizardry to convert sentiment into Bitcoin. Metaplanet and BNC alchemize geography into premium through geopolitical arbitrage. BMNR, SBET, and GAME merge yield and narrative momentum. TRON and BTCS remind us that usage without story rarely sustains a premium.

In this financial alchemy, fundamentals are the lead, narrative is the spark, and regulation is the catalyst that determines how brightly it burns.

Sources

• Japan National Tax Agency – Taxation of Dividends and Capital Gains on Listed Stocks
• SEC – Exhibit 99.1, MicroStrategy Equity Guidance (Aug 2025)
• DL News – HYPE DAT Ecosystem: A Clean Case Study for mNAV
• DeFiLlama – Digital Asset Treasuries Dashboard

But investors are calculating the same metric called mNAV in such different ways that this has created a hall of mirrors where the same stock can look like a 90% discount or a 500% premium.

The problem isn’t trivial since investors are making million-dollar-bets based on data that’s off by multiples.

The article below written by pseudonymous DefiLlama analyst Meta explains how to make sense of this complex metric and trade it accurately.

What is mNAV?

mNAV is short for market-cap-to-net-asset-value multiple. It tells you how much equity value you’re paying for every $1 of crypto the company holds.

mNAV = Fully Diluted MarketCap ÷ Treasury Value (USD)

• 0.5x means you’re paying 50 cents for every $1 of tokens. That’s a discount.
• 1.0x means the company’s marketcap equals its treasury holdings. That’s equal value.
• 3.0x means you’re paying $3 for every $1 of tokens. That’s a premium.

We run it three ways:

Realized: shares that exist today

Realistic: realized plus in-the-money dilution (options, warrants, convertibles, RSUs)

Maximum: everything that could possibly printAll three are often incorrectly used interchangeably by people when discussing “fully diluted” sharecounts, marketcaps, and mNAVs.

In practice, doing so inevitably leads to miscommunication, disagreement, and, most consequentially, trades executed without full knowledge of what the true values actually are.

The lens you pick to perceive through will change the picture in potentially radical ways. Realized can look like a discount. Maximum often will show the extreme or “worst-case” scenario of a premium.

The HYPE DAT Ecosystem: A Clean Case Study for mNAV

The HYPE DAT ecosystem is one of the clearest examples of why mNAV matters and how it gets misread, miscalculated, and, even, misreported.

The three main HYPE treasury plays right now are: HYPD (Hyperion DeFi), SONN (soon to merge into Hyperliquid Strategies, HSI), and LGHL (Lion Group). Galaxy Digital (GLXY) also holds HYPE however because of its broader business mix, it’s been left out deliberately as it is not a pure DAT-focused trade.

Depending on which share count you use to calculate for marketcaps, these stocks can look like deep discounts or expensive premiums.

One investor will say SONN is 0.06x. Another will say it’s 5.27x. Both are technically right. They’re just using different denominators.That contrast is exactly why the HYPE DATs make for a clean case study.

We’ll break down each company, walk through the math, and show where people can get tripped up.

Common pitfalls

• ADS math: LGHL trades as American Depositary Shares. One ADS = 2,500 ordinary shares. Mix that up and the marketcap booms 2,500x!
• Pre-merge vs post-merge: SONN has about 6.75M shares today, but post-merge with HSI it’ll be ~562.86M. Use today’s count and it looks like a total steal. Use the right base and it’s 5x.
• Resale registrations: A filing that registers 30M shares for resale isn’t today’s count. That belongs in maximum, not realized.
• Opacity: LGHL is messy. Filings are dense, structures shift, ADS math confuses everyone. It’s one of the trickiest DATs to pin down.
• Finance portals: Yahoo shows LGHL float at 904.93M, shares outstanding at 3.95M, and implied shares at 476k. Three completely different answers. That’s how you get mNAVs ranging from 0.06x to 119x without touching a filing. And Yahoo Finance lags filings, so even the “shares outstanding” line might be stale!

$HYPD

Treasury: 1,535,772 HYPE × $48 = $73,717,056

Price: $10.34

Takeaway: On realized shares HYPD trades at 0.79x. That’s a discount. Once you layer in dilution it jumps to 5–8x, which is firmly premium.

$SONN → HSI

Treasury: 12,600,000 HYPE × $48 = $604,800,000

Price: $5.66

Takeaway: On today’s count SONN screens at 0.06x. That’s a massive discount. On the real post-merge base it’s a 5.27x premium. Same stock, two different answers.

$LGHL

Treasury:

- 194,726 HYPE × $48 = $9,346,848- 6,707 SOL × $220 = $1,475,540- Total = $10,822,388Price: $1.43

Takeaway: On realized and realistic shares LGHL trades under 0.1x. That’s a steep discount. On maximum it jumps to 4x premium. The swing is all about which share count you pick.

Informed decision making becomes paramount when you consider such discrepancies.

The Yahoo Finance trap on LGHL

Yahoo currently shows:

• Float: 904.93M- Shares outstanding: 3.95M- Implied shares outstanding: 476.76kAt $1.43 per share and a $10.82M treasury, those imply:

Three different answers from the same site.

Now convert the float to ADS instead of ordinary:- 904,930,000 ÷ 2,500 = 361,972 ADS- Marketcap = $517,622- mNAV = 0.0478x

Still wrong, but at least consistent.

The correct counts from filings are 737,193 ADS (realized), 742,993 ADS (realistic), and 30,406,496 ADS (maximum). Those give 0.0974x, 0.0982x, and 4.0177x.

Lesson: Yahoo Finance mixes units and lags filings. Always go back to the SEC.

Cross-ticker snapshot

Key:

<1x = Discount- 1x = Equal- >1x = Premium

How to calculate mNAV yourself

1. Get the value of the total holdings of the token treasury: list tokens from filings, multiply by price, add them.
2. Anchor the share count: use the latest filing that states “As of [date], there were X shares outstanding.”
3. Pick your lens: realized, realistic, or maximum.
4. Match units: if the company trades as ADS, convert ordinary to ADS. If a stock split or reverse split occurred, adjust all prior filings to the new ratio, but leave later filings as reported. If a merger changes shares, use the post-merge base.
5. Run the math: Marketcap = pricexshares. mNAV = marketcap÷treasury.6. Optional: add debt and subtract cash to the marketcap to calculate Enterprise Value is what MSTR uses to calculate for the EV mNAV. Enterprise value = Market cap + debt - cash. EV mNAV = (Market Cap + Debt - Cash) ÷ Treasury Value.

Why this matters

mNAV is the backbone of the DAT trade.

It won’t replace judgment, but it grounds it. With clean numbers you know when you’re buying tokens at a discount, equal value, or paying a premium. That’s the difference between trading narratives and trading based on numbers.

Prices move fast, narratives move faster, but underneath all the noise each ticker is just a wrapper around a pile of tokens.

If you’re sloppy with the numbers, you’ll fool yourself. Everyone wants the shortcut. Use today’s SONN share count instead of the post-merge count and it’ll look like a steal at 0.06x. In reality, it’s a 5.27x premium.

Take LGHL’s ordinary shares and multiply them by the ADS price and, suddenly, you end up with mNAVs in the hundreds or thousands of x.

Rely on Yahoo’s “float” line and you may as well be pulling numbers out of thin air.

The fix is simple. Stick with filings, pick your lens, and stay consistent or simply use DeFiLlama.

This way you’ll actually know if you’re buying tokens at a discount, equal value, or paying a premium.

mNAV won’t tell you everything. Sentiment, liquidity, and timing all still very much matter and should be factored in for. mNAV alone won’t replace judgment, but it grounds it. With clean numbers, you know when you’re buying tokens at a discount, equal value, or paying a premium.

That’s how you avoid chasing what can look like free money and then getting steamrolled when the market reprices overnight.

The edge in DATs is about doing the math right using the most-up-to-date data while others cut corners.

Sources

• Sonnet Bio press release on HSI merger
• LGHL F-3 resale registration
• LGHL HYPE swap press release
• HYPD press release on HYPE purchase

Short glossary

• DAT (Digital Asset Treasury): a public company that buys and holds crypto tokens directly on its balance sheet.
• mNAV (market-cap-to-net-asset-value multiple): marketcap divided by the value of the tokens held. Shows if the stock trades at a discount, equal value, or premium.
• ADS (American Depositary Share): a U.S.-traded security that represents a set number of a company’s ordinary shares. For LGHL, 1 ADS = 2,500 ordinary shares.
• Realized shares: shares that exist today.- Realistic shares: realized plus in-the-money dilution such as warrants, convertibles, and RSUs.
• Maximum shares: everything that could possibly print, even if out of the money or contingent.
• Enterprise Value mNAV: the version MSTR uses. It adjusts the denominator by adding cash and subtracting debt from the token holdings. DeFiLlama’s method of calculating mNAV does not use cash or debt.

All the mNAVs on DeFiLlama’s website are standardized to using tokens only, which is simpler to calculate but not the same as Enterprise Value as such you may find discrepancies when comparing mNAV values from MSTR’s website for example.

Always check to see if there is an express mention of what variables are being utilized to calculate a reported mNAV when dealing with different sources.

They let investors easily switch between volatile crypto assets — like Bitcoin and Ethereum — and more stable fiat currencies like the US dollar or the Euro, without having to reenter the traditional financial system.

Competition in the burgeoning stablecoin sector is hot. Currently, Tether’s dollar-pegged USDT is the top crypto stablecoin with a market capitalisation of over $88 billion.

Big Tech has also stepped up to the plate with payments giant PayPal launching its own crypto stablecoin PYUSD in August.

But the lack of a regulatory framework for cryptocurrencies in the US could spell uncertainty for dollar-denominated stablecoins.

In the name of global adoption, the crypto community is rooting for any genuine attempt at a trustworthy digital dollar – especially given all the fear, uncertainty and doubt weighing on existing stablecoin issuers over the past year.

So what’s the good and bad with blockchain bucks these days? DefiLlama has its own section dedicated to exploring the crypto market’s numerous stablecoins.

Tracking stablecoins on DefiLlama

Over 120 stablecoin projects across more than 80 blockchains make up the $127 billion stablecoin market cap reported in DefiLlama’s “Stables” overview dashboard.

Users can filter tokens by a number of metrics such as market cap, type of backing, what asset they’re pegged to, what chains they’re available on, and more.

Upon entering the Stables overview dashboard, users are greeted with a historical timeline of the market capitalisation of all major stablecoins.

Here we can see Tether’s USDT (green) has stayed strong over the past year, while its biggest rival, Circle’s USDC, has fallen in popularity.

The chart also has the option to take a step back and look at the stablecoin market in its entirety. Let’s select “Total Market Cap” from the dropdown box in the upper left corner and see what it shows.

The red line shows the market capitalisation of all stablecoins. Since the collapse of the Terra blockchain’s algorithmic stablecoin in May 2022, dollars, in the form of stablecoins, have fled the market.

But, as the data shows, that trend could be changing.

In addition to stablecoin market cap data, the chart also has the option to show data for stablecoin dominance, US dollar inflows and token inflows.

Below the main chart is a table where you can find everything you need to know about a specific stablecoin. Like other DefiLlama dashboards, clicking the top of each column will filter stablecoins by that specific metric. Users can also click into each asset to get a more comprehensive view of its performance.

DefiLlama also provides a Stablecoin Chains dashboard. Here users can find out the dominant stablecoin on a specific blockchain, how many stablecoins are in circulation there, and several other helpful metrics.

A chart at the top of the page shows the number of stablecoins on all major blockchains.

Here we can see that Ethereum (red) holds the most stablecoins. But another gladiator has been battling in the arena as of late — TRON (blue).

After increasing its share of the stablecoin market throughout 2023, TRON is now the closest it has ever been to overtaking Ethereum as the dominant blockchain for stablecoins.

In all the examples we’ve looked at, dollar-backed stablecoins issued by a centralised custodian — like USDT and USDC — are the most dominant. But, as we’ll see, there are other ways to issue stablecoins.

Back that asset up

Stablecoins are designed to maintain a one-to-one peg with the asset they represent, and there are different ways of achieving this. The three main types of stablecoin are as follows:

• Asset-backed — These stablecoins are backed one-to-one with the asset they represent. For fiat stablecoins, these backing assets can include cash or cash equivalents like government-issued bonds.

Other stablecoins, such as those pegged to the price of gold, hold physical gold or gold derivatives in reserve. Circle’s USDC, or Tether’s XAUT are examples of dollar-backed and gold-backed stablecoins.

• Overcollateralised — These stablecoins are issued in exchange for locking up other assets, such as cryptocurrencies. Because the assets backing overcollateralised stablecoins are usually volatile, they must, in aggregate, always maintain a much higher market value than the stablecoin’s total market capitalisation.

MakerDAO’s DAI is an example of an overcollateralised stablecoin, and is issued in exchange for locking up Ether, wrapped Bitcoin, other asset-backed stablecoins, and more recently, real-world assets like bonds.

• Algorithmic — These stablecoins rely on an algorithm to help them maintain their peg. More specifically, most attempted algorithmic stablecoins are undercollateralized, meaning that the entity that issues them does not hold enough assets in reserve to allow holders to redeem them for their face value. Such a system can have disastrous consequences. The Terra USD algorithmic stablecoin collapsed in May last year, resulting in an estimated $40 billion of investor losses.

Without regulations ordering asset-backed stablecoin issuers to prove they hold adequate reserves, they usually try to reassure investors that their stablecoins are backed one-to-one in other ways. For example, USDC issuer Circle produces monthly attestations conducted by auditing firm Deloitte to prove that it holds more assets than liabilities and could redeem all USDC in circulation for US dollars, if it needed to.

