Total Value Locked Is a Terrible Metric for DeFi Success, Says Tushar Jain

According to Blockworks, Tushar Jain, managing partner at Multicoin Capital, has criticized the use of total value locked (TVL) as a metric for measuring the success of a blockchain or its applications in the decentralized finance (DeFi) sector. In an interview on the Lightspeed podcast, Jain argued that TVL is not only a useless metric, but also actively harmful, as it can be easily manipulated and gives a false sense of precision. He explained that TVL can be double, triple, or even quadruple-counted in some cases, leading to artificially inflated statistics.Jain also pointed out that TVL does not take into account the liquidity of assets, allowing for the creation of low-float, high market cap projects that boast high TVL as a key selling point. He urged serious investors to stop using TVL as a metric, as it can be misleading. Instead, Jain suggested that the only metric that truly matters is the number of people building new projects and the number of users interacting with them. He believes that focusing on TVL is putting the cart before the horse and is on a crusade to get people to stop using it.