DefiLlama Review: The All-in-one Defi Tool
Decentralized Finance (DeFi) is a rapidly growing trend in the blockchain industry, with the potential to revolutionize traditional finance through distributed ledger technology and blockchain-based DApps. DeFi aims to provide secure, efficient, and transparent financial services to everyone. The DeFi market has experienced explosive growth since "the DeFi summer" of 2020, with over 235 DeFi projects and a TVL exceeding USD 200 billion in 2021.
However, with the decentralized nature of these projects, it can be challenging for investors to keep track of them and stay up to date with the constantly evolving multi-chain landscape. Enter DefiLlama, one of the largest TVL aggregators that tracks the current value of cryptocurrencies deposited in popular DeFi chains and their DApps. Continue to learn everything you need to know about this effective resource, such as its capabilities, rival services, and tips on how to optimize its use. Let’s begin!
What Is DefiLlama?
DefiLlama is a decentralized analytics dashboard that monitors DeFi platforms and their Dapps via a Total Value Locked (TVL) metric that shows which DeFi protocols are the largest and how they develop over time. With a one-stop protocol that tracks over 130 different blockchains and more than 1750 DeFi protocols, DeFiLlama has become a go-to source for DeFi analytics across the ecosystem.
The platform collects data on a protocol by calling some endpoints or making some blockchain calls, and has a team that sources reliable data from open DeFi protocols where blockchain data is public. DeFiLlama claims it is committed to transparency and accuracy without any ads or sponsored content, and maintains its data through the DefiLlama/DefiLlama-Adapters Github repository.
What Is Total Value Locked (TVL) Metric?
DeFiLlama's most significant metric is the Total Value Locked (TVL). It represents the total amount of cryptocurrency assets and tokens locked in DeFi protocols. TVL is computed based on the USD-denominated value of tokens locked in smart contracts, which includes staking pools, lending platforms, and liquidity mining incentives.
However, TVL is not a metric to measure how much one can earn on their deposits; it's simply the total value of tokens locked within the ecosystem. The TVL for a particular DeFi protocol can change when users withdraw or deposit crypto assets into a DeFi project or when the prices of the supported tokens change. Even though crypto prices are highly volatile, a decrease in TVL does not necessarily imply an outward capital flow from the project. If a DeFi protocol is built on multiple chains, its TVL across those chains would be different.
An example that illustrates this case is Ethereum, which has the largest total value locked (TVL) in the DeFi ecosystem. A protocol's market cap represents the support of active and passive investors, while the total value locked is a clear indicator of its performance in the DeFi ecosystem.
How Does DefiLlama Work?
Upon arriving at the DeFiLlama site, users are greeted with a comprehensive dashboard that showcases a chart of TVL across a diverse range of DeFi activities.
This all-encompassing platform allows users to navigate through TVL rankings that are broken down by separate chains, such as Ethereum, Fantom, BSC, amongst many others, or even opt for a more general overview of the entire market. By selecting a specific chain, users are granted access to a plethora of applications tailored to that particular chain based on TVL, with the option to choose from the top largest DeFi applications.
The "Chains" tab also facilitates the checking of application compatibility with other chains, streamlining the process of finding the best DeFi exchanges for the largest chains without the need for exhausting individual research.
The dashboard's left-hand side features several individual features, allowing users to delve deeper into the DeFi space and explore the many avenues it has to offer, including:
Chains
DeFi Forks
Airdrops
Oracles
Stablecoins
Chains
When you're on the DeFiLlama dashboard, navigate to the "Chains" tab to access a comprehensive list of Layer 1 chains and check out the TVL of the largest blockchains.
Do note that DeFiLlama only displays Layer 1 blockchains that are smart contract compatible and can host applications, so you won't find Bitcoin there.
DeFi Forks
A forked software is a modified version of the original one, which aims to improve it in some way. The majority of Decentralized Finance applications are built on open-source code, which can be used and adapted for other projects. Forks have been known to surpass the original application's combined TVL at times.
Airdrops
The Airdrops tab on DefiLlama is an exciting feature that can help users optimize their earnings. This tab provides information on protocols that may conduct airdrops soon. These airdrops are giveaways of tokens that are typically offered when a new cryptocurrency is introduced to the market.
The primary purpose of these airdrops is to promote the token, incentivize early adopters, and establish a community around the DeFi ecosystem. By taking advantage of the Airdrops tab on DefiLlama, users can stay ahead of the curve and ensure that they are well positioned to benefit from these airdrops when they occur.
Oracles
The Oracles tab on DefiLlama is a bonafide treasure trove of information for those looking to gain insights into the top oracle services in the market. They enable the transmission of a wide range of data, including, but not limited to, price feeds, payment service data, and even weather data!
The Oracles tab on DefiLlama provides a comprehensive overview of the top oracle services in the market, making it an incredibly useful tool for anyone looking to stay abreast of the latest developments in the DeFi space.
Stablecoins
Are you looking for a way to keep up with the latest stablecoin market trends? Look no further than DefiLlama's Stablecoins tab! This feature provides users with a comprehensive list of the most popular stablecoins ranked by market cap.
With this information, you can stay ahead of the curve and make informed decisions about your investments. So why wait? Check out DefiLlama's Stablecoins tab today and start exploring the exciting world of stablecoin investing!
DefiLlama Features
DeFiLlama has introduced several TVL aggregator features that are sure to satisfy even the most discerning DeFi enthusiasts.
Chain: gives an understanding of which networks the protocol is functioning on and the division of its Total Value Locked up across different networks.
Market cap data: Alongside TVL data, allowing users to evaluate a protocol (Mcap/TVL) with ease.
Charts: Help users understand and track the protocol's total inflows and outflows, providing valuable insight into a DeFi project's future prospects.
Stablecoin Market Cap Chart: Offer details about the total stablecoin market cap by price, asset and chain.
Pools, Overview and Projects: Provide information on Yield Rankings, number of pools, TVL, audits, and APY.
Conclusion
DefiLlama is an essential tool for investors and enthusiasts looking to keep track of the ever-changing DeFi landscape. It can be a bit confusing for new users due to the overload of data, but the Total Value Locked (TVL) metric and the platform's comprehensive breakdowns of chains, forks, oracles, and stablecoins provide valuable insights into the DeFi ecosystem. With several features such as charts, yield rankings, and integrations with various DeFi applications and services, DefiLlama is a one-stop-shop for all things DeFi.