Others, like USDT issuer Tether, are less transparent. Tether’s reserves have been a source of speculation since USDT launched in 2014. Although the company details the assets it holds to back USDT and produces quarterly attestations on its holdings, it has never undergone a formal audit. Because of this, Tether’s solvency has been a constant point of issue among crypto investors.

The reserves of overcollateralised offerings like MakerDAO’s DAI or Frax’s FRAX are verifiable 24/7 simply by looking at the onchain smart contracts which govern them.

Next steps

• Check out the independent stablecoin ratings agency Bluechip.
• Learn about the next generation of stablecoins, such as Ethena Labs’ USDe.

With so many different blockchains out there, knowing how to compare them and across what metrics is essential for investors and users alike.

This article explores how to use DefiLlama to compare blockchains and why doing so matters.

How to compare blockchains

DefiLlama harvests public data to keep tabs on the inflows and outflows of money across hundreds of blockchains.

To access it, go to the DefiLlama website and click the Compare Chains tab under the DeFi dashboards section.

Users can pit blockchains against each other and compare them across several metrics, like total value locked, fees and revenue, active users, and transaction count.

Total Value Locked

In the context of blockchains, TVL refers to the total value of cryptocurrency that is deposited into smart contracts on a particular blockchain.

A higher blockchain TVL is usually a reflection of its popularity with investors.

However, TVL can sometimes be misleading.

For example, Ethereum’s TVL is much higher than Bitcoin’s — even though Bitcoin’s market capitalisation is triple that of Ethereum.

The higher TVL is down to Ethereum’s greater support for smart contracts. DeFi protocols built using complex smart contracts, such as decentralised exchanges and lending protocols, have attracted tens of billions of dollars of deposits.

By contrast, Bitcoin’s TVL is minuscule because of its limited support for smart contracts.

Fees and revenue

While TVL is still a great way to gauge a blockchain’s popularity at a glance, looking at other metrics within the Compare Chains dashboard can help create a more complete comparison.

Comparing the fees and revenue two blockchains create can yield insights into not only user activity, but also how financially sustainable they are.

Let’s use DefiLlama to compare Ethereum and Optimism.

Here we can see a large portion of Ethereum’s transaction fees go back to the network as revenue — in Ethereum’s case these fees are burned. On Optimism, an Ethereum layer 2 network, a much smaller proportion of its fees are kept as revenue.

That is because Optimism has to pay the Ethereum network it is built on top of to confirm transactions. The majority of transaction fees Optimism charges users are paid to Ethereum, while Optimism keeps what’s left.

Even so, Optimism, along with other Ethereum layer 2 networks, produce millions of dollars of revenue each month.

Active users and transactions

The Active Users and Transactions metrics are powerful in and of themselves. But when combined they can reveal deeper insights into the behaviour of the users on different blockchains.

First, let’s compare the active users on Polygon and Ethereum. On DefiLlama, the active users metric is synonymous with active wallet addresses.

As we can see in the example, Polygon has a little over 60,000 more active addresses than Ethereum does.

Next, let’s compare transactions.

Here we can see Polygon processes almost three times the number of transactions Ethereum does.

Now, let’s combine these two comparisons.

By dividing daily transactions by daily active addresses on Nov. 15, we find that each Polygon address made an average of 7.7 transactions.

On Ethereum, however, each address only made an average of 3.5 transactions.

So, what might be behind this difference? Well, Ethereum transaction fees are much higher than those on Polygon, which could be one influence.

But be careful when comparing transactions — not all blockchains allow for a fair comparison.

For example, Solana’s transaction count is much higher than any other blockchain DefiLlama lists. Is this because Solana users are just more active? Maybe not.

It’s actually because around 85% of all Solana transactions are from validators communicating with each other every time the network creates a new block. Such transactions happen automatically to keep the blockchain running.

Why are blockchains different from each other?

Aside from popularity and marketing, there are fundamental differences between blockchains based on what they’re trying to achieve.

A lot of what makes a specific blockchain unique can be boiled down to its approach to solving the so-called blockchain trilemma.

The blockchain trilemma posits that blockchains want to achieve sufficient security, scalability and decentralisation, but can only ever solve any two at the same time by sacrificing the third.

In the context of blockchains, security, scalability and decentralisation are defined as follows:

• Security. Some blockchains are better at safeguarding assets and data than others due to different consensus mechanisms – how blockchain transactions are validated.
• Scalability. Some blockchains can handle more transactions than others, making them better suited for sudden surges in use that bring in a tidal wave of traffic.
• Decentralisation. Some blockchains are more decentralised than others. In more decentralised networks, control and consensus rests in the hands of the community; in less decentralised networks, a smaller group of people call the shots.

A fast blockchain that can process lots of transactions at once might have to sacrifice decentralisation to achieve those high speeds. Conversely, some blockchains sacrifice speed and transaction throughput to maintain higher security.

Decentralisation, though, is what sets blockchains apart from other payment networks. Truly decentralised networks minimise centralised weak points and are more resistant to censorship. The most decentralised blockchains are public blockchains, like Bitcoin or Ethereum.

In contrast, some networks, known as private blockchains, happily forsake decentralisation for speed and security. These networks, such as the ConsenSys Quorum or Sygnum’s Desygnate, are invite-only.

Private blockchains’ security and speed is top-notch, but only for a select group of users. There are usually just a handful of companies that validate and view transactions.

Next steps

• Compare active users and transactions across different blockchains and find out which ones have the most active users.
• Investigate different approaches to the blockchain trilemma and read about those who claim to have solved the problem.

But fear not — forks are easy to understand.

Forking refers to any time a developer copies open-source code and uses it as the base for a new, separate project. In DeFi this most often takes the form of copying the code for an existing protocol and deploying it again, sometimes on a different blockchain, and often with small but significant changes.

Some of the largest DeFi protocols are forks. In 2020, Sushiswap, a fork of decentralised exchange Uniswap, reached a total value locked of over $8 billion at its peak as it challenged the dominance of the protocol whose code it had copied. Uniswap had a TVL of around $10 billion at the time.

But forking isn’t limited to DeFi protocols. The blockchains that an entire DeFi ecosystem is built on can also be forked.

The term is also used to describe any time blockchain developers agree to implement an update. When updating, developers must create a fork, as most blockchains cannot be updated without doing so.

As we’ll explore later, forks can be contentious, and some have created great schisms within blockchain communities.

But first, let’s explore how to use DeFiLlama to track DeFi protocol forks.

How to track forks on DefiLlama

To navigate to Forks dashboard, click on the DeFi tab on the left of the DefiLlama home page then click on the forks subsection.

At the top of the dashboard are two charts showing the popularity of different forks. Uniswap v2 is currently the most-forked protocol, accounting for almost 35% of all the forks DefiLlama tracks.

Lower down you’ll find a list of 88 different DeFi protocols and all the forks that use their code.

The list includes three columns. This first shows the number of forks of a protocol, the second shows the total value locked — or TVL — in that protocol, and the third shows the TVL of all forks of that protocol relative to its own.

The greater this figure is, the more successful the spinoffs are that used the original protocol’s code.

Take Solidly for example, an exchange protocol whose forks have amassed a TVL 105,511% that of the original. Solidly’s launch was marred by bugs, and so bad was its reception that its creator, Andre Cronje, quit the project just three weeks after launch.

But other developers eyed opportunity where Cronje gave up, and forked the protocol into more successful projects, like Velodrome.

Many forks are near identical copies of existing protocols, just deployed on a different blockchain. However, some use the existing protocol as a starting block to build something completely new.

For example, Frax Swap is a fork of Uniswap v2, but it is just one part of the larger Frax protocol that also includes an Ether liquid staking protocol and an algorithmic stablecoin.

Forking blockchains

Forking doesn’t just apply to the code behind DeFi protocols. As blockchains are also just lines of code on computers, they too can be forked.

The most common reason to fork a blockchain is to implement an upgrade. Blockchains have no centralised point of control, so everyone running nodes on the network must agree to switch to the upgraded version of the blockchain and leave the old one behind. This is sometimes referred to as a blockchain’s social consensus.

Ethereum’s Shapella upgrade in April 2023 is a recent example of a blockchain fork. The update changed Ethereum’s underlying code to allow users to withdraw staked Ether from the blockchain’s staking contract.

However, while everyone running Ethereum nodes agreed on the Shapella fork and switched over to the new network, this doesn’t always happen.

In 2016, an incident known as the DAO hack ruptured the Ethereum network, causing it to split into two blockchains: Ethereum and Ethereum Classic.

A hacker stole $60 million worth of Ether — about 14% of all Ether in circulation at that time — from The DAO, an early decentralised autonomous organisation that intended to act as an investor-directed venture capital firm.

After much debate, a majority of Ethereum stakeholders chose to fork the blockchain, effectively rolling back Ethereum’s history to before the hack. This rolled back version is the main version of Ethereum used today.

However, the decision was controversial — blockchains are meant to be immutable. Those who disagreed with the decision to roll back Ethereum continued to support the original blockchain, which is now known as Ethereum Classic.

Ethereum Classic is not the only forked blockchain. Bitcoin also has several forked versions that are still active, including Bitcoin Cash, Bitcoin Satoshi Vision, and Litecoin.

Next steps

• Read more about Sushiswap’s vampire attack on incumbent decentralised exchange Uniswap.
• Explore the reasons Bitcoin’s many forked networks came into being.

We’ll touch on a few basic concepts for understanding correlation, such as Pearson’s coefficient, and correlation vs causation. While it may sound complicated, DefiLlama makes tracking correlation intuitive.

About correlation — Pearson’s coefficient

In finance, correlation means tracking the relationship between two or more assets. If we approach it like a working question, we could ask, “How do Bitcoin and Ether behave in comparison to each other?”

While the answer may not always be clear upon our first look at the data, we can make things easier on ourselves by dividing relationships into three categories:

• Assets that move together (positively correlated).
• Assets that move in opposite directions (negatively correlated).
• Assets that don’t behave at all like each other (uncorrelated).

The most common way to measure such correlations is with Pearson’s coefficient, and it’s mercifully simple:

• It is measured on a scale from -1 to 1.
• 1 represents a perfect positive correlation.
• -1 represents a perfect negative correlation.
• 0 means the assets have no discernible connection.

Pearson’s coefficient is usually shown to two decimal places. For example, two assets with a 25% positive correlation would have a correlation coefficient of 0.25, while a 100% correlation results in a perfect 1.0.

Conversely, two assets with a 25% negative correlation would have a correlation coefficient of -0.25.

Note that the numbers can’t go over 1 or under -1.

How to use DefiLlama’s Correlations Matrix

Go to the DefiLlama website and click the Correlations tab on the left-hand side of the screen under the Tools section.

Here you’ll find DefiLlama’s Correlations Matrix. It’s a tool that lets users automatically calculate correlation coefficients between multiple crypto assets.

The matrix uses Pearson’s coefficient to display asset correlations from -1 to 1.

Here’s what you can do with it:

• Users can filter data across three time frames: weekly, monthly, and yearly.
• Add more assets by clicking the “+” button on the matrix, and typing your desired crypto asset into the search bar.
• Try a mix of different assets such as Bitcoin, Ether and other more-volatile cryptocurrencies to get a sense of which assets are correlated.

Be careful: When two of the same asset converge on the matrix, it will represent the correlation with the asset’s logo — logically, the correlation of an asset with itself is always perfect (1.0).

How to use correlation

A common phrase used in scientific circles is “correlation does not imply causation.”

It’s important for anyone considering correlations to keep that in mind.

In essence, it means that just because two or more assets may be moving together, it does not mean those movements are directly caused by each other.

Correlation data is useful, but it’s important to understand its limitations.

So, why is correlation data important?

Risk versus diversification, for one. If every asset in your portfolio is positively correlated, it’s likely that a price drop in one asset will translate to a similar drop among all of them.

If your portfolio hosts assets that show little or negative correlation, one asset’s headwinds may not affect your other assets.

This is in step with Modern Portfolio Theory, a popular model used to build out diverse and theoretically resilient portfolios.

Bitcoin, Ether, gold, Nasdaq and beyond

Bitcoin’s correlation to other crypto assets is of great interest to many analysts, and for good reason. As the largest crypto by market capitalisation, its price movements tend to lead the wider market.

Historically, the majority of non-Bitcoin crypto assets, sometimes referred to as altcoins, are positively correlated with Bitcoin, though they tend to be more volatile.

Bitcoin tends to be less volatile due to the fact that it’s the most widely held and well-established crypto asset.

Bitcoin’s closest rival, Ethereum, also has a great deal of pull in the market.

Many leading protocols are built on top of Ethereum, which means that market forces affecting the network may ripple outward and affect the prices of tokens running on it, too.

The talk surrounding Bitcoin’s correlation to other assets is not limited to the crypto sphere.

Exploring the correlations between Bitcoin and commodities like gold, or equities indexes like the S&P 500 or Nasdaq, is also popular.

Bitcoin has at times been hailed as digital gold, though its correlation to the yellow metal is far from consistent.

Bitcoin’s correlation to tech markets is similarly tenuous. US equities showed a strong correlation with Bitcoin from 2020 to 2022, but less so in 2023.

Next steps

• Try out the Correlations Matrix on DefiLlama. Compare a basket of well-known assets or high-volatility altcoins. Notice any patterns?
• Read this and other correlation-focused DL News articles to see how they can apply in real-world markets.

Just like with traditional financial services, DeFi protocols charge users fees for their use.

Fees charged on individual actions, like swapping tokens, are usually small.

For example, top decentralised exchange Uniswap charges a 0.3% fee on swaps, paid to liquidity providers who deposit their crypto into the protocol to facilitate trades.

But with enough trading volume, these small fees can add up fast.

Over the past year, the Uniswap protocol generated a whopping $542 million through fees alone.

For many protocols — like Uniswap — fees are paid entirely to liquidity providers.

Others take a portion of the money generated and direct it to the protocol’s treasury.

