TVL Can Be Too Easily Gamified

Study shows that Total Value Locked (TVL) is a poor metric for building crypto portfolios and making investment decisions

SINGAPORE, June 10, 2025 /PRNewswire/ — A new study from the Algorand Foundation’s tokenomics team challenges one of the cryptocurrency sector’s most widely cited metrics: Total Value Locked. The report provides some of the strongest evidence to date that TVL, despite its prominence across dashboards, headlines, and investor materials, has no bearing on a token’s financial performance.

A recent analysis of over 300 cryptocurrencies (excluding bitcoin and stablecoins) from 2023-2024, led by Dr. Matthew Brigida, Associate Professor of Finance at SUNY Polytechnic Institute and Chief Economist at the Algorand Foundation, revealed no evidence that TVL predicts token performance.

The research team constructed weekly portfolios that ranked tokens by TVL, holding the top 25% and shorting the bottom 25%, to test whether high-minus-low TVL portfolios generated alpha. They did not.

“TVL is often used to project credibility or potential upside, but our results show it fails as an investment signal,” said Brigida. “Even after adjusting for known issues like double-counting, TVL-based portfolios didn’t deliver abnormal returns.”

TVL remains common in crypto media headlines, but it can mislead investors and analysts, according to a study. Platforms like Messari, Artemis, and Token Terminal now consider TVL a secondary metric, while Blockworks has introduced REV (Real Economic Value). Community analytics tools like Dune and L2BEAT are either decentralizing TVL interpretation or using metrics like Total Value Secured (TVS). Nansen adds context to TVL through wallet behavior and smart money flows, while Flipside Crypto emphasizes the value of high-quality users over TVL.

As crypto integrates more deeply with global finance, the Algorand Foundation encourages platforms, researchers, investors, and media to adopt metrics that reflect actual usage and economic demand. This research supports Algorand’s role in evolving the crypto market by combining academic rigor with real-time blockchain insights for data-driven innovation in Web3.

Read the full press release here. 

The full whitepaper is available here.

About Algorand Foundation

Algorand’s mission is to power a world where information has integrity and innovative ideas can scale. The Algorand Foundation supports Algorand’s rapidly growing ecosystem by providing a best-in-class developer environment, supporting key infrastructure and setting technical standards, offering comprehensive support to builders and entrepreneurs, and providing the framework for decentralized governance. To learn more, visit algorand.co.