What does defi’s TVL mean (What exactly is defi)?

What does defi’s TVL mean? According to defipulse.com, DeFi’s TVL stands for Total Value Locked, also known as “liquidity mining.” Currently, the total amount of assets locked in smart contracts is 1 billion USD. However, as liquidity mining becomes more popular, this number will further decrease. As of May 18th, it is estimated that 600 million USD worth of circulating cryptocurrencies have been burned or exchanged for fiat currencies. The top ten tokens in terms of market value are Ethereum, EOS, and Bitcoin. In a sense, TVL refers to the percentage of the total owned assets obtained by users by collateralizing their assets.

What exactly is defi?

Editor’s note: This article is from Blockchain in Plain Language (ID: hellobtc), authorized and reprinted by Odaily Star Daily.

In the field of DeFi, we often hear the term “decentralized finance.” So what is defi? In fact, this sentence means “decentralized assets” or the so-called “smart contracts.” These so-called “smart contracts” can be used for value transfer, such as issuing stocks or shorting stocks. However, these tokens also have some issues: users are unwilling to pay high transaction fees, they don’t have enough time to maintain a network node, and there are various errors and flaws in the system.

Therefore, “decentralized finance” is not easily understood by ordinary people because it is an automatically executed code running on a blockchain-based distributed application. But most projects are currently developed based on Ethereum, so its significance is much greater than Bitcoin. What is “trustless digital currency”? How does it operate and function? Essentially, DeFi is a protocol type that achieves encrypted economic activities through the use of open network infrastructure—a decentralization that allows everyone to access anything tangible or data. In simple terms, it connects all real-world assets to the blockchain. Just like the Internet, when you connect everything together, you can create new business processes and generate real value transfer.

Many people have started paying attention to DeFi, but they just want to know what defi is. However, as the market develops, more and more institutions are joining the industry to participate, and this emerging technology will be more widely adopted and may even change the structure of the entire industry. Now, let’s take a look at what defi is. What is defi? Many people may be unfamiliar with this concept, so let’s first understand what defi is. In fact, everyone knows defi, which originated as early as August 17, 2017. At that time, people thought it was a very early idea, but after many things happened, they were not well resolved. Later, some people realized that although some things did not happen, there are still some things that are possible:

1. Increased demand for some form of lending.

2. Platforms like 1inch allow investors to buy assets on them and obtain loans.

3. DEXs like Uniswap allow liquidity providers to directly sell their tokens to investors.

4. Automated market makers like 3AC.

5. A website called “Sushiswap” allows investors to easily buy and sell tokens and platform tokens, and they can also modify prices as needed.

6. There are also many other products, including stablecoins like Bitcoin Cash (BCH) and Ethereum Classic.

7. “Synthetic assets” (Synthetix).