On DefiLlama, a protocol’s total fees minus the portion paid to liquidity providers is its revenue.

Revenue is used at the discretion of the individual protocol.

Common uses include funding protocol development, saving the funds for a rainy day in protocol treasuries, or providing rewards to incentivise people to use the protocol.

One popular way DeFi protocols distribute revenues is through governance tokens that investors must lock up to earn rewards.

This method has worked well for decentralised exchange Curve Finance and its governance community, who have locked up over $3 billion worth of the protocol’s CRV token.

Investors who lock CRV can vote on which liquidity pools receive half of the fees generated by the protocol, as well as all future CRV token emissions.

Not all DeFi protocols create revenues. Of the thousands of different projects operating on blockchain today, most struggle to retain a sustainable revenue.

Tracking Fees and Revenue

DefiLlama’s “Fees/Revenue” dashboard tracks the fees and revenue for hundreds of protocols across more than a dozen major blockchains.

The data is split between two sub-dashboards: Simple and Advanced.

Let’s take a look at the “Simple” dashboard first.

This dashboard only focuses on the amount protocols generate from fees over the daily, weekly, monthly, and yearly timeframes.

At the top users can search for a specific protocol.

They can also toggle the data to include bribes paid by other protocols in the fees calculation, which is relevant to certain protocols such as Convex Finance.

Despite the name, the term “bribes” in this context does not refer to anything criminal or dishonest, but a common DeFi praxis.

Token bribes are paid to meta governance protocols, like Convex. In return, Convex uses governance tokens it holds, such as CRV, to direct rewards to a Curve liquidity pool of the briber’s choosing.

Bribes are a cost-effective way for new protocols to attract liquidity to their token’s trading pool on Curve.

A final toggle for token tax applies to protocols which charge users a tax on successful transactions, such as trading bots like Maestro.

Users can filter the data by specific blockchains, and the type of protocol, such as decentralised exchanges or lending protocols.

Sometimes a broad overview isn’t enough to get a clear picture of a project’s success.

For more granular data, each protocol has its own page that includes a complete timeline of fees and revenue.

When investigating Curve Finance’s fee and revenue history, we can see activity spiked between May 6 to 13, generating over $15 million in fees for Curve Finance.

The mystery of the May spike is solved by cross-referencing the data with that of Curve’s “Defi Overview” dashboard.

Here, we can see May 6 to 13 was the week the Terra blockchain’s stablecoin, TerraUSD, collapsed.

Curve Finance facilitated trading of TerraUSD, and once the stablecoin failed many traders rushed in to sell their holdings for other stablecoins.

That week, Curve made $7.5 million in revenue from transaction fees and swap fees. However, Curve’s total value locked fell by $9 billion due to TerraUSD falling from its dollar peg to mere fractions of a cent.

Next, let’s look at what additional data the “Advanced” dashboard yields.

It looks similar, right? While the format and filtering options are the same, the amount of data provided is far greater.

By scrolling horizontally across the table, users can find data not only on protocol fees, but also total revenue, treasury revenue, supply side revenue, cumulative fees, incentives, net earnings, as well as helpful calculations for a given protocol’s price-fees and price-revenue ratios.

There are gaps in the data, but this is normal.

For example, a protocol may divert all its revenue to token holders and send none to its treasury, so its treasury revenue column is blank.

For the thousands of fly-by-night protocols that have met an early demise, there is a short list that has built profitable operations.

A well-planned fee schedule and the implementation of revenue-sharing incentives have helped cement a select few protocols as industry leaders.

Next steps

• Find out which DeFi market sectors tend to make the most revenue. Which sectors make the least?
• Discover which protocols have the largest treasuries in DefiLlama’s “Treasuries” dashboard.

In short, TVL is a metric that tracks how much crypto is locked up in a DeFi protocol’s smart contracts, or in all DeFi protocols running on a given blockchain.

As TVL is often viewed as a proxy for the growth and sustainability of a DeFi protocol, some investors use it to judge whether the market is correctly pricing a project’s native token.

While DefiLlama’s TVL figures are among the most widely used by those in the industry, the method for calculating TVL is not standardised.

Some blockchains try to inflate their TVL by double-counting crypto deposits.

One example of this is counting the value of both tokens deposited to liquid staking protocols and the receipt-like liquid staking tokens the protocol issues for the deposits.

Others trump up their TVLs by converting historical data to dollars using current asset prices.

It’s a tricky calculation, but getting a grip on it is fundamental to understanding DeFi.

DeFi power users first started looking at TVL during the sector’s rise in the early 2020s.

As the DeFi industry matured, TVL became a powerful metric for checking the popularity of a DeFi protocol at a glance.

To DeFi users, a rising TVL signals growing liquidity and use — and, hopefully, higher yields.

For decentralised exchanges like Uniswap or Curve, a higher TVL means they can facilitate larger swap volumes relative to the incurred slippage.

Slippage refers to the difference between the expected price of a trade and the price when the trade is executed.

For lending markets like Aave, it means larger loans are possible.

Analysts may consider a DeFi protocol undervalued if its TVL is significantly higher than its token’s market capitalisation. But this may not apply to all tokens.

Curve Finance’s CRV, for example, has a revenue share model and so Curve’s TVL does directly correspond to the value of the token.

On the other hand, Uniswap’s UNI or Aave’s AAVE aren’t tied to the protocol’s dynamics.

The problem with calculating TVL

The structure of the DeFi market presents several issues for accurately calculating TVL.

So-called double-counting is the sharpest thorn in the side of anyone hoping to accurately calculate TVL.

It refers to when the value of the same underlying tokens on a given blockchain are counted multiple times.

For example, imagine a DeFi user deposits some Ether to a protocol on Ethereum.

They then receive a placeholder token representing the Ether they deposited and deposit that token into a different protocol.

Should this same Ether be counted twice? Most argue that it shouldn’t.

Double-counting has historically been a contentious issue. When DefiLlama stopped double-counting tokens in 2022, the TVL of some blockchains subsequently dropped by over a billion dollars.

How does DefiLlama calculate TVL?

Counted assets can include staked funds like those deposited to liquid staking protocol Lido, collateral and borrowed assets at lending protocols — like Compound or Aave — and funds deposited into liquidity pools at decentralised exchanges such as Curve Finance or Uniswap.

DefiLlama takes precautions to ensure that TVL is calculated accurately and without bias across the DeFi market.

It considers the value of most tokens locked in the contracts of a protocol or platform as TVL, and values tokens using CoinGecko’s API data.

DefiLlama allows users to further filter TVL across several subcategories:

• Staking — Refers to assets locked in smart contracts.
• Pool2 — Assets locked in a type of liquidity pool that incentivises users to deposit native tokens issued by the protocol instead of selling them. Some older projects such as Alchemix have Pool2 TVL grandfathered in to avoid reputational damage, as at the time of inclusion nobody had agreed on a better way to calculate TVL.
• Borrows — Assets borrowed from lending protocols.

DefiLlama and the DeFi community have come to an agreement on what to exclude from TVL. Consequently, DefiLlama data does not include the TVL value of:

• Governance tokens staked within a protocol, such as CRV tokens locked within Curve’s protocol.
• Assets staked in blockchain contracts, as opposed to DeFi protocols. This can sometimes overshadow the TVL of DeFi protocols that run on that blockchain. DefiLlama does, however, track assets deposited to liquid staking protocols like Lido.
• Liquidity pool receipt tokens paired with governance tokens, like Convex Finance’s pool for locked Curve DAO tokens borrowed from lending protocols.
• The TVL of protocols whose TVL feeds into other protocols, such as locking tokens issued by Yearn Finance within Compound. These tokens would be considered Compound’s TVL, not Yearn’s.
• Rewards and liquidity for staked assets.

How to view TVL on DefiLlama

Users can check TVL for DeFi protocols through the “Overview tab” under the DeFi dashboard.

DefiLlama displays TVL using a line plot. At the top of the chart there are several toggles to overlay other metrics, such as a protocol’s market cap and revenue, on the chart.

Users can also change the currency from USD to the native token of the blockchain on which the protocol operates.

If the USD value drops noticeably while the native asset stays fairly steady, it hints at something.

This steadiness implies that the protocol hasn’t truly experienced a decrease in TVL, but has simply been affected by the price of the blockchain’s native asset falling.

There’s also a timeline slider to zero in on specific time periods, and a toggle for important market events.

Next steps

• Discover what led DefiLlama developer 0xngmi to remove double-counting in TVL calculation.
• Check out the DefiLlama documents for more in-depth reading about what is and isn’t included in TVL.

But while the ideas these projects pioneer can vary greatly, they all need one thing to succeed: money.

Building in crypto is expensive — just like any other industry. Ambitious projects can quickly run into the red due to labour costs, price oracle fees and server support bills.

Unless developers fund a project themselves, the money has to come from investors.

This article explains how crypto projects raise money, and how to track funding rounds with DefiLlama. That’s also the method DL News uses to publish its regular updates on raises.

How crypto projects raise money

One of the most popular avenues for crypto funding is through venture capitalist firms running investment funds that bet on new and unproven projects.

Some of the biggest VC firms actively investing in crypto include a16z, Polychain Capital, Pantera Capital, Variant and Paradigm.

It’s not just VC firms that can bankroll projects — sometimes wealthy individuals make sizable investments on their own. These people are referred to as angel investors.

So far in 2023, VCs and angel investors have poured over $4.9 billion into the crypto industry. But that figure pales in comparison to 2021, which saw a record $31 billion in venture capital inflows.

Crypto projects aren’t limited to making bold promises to wealthy VCs. They can also attempt to crowdsource funding through public web campaigns. Such offerings have become known as Initial Coin Offerings, or ICOs, which are like an unregulated, crypto version of the Initial Public Offering (IPO) model found in traditional finance.

ICOs enjoyed a boom during the 2017 bull market but have fallen sharply in popularity after regulatory crackdown from the US Securities and Exchange Commission.

Some projects still raise funds via token sales, but under different models. One model, called an Initial DEX Offering — or IDO — involves selling tokens using liquidity pools and smart contracts on a decentralised exchange, and usually tries to exclude US-based investors.

Why track fundraises?

For investors, tracking raises offers insight into not only the financial health and potential growth of a certain project, but the entire crypto industry if taken in aggregate.

If a project is able to keep raising money at higher and higher valuations, it’s a great indication of high investor confidence. It could also signal a project’s intention to expand into new markets or to hire more staff to improve their product.

On the flipside, if a project has to raise funds at a lower valuation than a previous funding round, or struggles to attract enough investors to fill a round, it might be a sign that interest is waning and that the project is in trouble.

But be careful — the venture capital firms that invest in crypto projects don’t always have the best judgment, as those who plowed $1.8 billion into crypto exchange FTX before its untimely demise found out last year.

Analysts, too, can examine fundraising across the entire industry to develop a broader understanding of market dynamics by tracking funding patterns and trends across DeFi. Greater fundraising in specific sectors, such as bridges, might make bridge-related tokens a hot commodity.

How to track raises with DefiLlama

DefiLlama tracks raises manually, so you can be sure someone has looked at each raise added to the dashboard to make sure it’s accurate.

You can also submit your raise using this form. And for any raises-related questions, just get in touch with llamaintern.

Our llamas also scour social media and news sites to find new raises, and work with investors to make sure the dashboard is up to date.

However, as DefiLlama only started compiling data on raises in September 2022, there are limitations to the data set.

For example, information on many raises from around 2017 has been lost, making it difficult to backfill. This is either because a lot of the companies raising back then failed and took down their websites, or because their teams have deliberately tried to hide information.

To get to the raises dashboard, head over to the “Raises” tab on the left of the screen. This section is divided into two sub-sections: “Overview” and “Investors”.

The ‘Overview’ section

Starting at the top, look for a particular investor in the search bar. You can also scroll through an alphabetical list of all tracked investors using the search bar — there are hundreds to explore.

The main fundraising tracker sits below the search bar. (A perceptive user will notice that DeFi raises begin in June 2014, the month in which Ethereum launched its ICO.)

The chart can be filtered by investors, chains, sectors and amount raised. It’s also possible to download this data as .csv and .json files — just hit the download button on the bottom right of the chart.

The project search bar is useful for finding out how much a particular project has raised. Type a project or company’s name into the search bar to reconfigure the field. If left blank, the field will list all projects by the most recent raise. This is handy for keeping up with the latest projects.

The project field includes valuable information such as:

• Round: lists the type of raise (pre-seed, seed, strategic, venture round, public/private token sale, ICO, angel round, and more).
• Description: provides a short description of the type of project conducting a raise.
• Lead investor and other investors.
• Valuation: listed in USD.
• Chains: the blockchain(s) on which the project operates.

The ‘Active Investors’ section

A separate active investors page is useful for finding out who’s spending on crypto right now. It comprises a field with three columns that display the investor, the number of deals they have made in the past 30 days, and a list of the projects they invested in.

While DefiLlama tracks the majority of DeFi raises, keep an eye out on Twitter and from crypto news sources to stay abreast of the latest funding rounds. As long as money keeps flowing into DeFi, there will always be new projects to explore.

Next steps

• Head to DL News and find an article about a recent raise.
• Look at the raises chart and compare crypto funding to market events — there might be some correlation there.

After Ethereum’s Shapella upgrade in April, the network now derives its security solely from users staking Ether. In addition to helping secure Ethereum, staking also rewards those who do it with newly-minted Ether.

But there’s a crucial drawback. Staked Ether is locked for the duration it’s staked and cannot be normally used elsewhere in DeFi. To address this potential market inefficiency, a wave of DeFi protocols offering so-called liquid staking have sprung up.

Such liquid staking protocols stake depositors’ Ether for them and give out placeholder tokens, called liquid staking tokens, in return. They are also sometimes called liquid staking derivatives, though some note that the term “derivatives” comes with regulatory baggage.

These liquid staking tokens automatically accrue staking rewards and can be used elsewhere in DeFi. Popular uses for liquid staking tokens include providing liquidity on decentralised exchanges or as collateral for taking out DeFi loans.

On the other side of the equation, liquid staking protocols take a small cut of the rewards earned on users’ Ether deposits for the convenience they offer.

Liquid staking has swiftly become one of the most widespread methods of earning yield in DeFi. The biggest liquid staking protocol, Lido, has issued a whopping $14.5 billion worth of stETH — its native liquid staking token.

This makes Lido not only the biggest liquid staking protocol, but also the biggest protocol in all of DeFi.

And with over $18.4 billion of DeFi’s $38 billion TVL posted in liquid staking protocols, tracking them is essential to get a deeper understanding of both Ether staking and the DeFi market as a whole.

Tracking liquid staking

DefiLlama’s “ETH Liquid Staking” dashboard tracks the liquid staking market. It is comprised of two main charts:

• A pie chart that displays how much Ether is staked through each liquid staking protocol. It is useful to see which protocol issues the most staked Ether.
• An area chart that shows the relative market dominance of liquid staking protocols since Ether staking began in December 2020. It is useful for understanding the history of staked Ether allocation across the market.

The dashboard also contains an “Inflows” tab that generates a bar graph of inflows and outflows from each liquid staking protocol.

Note the massive outflows on May 18, 2023. This was the day Ethereum completed its Shapella upgrade, which allowed stakers to withdraw Ether from the network’s staking contract for the first time.

At the time, many analysts worried the activating withdrawals would cause a mass exodus from Ether staking. While outflows did occur, the inflows in the subsequent months have dwarfed them in size.

The dashboard also contains a list of the top Ether liquid staking protocols by TVL, or total value locked.

Metrics for each protocol include:

• Staked ETH: Shows the amount of Ether staked through the protocol.
• TVL: shows the protocol’s total value locked. This is basically a conversion of staked Ether into its USD value.
• 7d Change/30d Change: Tracks each protocol’s TVL change over seven-day and 30-day timeframes.
• LSD market share: Displays the percentage of the liquid staking market the protocol occupies.
• LSD: Lists the name of the protocol’s liquid staking token.For example, Lido’s native liquid staking token is stETH.
• ETH peg: Measures the difference between the liquid staking token’s price and the price of Ether. This disparity can result from arbitrage or liquidity conditions, among other reasons.
• Mcap/TVL: Shows the ratio between market capitalisation of a protocol’s governance token and its TVL, expressed as a decimal. This is a valuable metric for appraising a project’s upward potential, and is often likened to the P/E ratio of a traditional company.
• LSD APR: Shows how much yield a given liquid staking token earns annually. This metric can change based on the fees different liquid staking protocols charge, or how good their validators are at capturing profits from MEV.

Next steps

• Consider whether inflows and outflows of staked Ether correlate with wider market behaviour.
• Research why Lido is such a dominant presence in the liquid staking market. Who runs the protocol, and who are the major stakers? Does Lido pose problems for Ethereum’s decentralisation?

Many interpret this message, published in the first ever open-source financial ledger, as an attack on the traditional financial system — which, conveniently for Nakamoto’s new project, had just endured its hardest crash in decades — the 2008 Financial Crisis.

Over the following 14 years, central banks worldwide printed an estimated $25 trillion to prop up economies.

Unlike central banks, which can create new money out of thin air, Nakamoto had the network issue new Bitcoin according to a rigid algorithm.

As such, while fiat currencies like the dollar or the euro are at the mercy of central banks and governments, Bitcoin’s issuance schedule is predictable, stable, and transparent.

Bitcoin’s idea caught on, and by the late 2010s developers had created thousands of cryptocurrencies, often with issuance schedules far more complicated than Bitcoin.

In many cases, crypto projects set aside portions of their tokens for team members, similar to how companies dish out stock options. Others initially sell large tranches of tokens to investors or venture capital firms to fund future growth.

In both cases, tokens are usually locked up — meaning their owners cannot sell them on the market — and are unlocked at a later date.

Fortunately for the crypto-curious, DefiLlama tracks all these token unlock schedules.

With a few clicks, it’s possible to see all the upcoming token unlocks in DeFi, get a sense of how projects’ issuance models will affect their token supplies, and compare issuance between protocols.

How do token unlocks work?

In DeFi, tokens are issued by protocols through smart contracts, and generally have a set issuance schedule governed by immutable code.

Protocols may choose to give out locked tokens to help better align the incentives of investors, team members, and the existing token holders.

For example, If a venture capital firm buys some tokens that are locked for three years after purchase, they are incentivised to stick around and add value to the project. If the tokens weren’t locked, the firm could dump them on the market at the earliest opportunity, profiting at the expense of both the project and secondary investors.

There are many ways tokens are unlocked and enter circulation. And there are many potential beneficiaries of token unlocks, which can include:

• Early Investors. Locked tokens bought early on in a project’s development by speculative investors later unlock, meaning they can be traded or sold on the open market.
• Airdrops. Protocols sometimes set aside a chunk of their token supply to airdrop to early or frequent users. When these windfalls are announced ahead of time, DefiLlama can track them.
• The protocol team. Protocols often pay developers, employees, and contributors in the protocol’s native token, or give employees locked tokens as part of a compensation package. In the latter case, these tokens unlock at a later date.
• Foundation or DAO allocation. Many protocols have adjacent foundations or DAOs that help direct future protocol changes and proposals.These organisations often receive locked tokens that they can use in governance votes, or allocate via grants and incentives programmes once the tokens unlock.

Protocols can use smart contracts to enforce a variety of issuance schedules, such as scheduled mass unlocks, linear emissions that issue tokens steadily over time, or burn mechanisms that periodically destroy tokens. These methods help reduce the circulating supply.

Using these methods, DeFi protocols are capable of addressing the same economic problems TradFi does, albeit through automated means. Of course, DeFi protocols are not always designed successfully.

Most DeFi protocols outline their tokenomic structure in documents called whitepapers. Smart contracts are built such that a savvy researcher can determine the issuance schedule of a project by looking at the underlying code.

Data aggregators such as DefiLlama take much of the guesswork out of this process, however, by distilling unlock data in an easy-to-digest format.

What are token supply metrics?

Before we delve into the intricacies of token unlocks, it’s essential to first grasp the foundational concepts of supply metrics.

These metrics shed light on the availability, distribution, and potential quantity of tokens, serving as key indicators for investors and market participants.

Circulating supply refers to the number of coins or tokens that are publicly available and actively circulating in the market.

This metric is key in calculating the market capitalisation, or market cap for short, of a given token.

Market cap represents the total worth of all tokens currently in circulation, and it’s calculated by multiplying the circulating supply by the current price of the token.

Another metric closely related to market cap is Fully Diluted Valuation, or FDV for short. FDV calculates the potential market value at the current token price if all tokens were in circulation, which brings us to the next metric.

Total supply accounts for all tokens that have been created or mined, minus those that have been burnt, or removed from circulation forever. Total supply includes not just the circulating tokens but also those that may be locked, reserved, or even held back by the project’s team.

If you multiply the current price of the token by the total supply, you’ll get a valuation that’s somewhere between the current market cap and the fully diluted valuation. This is because it accounts for all tokens minted, but not necessarily those that can or will be minted in the future.

Total supply isn’t the final frontier. There’s also maximum total supply, which represents the absolute ceiling or the maximum number of tokens that will ever be created for the project, defining its ultimate scarcity.

If you multiply max total supply by the current token price, then you will get the FDV.

FDV gives potential investors an idea of what the market cap could be if the total supply of tokens were fully realised and if the current price remained unchanged.

Although these metrics are useful, they aren’t as clear-cut as they may seem.

Bitcoin has a maximum supply of 21 million coins, with about 19 million coins circulating at the time of writing. But not all cryptocurrencies have capped token supplies like Bitcoin.

Ethereum has about 120 million tokens in circulation with an uncapped total supply. However, since the introduction of a change called EIP 1559 in August 2021, the Ethereum network now burns a portion of transaction gas fees, potentially reducing new Ether supply and adding a deflationary element to the cryptocurrency if the network’s in high demand.

Another important caveat to remember is the enforceability of the maximum total supply.

There have been instances where project teams have the ability to modify the supply rules or where the underlying code of a project doesn’t strictly enforce the advertised cap. It’s helpful to differentiate between a token’s hard-coded, immutable maximum supply and promises made in whitepapers or by project spokespeople. While the former is a technical constraint, the latter relies on the trustworthiness and credibility of the team behind the project.

Why follow token unlocks?

Token unlocks provide insight into a DeFi project and its team. Prospective investors in a token may draw conclusions about the attractiveness of a project based on unlock details.

For example, if a token is about to unlock 20% of its supply all at once, it’s possible that holders of the locked tokens will sell them the moment the unlock occurs. That could drive down the price of the token.

If the team allocation does not begin until the protocol reaches a certain age, an investor may choose to wait until the allocation begins to determine the team’s resolve in their own project.

If the team holds the token or sells a small amount of it following the unlock, perhaps the team believes that the project has more merit. Conversely, if the team immediately begins to sell in large quantities, some investors may consider that a red flag.

How to track token unlocks on DefiLlama

DefiLlama orders its Token Unlocks section by date. The protocol next to unlock tokens sits at the top of the list. Each row displays the current token price, along with the token’s market cap. This data helps calculate the other available metrics.

The max supply metric states the number of tokens that can ever be issued, and is supplemented with the token’s FDV. Recall that FDV calculates the potential market value at the current token price if all tokens were in circulation.

These metrics are important because they reflect the issuance phase of the token’s life span — once all tokens are issued and in circulation, the behaviour of the token’s price will no longer be affected by issuance.

So, if Aptos’s APT token has a price of $5, with a market cap of $5 billion, that means 1 billion tokens are currently circulating. The max supply metric shows APT as having a max supply of two billion, which means that one billion tokens remain locked. Thus, the Fully Diluted Value (FDV) of APT is $10 billion.

The FDV of a token is displayed in grey letters below the max supply metric.

The FDV of a token is a simple projection. It does not take into account fluctuations in price that are likely to occur once unlocks take place.

Although the FDV serves as a valuable metric for assessing token valuation, it shouldn’t be construed as definitive proof of the token’s inherent value. It’s also crucial to remember that there may never be enough exit liquidity to truly realise the FDV.

Protocols may issue tokens using long-term release schedules, vesting periods, or burning mechanisms that will alter the circulating supply over time. An example of this is the next metric, unlocks per day, which tracks the daily distribution of a token with a constant release schedule.

Unlocks per day is calculated based on the amount of tokens issued and their USD value.

The final columns show information about a protocol’s next unlock event. The percentage represents the number of tokens that will be released from the total supply.

The total supply is the complete count of a cryptocurrency’s coins or tokens, whether they’re being traded, locked away, saved, or kept by the creators.

Above is a dollar amount for the entire unlock, calculated using the current price of the token. A countdown clock gives a live, up-to-the-second deadline for the unlock. The final column displays the actual time and date of the unlock.

Token unlocks are but one piece of the puzzle when evaluating a DeFi project. Issuance schedules reveal information about a token’s lifespan, its developer team, and possible selling pressure down the road.

While DefiLlama TVL charts help users see how a project has performed in the past, the token unlock section is one of the best ways to peer into a token’s future.

Next steps

• Read through the DefiLlama token unlocks page and try to find disparities between different unlock schedules. Are some unlocks riskier than others for investors?
• Compare the past token unlock of a project with its consequent price action. Does an unlock translate to a drop or rise in price?

Of this amount, almost half is attributed to one organisation: the North Korean state-sponsored Lazarus Group. And according to cybersecurity experts, much of the profit from the group’s crypto heists is funnelled into the hermit kingdom’s nuclear weapons programme.

But Lazarus is not alone. There are many more cybercrime groups and opportunistic hackers that use a variety of hacks and exploits to take users’ hard-earned crypto.

While the terms hacks and exploits are often used interchangeably, they have slightly different meanings.

Hacks refer to someone gaining unauthorised access to data, while exploits involve manipulating code bugs or loopholes to gain an advantage within a system — usually with the goal of extracting sensitive data, money or crypto.

Let’s take a look at some different kinds of hacks and exploits, how they work, and how you can track the damage they cause on DefiLlama.

Hacks

A hack is a broad term applied any time someone gains unauthorised access to data in a system or computer.

This can take many forms: a hacker can infiltrate a computer network by planting malicious code directly into a system, or by convincing someone to open a dodgy file that, when clicked on, allows the hacker to swipe their data.

Below are some of the most common kinds of hacks in crypto:

Malware hacks

Malware hacks are where someone uses a file or code that infects, explores, steals, or conducts some behaviour an attacker wants. In crypto, the goal of those distributing malware is often to steal the password-like private keys that grant access to crypto wallets.

As we’ll see, malware is a key component of other kinds of hacks, such as phishing or ransomware.

Ransomware

Ransomware is a type of malware which prevents a user from accessing their device and the data stored on it, usually by encrypting their files.

The ransomware software demands the user send cryptocurrency to the hacker to remove the encryption and let them access their files.

The May 2021 Colonial Pipeline attack is one of the most high-profile ransomware cases in recent years. Hackers hit the Colonial oil pipeline with ransomware, resulting in a shutdown of operations, and demanded a 75 Bitcoin ransom, worth about $4.4 million at the time.

The pipeline’s operators paid the ransom, and were able to restart operations. But less than a month later, the US Justice Department announced it had found and recaptured the majority of the ransom, and attributed the hack to DarkSide, a Russian hacking group.

Frontend hacks

Frontend hacks are where hackers break into the websites that let users interact with DeFi protocols or other crypto services and manipulate the site’s code for nefarious purposes.

In 2021, users of the DeFi protocol BadgerDAO suffered $120 million in losses after hackers targeted the protocol’s website.

The hackers injected malicious code into the BadgerDAO website letting them generate rogue transaction approvals.

To users, these transactions looked normal. But when approved, they allowed the hackers to pull funds into their own wallets instead of those controlled by BadgerDAO.

Phishing

Phishing is the practice of sending fraudulent emails or other messages purporting to be from reputable companies in order to induce individuals to reveal personal information.

The main target of phishing attacks are the password-like private keys that grant access to crypto wallets. One of the most common phishing techniques involves disguising malicious software within computer files, such as email attachments.

In crypto, phishing attacks are everywhere, and they can be highly lucrative if executed correctly. Lazarus Group has been one of the most successful phishers, draining over $700 million worth of crypto via phishing in 2022 alone.

In one of its more recent heists, Lazarus used a bogus job offer to an unassuming employee at crypto payments provider CoinsPaid to steal $37 million. The employee, under the impression they were being interviewed for a lucrative job with centralised crypto exchange Crypto.com, downloaded malicious software as part of a supposed technical test.

When the employee downloaded the malicious file, it gave hackers access to CoinsPaid’s system, where they were then able to exploit a software vulnerability to withdraw funds from CoinsPaid’s crypto wallets.

Cryptojacking

Cryptojacking is a type of malware attack specific to crypto.

Hackers secretly install crypto mining software on their victims’ computers, often through infected files. Using the victims’ computing power, the software mines cryptocurrencies on behalf of the attacker.

The sources of computing power can be startlingly large. Russian scientists secretly cryptojacked their own nuclear facility supercomputer to mine Bitcoin in 2018, before they were found out and arrested.

And in February that year, a security researcher found cryptojacking code within the homicide page of the Los Angeles Times.

SIM swapping

SIM swapping is when hackers gain control of a victim’s SIM — or cell phone number and accompanying information — with the goal of hacking accounts tied to it.

Hackers usually gain control of numbers in a surprisingly direct manner. They call up the mobile phone carrier pretending to be the owner of the SIM, and then use social engineering techniques to convince the operator to give them control.

Once a hacker gets the number transferred to them, they can use it to receive codes for the victim’s two-factor authentication via text. These can help the hacker gain access to the victim’s accounts on centralised exchanges and transfer their crypto assets out of them.

On December 1, 2022, a Florida man was sentenced to 18 months in prison after stealing over $20 million worth of crypto in a SIM swap attack.

Bonus — Confidence scams

While not a hack in the traditional sense, confidence scams are when a scammer uses psychological manipulation and social engineering techniques to establish credibility and create a sense of urgency or opportunity, with the end goal of stealing a victim’s money or crypto.

Whether they take the form of fake celebrity endorsements, the promise of easy money, or romantic companionship, these scams prey on the victim’s fears, desires, and vulnerabilities.

So-called Pig Butchering scams are a type of confidence scam that have made frequent headlines in recent months. They involve a hacker building rapport and trust with the victim, often by helping them make money through crypto trading.

This is crudely painted as fattening the victim up, before the trust the hacker has garnered allows them to dupe the victim out of all their money — i.e. butchering them like a pig.

Exploits

Exploits are different from hacks in that they involve directly manipulating existing code to gain an advantage within a system.

In crypto, exploits are usually performed to extract money or valuable crypto assets. This often involves finding bugs — or unintended loopholes — in smart contract code that allow the hacker to transfer funds from a DeFi protocol or its users to the exploiter’s crypto wallet.

With fresh smart contracts going live on blockchains like Ethereum every day, there’s plenty of opportunities for a bug to slip by developers.

Let’s take a quick tour of the most common kinds of crypto exploits:

Oracle manipulation

Oracle manipulation is where an exploiter causes an oracle to report inaccurate or stale information — usually about the prices of crypto assets.

Oracles are foundational to DeFi. They bring data, such as crypto asset prices, from off-chain sources and put it on the blockchain for smart contracts to use.

Bad actors can manipulate oracles using large amounts of crypto. They target low-liquidity tokens and quickly increase trading volume to pump up the price of the asset on a specific DeFi protocol.

Because it’s done so quickly, that price increase isn’t immediately reflected in the wider market. This lets the exploiter exchange their artificially inflated holdings for other tokens with a more consistent value, or use them as worthless collateral to take out loans, without the intention of ever repaying them.

Avraham Eisenberg’s 2022 Mango Markets exploit is a famous case of price oracle manipulation.

Integer overflow

Integer overflow is a quirk of how computers process data that can have some pretty big consequences.

If a user inputs a number into some code that’s larger than it can handle, it can sometimes roll over the number to the lowest possible value.

For example, if something were coded to have a maximum value of 255, increasing the value from 255 by one could roll it back to 0.

In the context of smart contracts that govern millions of dollars in DeFi, integer overflow can have disastrous consequences if not properly managed.

In 2018, an integer overflow attack on an Ethereum token called Beauty Chain allowed an exploiter to create an absurd amount of the token, instantly killing the project.

Although integer overflow bugs in Ethereum have since been patched, the possibility for new ones to pop up elsewhere in the crypto industry remains.

Reentrancy attacks

Reentrancy attacks are a way for an exploiter to repeat an allowed interaction with a smart contract more times than they should be able to.

Because Ethereum doesn’t synchronise states between smart contract interactions, exploiters can potentially repeat the same interaction if they can reenter the smart contract before the state is updated.

This lets them execute actions repeatedly which were only intended to be executed once — such as withdrawing a specific amount of tokens from a contract.

By repeating token withdrawals through reentrancy, an exploiter can forcefully drain all the tokens held in a specific smart contract.

The 2016 DAO hack, a notorious example of a reentrancy attack, led to the loss of around 3.6 million Ether, valued at approximately $50 million to $60 million at the time.

Despite being used in one of crypto’s highest profile exploits, reentrancy attacks still remain one of the most common exploits.

Bonus — Flash loans

Flash loans are uncollateralised DeFi loans that must be paid back in the same Ethereum block they were taken out in.

They are usually used to keep DeFi markets efficient by helping with arbitrage, liquidations, and collateral swaps. But they also make possible exploits which involve leveraging large amounts of tokens.

As such, flash loans make an appearance in 11% of all recorded crypto thefts, according to DefiLlama data.

A recent exploit that used flash loans was the Euler Finance attack in March. Thankfully, the attacker later returned all the stolen funds after complaining of a guilty conscience.

DefiLlama’s Hacks dashboard

DefiLlama’s Hacks dashboard keeps track of the shady underworld of crypto. Don’t be fooled by the name — the dashboard tracks scams and exploits, too.

Recorded events date back to the 2016 Ethereum DAO hack, when an attacker drained the first deployed smart contract of $60 million worth of Ether.

The dashboard displays the date of each attack, along with the protocol and blockchain where it occurred, the type of hack or exploit employed, and the amount lost.

As the pie chart above shows, compromised private keys account for over 25% of cryptocurrency thefts.

These thefts involve four of the ten largest crypto heists recorded by DefiLlama. Thieves often steal private keys using social engineering, phishing, and malware attacks.

Some private key thefts have even turned out to be inside jobs conducted by rogue employees.

Bridges, the infrastructure that lets crypto users move funds between blockchains, have suffered greatly from compromised private keys.

So much so that DefiLlama calculates a Total Value Hacked in Bridges metric, which currently accounts for more than one-third of crypto lost in hacks.

For example, the Poly Network bridge has suffered several hacks, with the latest occurring in July, when a hacker compromised three out of four private keys used to control the bridge.

This allowed the hacker to mint a nearly unlimited amount of placeholder bridge tokens and use them to swipe $10 million.

Other bridges looted due to lax private key security include the Ronin, Harmony, and Multichain bridges.

As should be clear by now, the crypto market is fraught with risks, and even the most seasoned investors can still fall prey to hacks and exploits.

DefiLlama cannot stress enough the importance of safely securing your private keys, passwords, and cellphones.

Take proactive measures to safeguard your assets and identity — including never using the same password across multiple sites, and avoiding downloading email attachments and files, even from trusted sources.

And if something sounds too good to be true, RUN!

Next steps

• Read the Gate.io court documents detailing the first legislated instance of compromised private keys in cryptocurrency history.
• Weigh in on the “Code is Law” debate by reading up on the Indexed Finance attacker.
• Learn about Compound’s $147 million math mistake.

Uniswap vs Curve Finance: a tale of two DEXs

Most DeFi investors and traders know they should always keep a certain adage in mind: DYOR, or “Do Your Own Research.” Any researcher worth their salt usually starts with a question — a hypothesis they want to put to the test.

A possible research question might be something like: “How did Uniswap fare versus Curve following the 2022 FTX collapse?” Uniswap and Curve Finance are quite different in how they operate, but as decentralised exchanges, they both vie for the same market share across metrics like total value locked (TVL) and trading volume. So answering this question might give us better insight into how these protocols are used and their place in DeFi.

We’ll use this question as an example to help illustrate how to use DefiLlama to compare DeFi protocols.

This research question has several components:

• First: “How did Uniswap fare?” This poses a number of problems. Which metric best defines “fare?” Could it be a change in TVL, or perhaps a change in trading volumes on the protocol? The answer could require a combination of several metrics.
• “Following the 2022 FTX collapse.” This phrase deals with an event in time — the 2022 FTX collapse — so a researcher will probably want to plot charts to see how their chosen metrics behaved before, during, and after the event.

With any research question, there are usually at least two parts to consider:

• The object studied (the independent variable). This is the “FTX collapse.”
• The thing changed by the object (the dependent variable). This could be “TVL in Uniswap and Curve.”

The role of metrics in protocol research

Users can track many different metrics on DefiLlama that can help answer research questions like those concerning Uniswap and Curve. Here are some of the most useful:

Total Value Locked (TVL) is a metric that tracks how much crypto is locked up in a DeFi protocol’s smart contracts. Tracking TVL can be complicated by things like staking, double counting, and native governance tokens. Read our previous article on calculating TVL for more info.

Market Capitalisation, or market cap, is a measure of the total market value of a protocol’s native token. It is calculated by multiplying the amount of a protocol’s token in circulation by its price. For example, if Curve has 1,000,000 tokens in circulation at a price of $5 per token, it will have a market cap of $5,000,000.

Fully diluted valuation (FDV) is similar to market capitalisation, but takes into account tokens that are not yet in circulation. This includes tokens that have yet to be distributed, such as reserved staking rewards or locked tokens bought by institutional investors.

Liquidity represents the availability of funds, or the amount of tokens locked up to enable trade. The more liquidity a token has, the less a trade will impact its price.

Other popular metrics include token price, fees earned, annual revenue, assets staked, assets borrowed, yields, funding raises, and more. For certain protocols, DefiLlama includes data on governance proposals, major market events, and token unlock schedules.

How to compare protocols on DefiLlama

The quickest way to assess a protocol is to find it right on the DefiLlama homepage. Scroll down to see a list of protocols ranked by TVL. The metric by which the protocols are ranked can be changed by clicking the top of any of the columns. To see more about an individual protocol, click on its name.

Inside an individual protocol’s page, several of the previously mentioned metrics become available. TVL features prominently in the upper left, and below it are several metrics that vary depending on the protocol. In general, the page will at the very least display TVL, market cap, and token price. DefiLlama developers add other metrics based on the information contributors provide to them.

Click any of the metrics at the top to add them to the chart. Note that metrics like TVL can be viewed either in USD or the native asset of the blockchain the protocol resides on. Toggling this can affect the story you see.

If you see a substantial decline in USD value, yet the native asset remains relatively stable, it offers a clue. This stability suggests that the protocol hasn’t genuinely suffered a “loss in TVL.” Instead, it has merely been impacted by broader market dynamics.

Conversely, if the native asset shows a significant decline while the USD value remains consistent, it indicates that the protocol might be facing inherent challenges or issues, separate from general market trends.

This reversed scenario underscores the importance of evaluating both metrics to obtain a comprehensive view of a protocol’s health.

Another feature that appears on the charts of some protocols is a visual marker for major market events.

Scroll down from the chart to see a series of tabs with more information, including links to relevant news posts from DL News. As with the metrics section above, the amount of data found here will depend on the protocol.

DefiLlama has also added a “Comparison” section to the site, which allows users to select several protocols at once, and superimpose their respective TVL figures on a single chart. At this time, TVL is the only metric that can be displayed this way.

By simultaneously displaying Curve (orange) and all versions of Uniswap (pink), we can see that Curve was hit much harder around the FTX collapse of 2022, and even more so during the Terra/Luna crash earlier in the year. This is just one example of how to build out a research question and tackle it with DefiLlama. As DefiLlama’s comparison functionality improves, it will become easier than ever to draw research conclusions from multiple protocols. Now set out, and put the power of comparison to work!

Next steps

• Pick two protocols from the same DeFi sector, and compare their TVLs on DefiLlama.
• Learn about DeFi trading volumes and how to track them.

DefiLlama’s NFT dashboard tries to quantify the ups and downs of one of crypto’s most volatile markets. Over $17 billion worth of NFTs swapped hands in a month at the market’s January 2022 peak, only for the asset class to crash by about 90% by September of that year.

This article unpacks the core concepts that define this strange market, and teaches about how DefiLlama’s tools can help analyse it.

What is an NFT?

Non-fungible tokens, or NFTs, differ from regular cryptocurrencies in that each token is individual and distinct. Because of this unique feature, NFTs are often used to affirm ownership of some digital artefact. Common uses for NFTs include digital art and music, event tickets, trading cards and video game cosmetics, with new use cases envisioned regularly.

Many NFTs confer ownership to intangible items, like decentralised domain names, or Jack Dorsey’s first tweet. However, NFTs can also be used to tokenise real-life things like physical art or luxury watches, providing an easily-accessible record of provenance and ownership.

The Ethereum blockchain was among the first to popularise NFTs, and has become the chain of choice for most NFT connoisseurs.

Most NFTs on Ethereum are built using the token standards ERC-721 and ERC-1155. These standards have since been ported to other blockchains like BNB Chain, Solana and Polygon.

It’s often easy to duplicate the piece of media an NFT represents, whether that’s digital art, music, or something else. However, the real value of an NFT lies in the unique ownership rights it confers to that piece of media.

These are not necessarily legal property rights or copyrights – the Grumpy Cat owner’s cease-and-desist letter to the creator of the NFT version attests to that – but ownership over exclusive metadata.

Each NFT contains metadata that describes the characteristics and properties of the token, such as its creator, traits and transaction history. This metadata is stored on the blockchain, creating an immutable record of ownership that anyone with access to the blockchain can verify.

An NFT’s metadata can often be a strong determinant of its value. Art or video game NFTs are often sold in collections, and the rarer an NFT’s metadata, the more valuable it usually is.

For example, each NFT in the 10,000-strong Bored Ape Yacht Club collection is fashioned from over 170 traits, and the rarer traits sell for more. A single golden-haired, beanie-sporting Bored Ape sold for $3.4 million in October 2021.

Alternatively, some NFTs are more valuable than others because they provide certain boons to holders guaranteed by their creator. Select NFTs from Internet personality Gary Vee granted holders the opportunity to go garage-saling or play tennis with him.

DefiLlama’s NFT aggregator dashboard displays the top collections and marketplaces. It also contains information about NFT floor prices, 24-hour trading volume, individual purchases and a link to NFT smart contract addresses on Etherscan, a popular blockchain explorer.

The dashboard lists hundreds of NFT collections, each of which lists the collection’s total supply and the number available for sale on NFT marketplaces.

The one-day sales volume can help traders find the most hyped collections.

The barrier to entry for launching an NFT collection is low. Because of this, new collections pop up almost constantly, often springboarding off of current events, meta-irony and inside jokes, and other more successful collections. For example, among the hottest NFTs as of this writing is FF6000, a collection of NFTs named after the orange colour hex code. The floor price of these tokenised orange blocks increased by 47% in a day to $250 following 100 ETH worth of trades.

Free market competition

Most NFTs trade on marketplaces. Over 80 million NFTs are currently up for sale on OpenSea, the largest such bazaar. OpenSea helped launch NFTs into the mainstream in 2021, but other NFT marketplaces have since sprung up to beat it at its own game.

A battle for NFT market dominance broke out in early 2023 between OpenSea and a newcomer called Blur. Blur attracted customers by lowering sales fees and making royalties paid to NFT creators optional. Blur wreaked havoc on OpenSea’s market share, forcing the incumbent marketplace to cut fees under the company’s rebranded NFT aggregator “OpenSea Pro.”

So who won the battle? DefiLlama’s NFT dashboard tells the story with data.

Blur launched its marketplace in October 2022 and released its own token the following February. The Volume chart on DefiLlama’s NFT Marketplaces dashboard focuses on these dates with the timeline sliders.

The sliders make it easier to see how Blur experienced a surge in trading volume after its token launched – growing 300% overnight on February 14. Blur’s spike bumped up trading volume on OpenSea, too, but Blur outpaced it. By February 22, users traded almost 600% more NFTs on Blur compared to OpenSea.

The “Trades” graph shows how the number of trades on Blur’s marketplace increased 75% from February 14 to 15, while OpenSea’s numbers dropped by almost 25% in the same period.

But one metric undermines Blur’s success. As the chart above shows, Blur has a far higher percentage of wash trading volume compared to OpenSea.

Wash trades are when the same person or people buy and sell an asset again and again to create a false impression of market activity — or in the case of Blur, to farm the marketplace’s lucrative token airdrop.

Wash trading is rampant on Blur: NFT tracking platform CryptoSlam found 80% of trades on Blur to be inorganic throughout its token release week.

The steep rise of inorganic trading prompted updates to NFT analytic platforms’ wash trading filters. DefiLlama now omits trades that contain the following characteristics:

• Self-trades, where the buyer and seller have the same address.
• Circular trades, where an NFT finds its way back to the seller on the same platform.
• Buys and sells funded by the same address.
• Using flash loans to buy an NFT.
• Multiple transactions between the same buyer and seller paid above floor price.

These filters are not fool proof, and wash traders continue to find ways to bypass them. As long as platforms like Blur continue to incentivise the practice, wash trades will continue to skew NFT analytics data.

From an outsider’s perspective, sky-high valuations for digital pictures of monkeys or orange blocks might seem detached from reality. But if crypto experiences another bull market, the newly-minted millionaires will look for ways to show off their wealth. And, as history has taught us, NFTs and the luxury digital goods they represent will likely be a popular choice.

But fear not — DefiLlama will be here to equip you with the insights and data needed to navigate this eccentric market.

Next steps

- Explore NFT wash trading data compiled by hildobby, a pseudonymous data analyst at crypto venture fund Dragonfly.

- Read up on court battles revolving around NFTs and copyright laws, such as the “Grumpy Cat” cease-and-desist order.

By late 2022, investors began demanding serious change. To prevent the lack of transparency from causing another financial disaster, they asked crypto exchanges to open up their books to the public.

Several exchanges now publish a proof of reserve based on funds held in their on-chain crypto addresses. The addresses show that a given exchange holds reserve assets equal to or greater than the total amount of its users’ crypto deposits.

Crypto exchanges publishing proof of their reserves is a step in the right direction, but the movement certainly has its limitations. Exchanges do not publish complete logs of their outstanding debts and customers have little insight into how exchanges take snapshots of their reserves. Rigorous audits remain few and far between.

That’s why it’s important to stay vigilant, even when exchanges publish proof of their reserves. DefiLlama is among a handful of organisations pushing for greater transparency by drawing attention to these important figures. This work helps investors assess whether an exchange is safe to use, and identify which ones still suffer from a lack of transparency.

Why does crypto have a transparency problem?

Before digging deeper into proof of reserve, it’s necessary to understand why the industry has readily sacrificed transparency in favour of convenience for over a decade.

The price of entry on centralised exchanges — or CEXs —, like Binance and Coinbase, has always been control. CEXs store customers’ digital assets in giant crypto wallets to speed up trades, which they execute within their platforms rather than on blockchains.

Because CEXs spread funds over many different wallets, it’s difficult for users to know if a specific exchange holds enough assets in reserve to make all depositors whole at any given time.

A CEX could trade away or loan out users’ funds and they would be none the wiser — until they all tried to withdraw and found there wasn’t enough crypto available. This is a risk traders are willing to take in order to benefit from exchanges’ ease of use and low trading costs. Crypto exchanges are far more convenient than a slow and expensive blockchain.

Exchanges, obviously, say that they are very careful about how they handle their customers’ money, and to their credit, many have safeguards in place to prevent things like theft or misappropriation of funds.

Unfortunately, the industry is largely unregulated and some exchanges lie. In November 2022, FTX secretly lent over $8 billion of its customers’ money to its sister trading firm, Alameda Research. Alameda then drove itself into bankruptcy, bringing FTX – and nine million customer accounts – down with it.

Spooked by the market contagion that followed, investors withdrew billions worth of cryptocurrencies from centralised exchanges.

The alternative to keeping funds on a CEX is for investors to keep their crypto in a non-custodial wallet that they have complete control over. With a non-custodial wallet, users can connect to decentralised exchanges — immutable code deployed directly on blockchains like Ethereum — to trade assets.

Decentralised exchanges — or DEXs — do not custody users’ funds, removing the risk that they might misappropriate users’ crypto. In fact, all DEX transactions are public, meaning anyone can follow the flow of funds on a blockchain explorer.

DEXs sound like paradise, but the caveat is that trading on them can be far more expensive than trading on a CEX, and it takes a lot longer for trades to execute. Also, DEXs have no way to convert between fiat currencies like dollars and pounds and crypto, a service which requires a centralised custodian.

These drawbacks explain why CEXs have attracted significantly more capital than their decentralised counterparts.

Despite their ongoing issues with transparency, centralised exchanges still custody three quarters of the $1.2 trillion cryptocurrency market cap, according to a 2023 report from CoinGecko.

Why the move to proof of reserves?

CEXs are likely here to stay. But customers of centralised exchanges would probably prefer the entities safeguarding their money function more like banks than casinos.

In most countries, banks are required to follow strict government regulations to ensure they’re handling customer deposits responsibly and are solvent. Even though many banks use a fractional reserve system, where they only keep a small fraction of overall deposits in cash reserves, adherence to regulations and government guarantees on deposits helps the bank maintain trust with its customers.

However, CEXs do not receive the same level of government oversight as banks, and are not legally required to disclose proof that they are solvent. This often leaves investors questioning whether they are on Wall Street or the Las Vegas Strip.

As a result, several centralised exchanges have experienced bank runs that have left millions of customers with nothing. In late 2022, investors became tired of the lies and lip service and demanded that the largest crypto exchanges prove their solvency, too.

How do exchanges publish proof of their reserves?

Ideally, an exchange demonstrates its solvency by having a reputable accounting firm audit its books regularly, and by providing a constant proof of its reserves and a full disclosure of its liabilities. Frequent and complete reporting would demonstrate an exchange’s commitment to protecting its users from fraud and counterparty risk.

However, exchanges often compromise on transparency to remain limber and private. To avoid expensive auditing costs, they publish snapshots of their books that they call proof of reserves. In publishing these snapshots, exchanges aim to show that they hold funds of equivalent or higher value than user balances.

Exchanges employ different methods of proof to provide these snapshots. Some exchanges, such as OKX and BitMEX, release attestations of their reserves — where an auditor confirms that the exchange’s bank accounts and wallets are filled with enough money to credit customers. Others post their storage wallet addresses on Twitter or blockchain analytics platforms like Nansen, and others yet, like Binance, just publish a figure and say that they are good for it.

Note that none of this is the same as a proper audit, and there’s little to stop an exchange from moving funds into a wallet, taking a quick snapshot, then moving them elsewhere. Plus, most exchanges do not publish all their liabilities, leaving out debts they owe to banks or other companies. They only publish how much they owe their customers.

While methods diverge, most exchanges publish reports cryptographically in the form of a data structure called a Merkle tree. This structure allows the public to verify that an exchange can credit all its customers, without being privy to the amounts in each customers’ wallet. It is like a cryptographic stamp that says, “yes, the exchange has the money it claims to have”.

However, the Merkle tree is only as legitimate as the data included within it. The stamp is often, but not always, controlled by an independent auditing firm. Auditing firm Mazars no longer stands behind Binance’s Merkle Tree, for instance, and scrapped it from its website after the media heat on Binance became too hot to handle. As such, there is no way of knowing whether Binance’s proof of reserves data is complete.

Plus, the proof of reserves that exchanges publish have to be vetted. Sites like DefiLlama undertake the arduous task of tracking and tallying the staggering amount of wallets that exchanges publish as evidence into their proof of reserves.

CEX Transparency with DefiLlama

DefiLlama checks the data that CEXs provide on its CEX Transparency dashboard. The dashboard lists dozens of exchanges and provides a wealth of additional information, such as how much money is flowing into exchanges as deposits, if an exchange has received an audit and when that audit happened, and the total value of assets held.

Most CEXs can mint their own tokens at will to bolster their balance sheets, like a crypto Jerome Powell.

To prevent exchanges from using self-issued tokens to distort their balance sheets as FTX did with its FTT token before it imploded last year, DefiLlama includes a “Clean Asset” metric. Clean Assets counts the value of all crypto an exchange holds, minus self-issued tokens such as Bitfinex’s LEO token or Crypto.com’s CRO.

A keen observer will notice the absence of information in the “Auditor” and “Last Audit Date” columns from the above table. Out of the 50 plus exchanges listed on the dashboard, only three have provided audit information. Additionally, DefiLlama cannot include CEXs on its dashboard that do not provide at least a published wallet address list.

In the absence of proof of reserves, the flow of money into an exchange is a good indicator of how customers feel about the health of an exchange. A period where withdrawals exceed deposits usually indicates a lack of confidence. A quick glance at the asset inflows shows that Binance has had a rough month. The screenshot was taken shortly after the US Securities and Exchange Commission lobbed a barrage of charges against it, prompting customers to withdraw almost $4.5 billion.

While investors may never get the full story of a centralised exchange’s finances, outside of when a bank run occurs, some progress has been made to increase trust in these platforms. The failures of some of crypto’s largest exchanges throughout the latter half of 2022 serves as a stark reminder that not all funds are, as Binance’s CEO famously misspelt, “safu.”

Take all official statements with a pinch of salt and a sprinkle of scepticism. For everything else, there’s DefiLlama.

Next steps:

- investigate individual protocols within the dashboard to find specific methodologies for how DefiLlama gathers a CEX’s wallet data.

- Read why auditing firm Armanino is standing by their proof of reserves report on failed exchange FTX.

The problem is that the $18 billion DEX market is split across close to a thousand exchanges, each containing thousands of liquidity pools that impose their own set of rules and prices upon traders.

While DEX aggregation protocols like 1inch and ParaSwap promise to calculate the most efficient trades on behalf of investors, the DEX aggregation market is also fragmented across dozens of protocols, each of which has its own homebrew method for getting users the best prices on trades.

To simplify the ordeal of picking the right aggregator, DefiLlama created LlamaSwap, a free-to-use protocol that finds the best deal on a crypto trade across the top 10 DEX aggregators.

LlamaSwap taps popular exchange aggregators and finds the deal that saves the trader the most money. In an instant, LlamaSwap condenses that fragmented market of close to a thousand protocols into a single app.

How LlamaSwap works

LlamaSwap is the final stop in a set of DeFi transactions that help traders buy and sell tokens while incurring the lowest fees and the most stable prices.

At the bottom of the pile are DEXs. These exchange protocols do not hold funds in a centralised orderbook, a la Coinbase or Binance, but facilitate trades through vast reserves of tokens called liquidity pools. Other users park their funds in these pools to grease the wheels of the exchange and earn a cut of the transaction fees.

DEXs move funds in and out of these pools to process trades. Let’s say you want to swap some Ether for Circle’s USDC stablecoin. The exchange adds your Ether to a liquidity pool containing both tokens, then credits you with USDC from the pool. To account for the imbalance of tokens, the liquidity pool makes ETH a little cheaper to balance the value of the Ether and USDC in the pool.

Prices across liquidity pools can vary for smaller tokens that attract less liquidity, so it is often cheaper to reroute the trade through several liquidity pools. Consequently, a DEX that is short on USDC might first convert funds from other liquidity pools, or take funds from other protocols altogether.

Routing across several pools and protocols can quickly become complicated, and some DEXs are more efficient than others. Given the breadth of the market, choosing the cheapest route to swap coins is, obviously, impossible to do alone. Even if you tried, the price of the token you’re trying to buy could have dropped by the time you’d worked it out. High transaction fees can make wrong moves even more expensive.

That’s where DEX aggregators come in. DEX aggregators compile the best prices from hundreds of decentralised exchanges, much like how Expedia scrapes together a list of the cheapest flights and hotels. Some DEX aggregators also take so-called slippage into account, referring to the price difference between when you submit a transaction and when the transaction is confirmed on the blockchain.

Yet even DEX aggregators diverge in their efficiency. That’s where LlamaSwap comes in. LlamaSwap ranks the best prices across 20 blockchains from 10 popular DEX aggregators to work out which is the most efficient for a particular trade.

To do so, it orders the DEX aggregators by their quote and gas fees — how much you’ll have to pay the blockchain network to get your transaction through the door.

How to use LlamaSwap

To use LlamaSwap:

• Head to DefiLlama Swap via the sidebar on the DefiLlama landing page.
• Connect your cryptocurrency wallet to LlamaSwap by clicking the “Connect Wallet” button in the top right corner of the screen.
• Select the tokens you’d like to swap from the dropdown menus. So, to swap USDC to ETH, select “USDC” under the “You Sell” menu and ETH from the “You Buy” menu.
• Enter the amount you’d like to swap. The bottom field will automatically calculate what you will receive in the destination token.
• Select your slippage tolerance, or enter a custom amount. Slippage refers to the difference between the expected price of a trade and the actual price at which it is executed. The slippage tolerance is impacted by market volatility and liquidity conditions.
• Select your trade from the list of aggregators on the right side of the screen. If everything looks good, click “Approve” on your preferred trade route.
• Click “Swap via xxxx”, where “xxxx” will show the chosen aggregator.
• Review the transaction details inside your crypto wallet and, if it’s all as you expected, execute the trade.

A couple of notes:

First, airdrop eligibility. LlamaSwap users remain eligible for airdrops from DEX aggregators similar to an airdrop allocated to swaps executed directly from a DEX aggregator’s app. Historically DEXs have passed on airdrops to aggregators who in turn can choose to distribute.

Second, privacy. LlamaSwap gives users the ability to hide their IP address by redirecting requests through DefiLlama’s servers. This prevents aggregators from linking your wallet to your IP address. DefiLlama does not store IP address data.

And just like that, DeFi trading becomes a whole lot cheaper.

Next steps

• Compare quotes for swaps big and small of various cryptocurrencies across different blockchains on LlamaSwap.
• Learn about the history of early cryptocurrency exchanges and the challenges their creators faced.

The process usually signals the end of an enterprise, whether that’s the closure of a brick-and-mortar business or the dissolution of a major investment fund.

In decentralised finance, liquidation usually occurs on lending protocols when the value of a user’s loans exceed a predetermined threshold against their deposited collateral.

The smart contracts close out borrowed positions wholly or in part to ensure that lenders are repaid in full and the protocol does not accrue bad debt. This generally entails a loss for the borrower; a liquidation indicates that the borrower has been unable to keep the loan solvent.

To keep lending protocols attractive to both borrowers and lenders, DeFi applications try to strike a balance between providing high yields to lenders and protecting them from reckless borrowing. This balance is struck through a set of rules enforced automatically through smart contracts.

NOW READ: ‘I just want to help’: Justin Sun scoops $2.9m worth of Curve founder’s governance tokens amid liquidation crisis

Loans issued through smart contracts can’t play by the same rules as traditional finance, or TradFi, where many loans are taken out on credit, meaning that the borrower has not provided any collateral up front. These kinds of loans are usually referred to as undercollateralised in crypto.

In DeFi, lenders operate from pseudonymous wallets, so it is difficult to trust them with undercollateralised loans — a bailiff wouldn’t know whose door to knock down to try and recoup losses.

DeFi is designed to be trustless. Because of this, lending protocols require borrowers to provide assets with a greater value than they can borrow, so that the protocol is better insured against losses.

As such, the most common method for getting around this is to overcollateralise. The borrower provides a DeFi lending protocol with a greater value of assets than they intend to borrow, so that the lending protocol is better insured against losses.

Because overcollateralised loans are based on rules enshrined in code, there are no limitations on who can access them. Factors a bank may take into account when deciding to lend money for an undercollateralised loan, such as credit history, non-collateral assets and employment status do not apply in DeFi.

NOW READ: ‘Great revenue source for the protocol’: BNB Chain gears up to liquidate its hacker in DeFi

There are a few reasons why someone would take out a loan to borrow less than the collateral they put up. One is that borrowers would like to retain exposure to their collateral asset while they trade a borrowed asset for a short amount of time.

Another is that borrowers can use overcollateralised loans to bet against assets, otherwise known as shorting. This is done by posting collateral, borrowing the target asset against it, then immediately selling it on the market. If the borrowed asset then falls in price, the borrower can buy it back at a lower price, repay their loan and pocket the difference.

But what happens if the value of a borrower’s collateral falls below the value of the assets they borrowed? Imagine that a borrower posts $1,000 worth of Ether to borrow $500 of BTC. The ether market crashes, and the price of ETH goes down 60%. This leaves the borrower with only $400 worth of Ether. Uh-oh — they are no longer overcollateralised. This is where liquidation comes in.

How do liquidations work?

Liquidations are designed to prevent lending protocols from going bust. There are three important phrases to keep in mind when thinking about this: health factor, liquidation threshold, and collateral ratio.

Lending protocols such as Aave or Compound liquidate loans based on what’s called the health factor of a loan. The health factor is calculated by an algorithmic formula that includes the borrower’s collateral, the collateral asset’s liquidation threshold, and the total value of borrowed assets. Borrowers need to be wary of the difference in value, otherwise known as the collateral ratio, of assets to keep loans healthy.

If the loan turns so unhealthy that the health factor approaches a one-to-one ratio with the deposited collateral, the lending protocol puts the loan up for liquidation.

Just as DeFi lending markets are open to anyone, so is the liquidation process. But since liquidation is a highly competitive and lucrative endeavour, the successful liquidators tend to be the ones running specialised computer programs commonly referred to as liquidation bots.

These bots can execute transactions far faster than a human, which means the liquidator with the best bot usually wins. The winning bot is rewarded with a liquidation fee from the borrower whose collateral they are liquidating.

NOW READ: Everything is about to change at MakerDAO: Rune Christensen on his Endgame plan

Competition for rewards ensures that bots liquidate bad loans almost instantly, and that lending protocols experience minimal disruption when a borrower fails to keep a loan healthy. This is not always the case — protocols such as Maker have come close to bankruptcy when waves of failed loans overwhelm their algorithms.

Liquidations can be triggered by various mechanisms, but Aave’s model is a good example of how a typical liquidation might go down.

1. Leroy the Llama deposits 50 Ether into Aave and borrows 25 Ether worth of USDC.
2. The crypto market takes a hit. Ether falls in price, and the health factor of Leroy’s loan drops below one.
3. A liquidation bot swoops in and buys up to 50% (12.5 Ether worth of Leroy’s collateral. This number is specific to Aave and varies across lending protocols.
4. The bot then immediately sells the Ether on the market to avoid losing money if the Ether price continues to fall.
5. In addition, the bot takes a liquidation fee from Leroy’s remaining collateral — this acts as an incentive for bots to buy Leroy’s assets from the protocol.
6. Leroy loses, liquidators profit, and the protocol remains solvent.

How to use DefiLlama to track liquidations

DefiLlama tracks liquidation data for 35 assets on 11 protocols across five blockchains.

To track them, head to the Liquidations tab on the upper left of the DefiLlama landing page, and click to see the list of assets tracked. The switch in the upper right corner above the chart toggles the graph between protocols and chains.

Select an asset to see a chart showing liquidation levels at all lending protocols that offer borrowing against it, along with some other nifty data points, including::

• Total Liquidatable (USD): This shows the total amount of the chosen asset that is posted as collateral across all lending protocols. Keep in mind that any funds borrowed from lending protocols are at risk of liquidation, so this number tracks even healthy loans with minimal risk.
• Liquidatable value change (24hr): Tracks a change in the value of Total Liquidatable assets over the past 24 hours.
• Within -20% of current price: This number shows how much of the chosen asset is within 20% of borrower’s liquidation thresholds. It provides a clearer metric of risk associated with the chosen asset than Total Liquidatable.

Next, let’s look at the two main fields in the liquidations section in detail.

Chart:

The chart shows data related to liquidations. Each bar represents how many loans will be liquidated at various price points. Scroll over the chart for additional metrics.

• Cumulative filter: The cumulative filter summarises liquidations without taking the size of individual loans into account. Large wallets that take out a few outsized loans drastically affect unfiltered charts, so the cumulative chart allows for a better picture of the general liquidation landscape.
• Click the Protocols or Chains listed on the left side of the chart to add or remove them from the chart.
• The toggle in the upper right section of the chart displays liquidation data in either the chosen asset’s value, or in its USD value.
• Click bobo to meme out the chart.

Dashboard List:

The dashboard list sits below the chart. Information in the dashboard is listed by rank, depending on which filters are selected.

The dashboard is divided into two sections: Distribution and Positions.

% Distribution:

The field is linked to the “Protocol/Chain” toggle, and displays the distribution of liquidatable funds across either protocols or chains. Select “protocol” to display the distribution of the asset across lending protocols. Select “chain” to display the distribution across the different chains the asset is hosted on.

Positions:

A position indicates the amount of an asset held on a lending protocol by a single wallet. This field is not linked to the “Protocol/Chain” toggle, and will give a single set of data per chosen asset. The positions field displays the top 100 liquidatable positions of the chosen asset, regardless of protocol or chain, and includes several columns.

Tip: Above the chart on the right, you can click “Download all positions” to download a .csv file containing all liquidatable positions, not just the top 100.

Next steps

• Check out Aave and Compound docs to see how liquidations function at a deeper level.
• Head over to the DefiLlama hacks page to see other not-so-nice DeFi metrics.

A crypto-asset’s trading volume — how much of it is bought and sold within a given time frame — spins a complex yarn about its popularity.

These intervals can range from minutes, hours, months, or even years. Analysing trading volumes can reveal valuable insights into the inflows and outflows of money in DeFi, as well as the liquidity of specific assets.

When trading volumes spike, you’ll know something big is happening in the market — and it often isn’t good news.

For example, trading volumes for Terra’s UST stablecoin soared to all-time highs during its collapse in May 2022. Then when USDC broke its dollar peg in March 2023 amid the crypto banking meltdown, Ethereum decentralised exchanges recorded their highest ever trading volumes.

On the other hand, a slow and steady increase in trading volume can suggest increased use and adoption of a DeFi protocol or blockchain.

But be careful — often trading volumes turn out to be completely fraudulent. In an early application for a Bitcoin exchange-traded fund, software services provider Bitwise complained to the Securities and Exchange Commission that 95% of Bitcoin’s trading volume on CoinMarketCap was entirely made up. Things aren’t necessarily much better today.

This article will explain what crypto trading volumes are, how they are calculated and how to follow along using DefiLlama.

What are crypto trading volumes?

In the cryptocurrency market, trading volume refers to the value of all the trades of a particular asset within a specific amount of time.

Trading volume data is a mix of self-reported volume from cryptocurrency exchanges, much of it unverifiable, and on-chain volumes from decentralised finance protocols that are verifiable and traceable.

For example, the overall daily trading volume of Ether, the native currency of the Ethereum blockchain, is about $8.6 billion, according to crypto metrics site CoinMarketCap. This figure represents all the ETH that has been bought or sold on cryptocurrency exchanges in the past 24 hours.

It includes self-reported data from centralised exchanges and data scraped from DeFi protocols, like Uniswap, and excludes peer-to-peer transfers and over-the-counter trading.

In comparison, trading volume data on DefiLlama only draws from verifiable on-chain data, and looks at total trading volumes on specific blockchains or DeFi protocols, rather than for individual assets.

High trading volumes can signal strong buying pressure, where investors are eager to purchase an asset, or strong selling pressure, where investors are offloading their holdings.

Indeed, there’s a whole art dedicated to tracking changes in prices and volumes called technical analysis, where traders attempt to predict a cryptocurrency’s future price by deferring to patterns in price and volume charts.

Tracking trading volumes on DefiLlama

While sites like CoinMarketCap or CoinGecko focus on volumes of the entire crypto market, DefiLlama offers a comprehensive view of DeFi trading volumes.

The Overview subsection lists trading volumes for decentralised exchanges, in order of 24-hour trading volume. Users can filter the data on daily, weekly, or monthly time frames, and across dozens of different blockchains.

The Chains subsection, on the other hand, provides data on the total trading volumes on different blockchains, such as Ethereum and BNB Chain. Users can find data showing the weekly change in trading volume and cumulative trading volume in addition to daily and weekly time frames.

For those interested in the non-fungible token market, DefiLlama also tracks trading volumes for popular NFT projects and marketplaces. It lists metrics, such as floor price, price change, volume, and collection supply, for various NFT collections. Additionally, DefiLlama ranks NFT marketplaces by volume, market share, and number of trades.

The Derivatives and Options subsections provide data on the trading volumes of various derivatives products, such as options and perpetual futures, across different platforms.

Users can filter the data by platform, blockchain, and time frame, allowing them to track the performance of different derivatives products and trading activity over time.

Are crypto trading volumes reliable?

Even on-chain data isn’t necessarily an accurate depiction of a protocol or asset’s trading volume. Fraudulent exchanges or traders can artificially inflate trading volumes to bump up the numbers, making an asset or protocol look more popular than it actually is. Garbage in, garbage out, as they say in programming.

Various accounting efforts have attempted to offset bogus trading volumes. NFT wash trading filters, like those offered on Nansen, CryptoSlam or on DefiLlama, try to remove inorganic activity and provide a more accurate picture of on-chain trading.

To highlight the extent of wash trading, DefiLlama’s NFT trading volume dashboard includes data showing the percentage of inorganic trades relative to organic trades over the past seven days.

Happy hunting!

At no cost to its users, the site publishes metrics like trading volume, protocol revenues and fees and available yield rates, as well as detailed insights into protocol expenses, treasuries and hacks. This article will explain how to navigate all this information.

What data does DefiLlama provide?

DeFi Dashboard

The DeFi Dashboard is DefiLlama’s flagship dashboard. Located on the front page, it lists thousands of protocols and contains metrics such as TVL, volume, fees and revenue. In addition to the overview, there are 10 additional subsections to the Defi Dashboard:

• Chains: This subsection shows data for individual blockchains. It displays active user count, the number of protocols built on the chain, TVL, and the combined value of all stablecoins on the network.
• Compare Chains: This subsection lets users pit blockchains against each other by comparing TVL, fees and revenue, transaction count, and active user count.
• Airdrops: This dashboard lists DeFi protocols without tokens which may potentially launch one and distribute it through an airdrop to early adopters. The dashboard includes market category data, TVL, money raised, and notes how long ago it was listed on DefiLlama.
• Treasuries: Treasuries are protocol’s warchests. This dashboard breaks down treasury assets by stablecoins, major assets like BTC and ETH, the protocol’s native tokens, and other sundry coins.
• Oracles: Oracles deliver price feeds to DeFi protocols. This subsection lists dozens of oracles and the combined total value locked of the projects they provide information for.
• Forks: Successful projects tend to get copied in DeFi, and these copies are called forks. This dashboard lists the number of times the original project or chain has been copied and how much TVL the copies have compared to the original.
• Top Protocols: This table displays the top dogs of over 30 categories in DeFi, including liquid staking projects, lending markets, decentralised exchanges and NFT marketplaces.
• Comparison: A place to compare multiple protocol’s historical TVL.
• Protocol Expenses: This subsection includes a short list of protocols that have published information about their expenses. It also lists headcounts, which denote the number of active employees.
• Token Usage: This subsection explores the extent to which a DeFi project is exposed to ETH. A project greatly exposed to ETH in a bear market stands to gain the most if ETH rises in price.
• Categories: This section tracks the value of over 30 categories on a historical timeline graph. The dashboard describes the services offered in each category and how many protocols are included in them.
• Recent: Arriving early to a project can sometimes be a financial boon. The Recent subsection includes a list of protocols recently-added to DefiLlama, their market category and their TVL.
• Languages: One for the coders and developers, this subsection shows which coding languages protocols are written in. So far, there are 17 languages including Solidity, Vyper, and Rust.

Yields

The Yields dashboard is a DeFi farmer’s godsend. It tracks around 9,000 pools across hundreds of protocols and dozens of chains. Researchers can use it to find the best money-making opportunities, then filter them by asset type, protocol, TVL, and historical annual percentage yield (APY).

Some projects include a Reward APY — incentives paid out in a project’s native token, rather than generated from trading fees, lending, or staking.

LlamaSwap

DefiLlama created LlamaSwap, a free protocol which finds the best prices on crypto trades across the top 10 decentralised exchange aggregators.

NFTs

Once a frenzied market, non-fungible tokens (NFTs) have cooled off over the crypto winter. However, there’s still data to mine, and DefiLlama tracks the most popular collections and markets.

• Collections: This subsection lists hundreds of NFT collections. It provides data on NFT floor prices — the lowest price an owner of a particular collection is willing to sell an NFT for, historical changes in price and volume, the number of sales, and the total supply.
• Marketplaces: The places where NFTs are traded. This subsection includes timeline graphs that allow analysts to compare trading volume by project.
• Earnings: A dashboard of NFT creators and the amounts their projects earned from minting and royalties.

Unlocks

This section tracks when a venture capital firm or protocol team member’s vested tokens are scheduled to be available for selling. These events tend to precede price movements.

Sometimes, unlocked tokens are dumped onto the market pushing prices down.

However, if holders decide not to sell their unlocked tokens, it can be interpreted as a sign of confidence and push the token’s price higher.

Borrow Aggregator

The Borrow Aggregator finds the best route for borrowing an asset with a specified collateral. The dashboard shows which protocols offer borrowing for a specified asset, the cost to borrow it, and the amount available to borrow.

CEX Transparency

After several crypto companies failed in 2022, investors began demanding proof from these centralised giants that they did in fact hold enough assets in reserve to back customer deposits.

Companies that have provided DefiLlama with on-chain data showing how much crypto they hold have it posted on the CEX Transparency dashboard.

Using this data, DefiLlama also calculates the total value of an exchange’s assets, the amount of money coming in and out of the exchange, and audit information, if any is available.

Bridges

Bridges let DeFi users move assets between blockchains. The Bridges dashboard shows a historical timeline of the total volume of crypto moving across hundreds of bridges. Historical bridge transaction data is downloadable in .csv format.

Governance

DeFi protocol stakeholders regularly put forward governance proposals, which, with enough support, are voted on by that protocol’s token holders.

These determine the future direction of a project. Tracking these proposals gives insight into what changes protocols are planning. The Governance dashboard tracks the history of proposals for hundreds of DeFi protocols.

Liquidations

Liquidation is when a financial institution closes a business or trader’s financial position to ensure it does accrue debt. In DeFi, the liquidation process is partially automated by smart contracts.

DeFiLlama tracks liquidation data for 11 different lending protocols and dozens of assets across multiple chains. The Liquidations dashboard shows the total liquidatable amount of each asset and at what price specific token positions will enter liquidation.

Volumes

Trading volume refers to the value of all the trades of an asset within a specific time frame. The Volumes dashboard gives an overview of the trading volumes of tokens across numerous decentralised exchanges.

The Chains subsection provides data on the trading volumes of assets across different blockchains, and the Options and Derivatives subsections show the trading volumes of various derivatives products, such as options and perpetual futures contracts, across different platforms.

Fees /Revenue

In decentralised finance, protocols charge fees, payable with crypto, for providing financial services. After paying operational costs including marketing, infrastructure, and salary, protocols use the crypto left over — the revenue — to improve the project, bolster treasuries, and provide rewards to incentivise people to use the platform.

DeFiLlama’s Fees/Revenue dashboard tracks the fees and revenue for hundreds of protocols across dozens of blockchains. This data, which spans 17 columns, also shows how much revenue goes to investors.

Raises

The Raises dashboard displays a history of funding rounds for DeFi protocols and crypto startups, denoting the amount raised, which investors participated, and a description of what they invested in. All results can be filtered by sector, blockchain, investor, type of round and amount raised.

An Active Investor subsection shows which funds are participating in what projects, and the number of deals they have been involved in over the past month.

Stables

Stablecoins are arguably the lifeblood of DeFi. They are cryptocurrencies that are pegged to the value of real-world assets, such as fiat currencies or gold.

The landscape of the stablecoin market is just as important as that of the DeFi protocols using them.

That’s why DefiLlama dedicated a whole dashboard to stablecoin data. In it, you can find a total stablecoin market cap and historical timeline of stablecoin dominance.

Over 100 stablecoins are listed and the dashboard shows what blockchains they are available on, their market cap, and what percentage off-peg they are — an off-peg stablecoin usually spells trouble; just ask Terra’s UST.

Hacks

The bane of the crypto industry, hacks and exploits have cost unwary investors billions over the years. Fortunately, there is a large community tracking every such event, and DefiLlama’s Hacks dashboard records them all.

This section includes a historical list of hacks and exploits dating back to the 2016 Ethereum DAO hack. Each event is classified by what was affected, what technique the hacker used, and the total amount lost.

ETH Liquid Staking

The ETH liquid staking market has taken DeFi by storm ever since the Ethereum Network’s Shapella upgrade in the second quarter of 2023.

Liquid staking is where users stake their Ether through a DeFi protocol and receive a receipt-like token in return which represents their staked Ether. Holders can use this liquid staking token across other DeFi protocols to provide liquidity or as collateral for a loan.

The ETH Liquid Staking dashboard shows the market share for different liquid staking protocols, what derivative is given by each protocol, and the annual percentage yield it pays.

There you have it — DefiLlama’s complete arsenal of investigative tools, all for free. With such an abundant collection of data, there’s bound to be some helpful information for any who visit. Master these investigative tools and you are certain to become a well-informed DeFi(Llama) wizard.

The DefiLlama brand was born in 2020 as a humble TVL tracker counting the total value locked up — total investor deposits — in popular decentralised finance protocols, like Uniswap and Curve, on the Ethereum blockchain.

When the decentralised finance (DeFi) market grew, DefiLlama grew right alongside it. These days, the site tracks over 2,400 protocols across 181 blockchains with a combined TVL of $58 billion. It also tracks metrics like yields, revenues and fundraises, as well as NFTs on 21 marketplaces.

Under its umbrella company called LlamaCorp, DefiLlama has expanded to include data services like portfolio trackers, RPC provider services and crypto news reporting.

Follow along with our series of explainers to learn how to navigate the platform and get the most out of every nook and cranny on the site.

How does DefiLlama work?

DefiLlama is best known for its aggregation of on-chain DeFi data. It covers a range of projects such as decentralised exchanges (DEXs), lending platforms, and liquid staking protocols. By gathering all DeFi data in one place, DefiLlama makes it easy to track the DeFi market across key metrics such as TVL, trading volume and liquidity.

The site is an open-source project that prioritises unbiased data aggregation. To list a protocol on the site, projects submit code that returns on-chain TVL figures, or an API or subgraph to outsource the job.

DefiLlama adapters are also open-source, meaning projects can list themselves, pending approval from DefiLlama’s GitHub community. The API data that DefiLama uses is sourced directly from the blockchain, so it’s as accurate as the smart contracts that feed it.

Most tokens listed on DefiLlama are priced using CoinGecko’s API.

What data does DefILlama track?

DefiLlama tracks thousands of protocols across all major blockchains. Many of these blockchains, such as Polygon, Fantom and Ethereum layer 2 networks are EVM (Ethereum Virtual Machine) compatible, which means they are interoperable with Ethereum.

DefiLlama also tracks non-EVM chains, such as Kava, Cardano, and Solana, and pulls data from 21 major NFT marketplaces including OpenSea and Blur.

On the DefiLlama website, you’ll find:

• Yield tracking. Tracks and compares how much yield DeFi users can earn across different protocols and tokens.
• LlamaSwap. A trading tool that automatically finds the best prices and the lowest possible fees for token swaps.
• Token unlock updates. A page that tracks when tokens are scheduled for release onto the market.
• Centralised exchange (CEX) transparency monitor. Provides a peek behind the curtain of CEXs, some of which provide data about the assets they hold.
• Cross-chain bridge data. Helps to track flows and volumes across blockchain bridges – protocols that let users send cryptocurrency between blockchains.
• Governance proposal tracker. Provides data and links to monitor protocol governance via Decentralised Autonomous Organisations — or DAOs.
• Hack/exploit history. Displays which protocols have been hit by malicious actors, including the amounts lost and a description of the vulnerability.
• Borrow Aggregator. A tool to simplify lending and borrowing in DeFi by providing market-wide data. This helps to filter out risky protocols and lending conditions.

How is DefiLlama run?

DefiLlama is managed by a core team, some of whom are self-funded and others compensated as employees. These people form a small part of the wider public community, lovingly referred to as “The Llamas.”

The Llamas make themselves heard on GitHub repositories and social media platforms. Motivated Llamas have risen from anonymous contributors to crucial members of the team.

The Llama community counts thousands of followers on Twitter, a Discord community, and several other social media outlets including the DefiLlama Round-up on Telegram.

And what about LlamaCorp?

Llama Corp is the umbrella organisation behind DefiLlama. Beyond the main DefiLlama data site, it operates several other products.

These include:

• LlamaNodes. An open-source RPC infrastructure service that provides fast and secure access to blockchains.
• LlamaFolio. An upcoming wallet and portfolio tracker with a suite of analytics features for DeFi users.
• DL News. A news organisation that provides original, in-depth reporting on cryptocurrency and DeFi.
• LlamaPay. A non-custodial solution to automate recurring payments, such as salaries for crypto and web3 companies.
• ChainList. A list of EVM networks. Users can use the information provided to connect their wallets to different blockchains.

What next?

• Check out LlamaCorp to see the growing variety of products and tools available to Llamas, as well as the stable of Llama employees and contributors.
• Click to continue exploring the world of DefiLlama with explainers on TVL and DeFi trading volumes.
• Find out what’s happening in the world of DeFi and beyond at DL News.