When it comes to DeFi data, many people's first reaction is "What is the TVL?" and "What is the annualized return?" However, these indicators alone do not determine whether a project is reliable. To truly understand a DeFi project, we need to focus on three key indicators: how much is locked, how much is earned, and how active the users are. These correspond to asset security, profitability, and user activity.
1. How much is locked? — This reflects asset security and trustworthiness#
Why is this important?
TVL (Total Value Locked) is the most direct data for judging how much trust a protocol has from users. The larger the pool, the more people have invested real money into it; fluctuations may indicate unstable funds or hidden issues.
What data should we look at?
Total TVL: Like the amount of deposits in a bank, how large is the protocol's "pool"?
Asset structure: Is it primarily stablecoins (USDC, DAI), blue-chip assets (BTC, ETH), or "homegrown tokens"?
On-chain distribution: Is it concentrated on a single chain, or is it multi-chain?
Growth trend: Is the TVL steadily increasing, or is it experiencing spikes and drops?
What tools can we use?
DeFiLlama: The most comprehensive TVL data, supports detailed views by chain and project.
Token Terminal: Combines revenue and user data to better assess the "value" of locked assets.
Project official website & GitHub: Check the locking mechanism, is it pure staking, bilateral pools, or synthetic asset models?
A reminder:
A higher TVL is not always better; it should be considered alongside the asset structure and volatility. Only projects with a healthy funding structure and stable growth are truly worth paying attention to.
2. How much is earned? — This reflects the profitability model and sustainability#
Why is this important?
A good DeFi protocol should not rely on airdrops to "burn money for growth," but should be able to generate profits and share them with users, creating a positive business loop.
What data should we look at?
Protocol Revenue: How much has been earned from fees, liquidations, and transactions?
User Revenue: Are users and LPs making profits or losses? Is the structure of subsidies and actual earnings reasonable?
Cost proportion: Who takes the largest share, the protocol, LPs, or stakers?
Token economic model: Does revenue support token value? For example, through burning, dividends, or staking rewards.
What tools can we use?
Token Terminal: Overview of financial data, P/F (Price/Revenue ratio) can also be viewed.
Dune Analytics: Search "project name + revenue" to find community-created dashboards.
Project Docs & whitepapers: Understand how it makes money and the distribution logic.
Judgment tips:
A protocol's reliability hinges on whether it can survive without subsidies. Projects that rely on incentives for survival may collapse once the incentives stop.
3. How active are users? — This reflects user activity and risk situation#
Why is this important?
High TVL does not equal high activity. Some may be one-time institutional injections; high activity does not equal safety. A protocol that has not been audited and is frequently attacked by flash loans can be risky, regardless of user numbers.
What data should we look at?
Active user count (DAU/MAU): Are there "real users" using it, rather than zombie addresses completing tasks?
Number of transactions: High interaction frequency indicates that real use cases exist.
Contract audit status: Has it been audited by a reputable agency? Has it been attacked before?
Historical risk events: Have there been liquidation incidents, flash loan attacks, or reentrancy vulnerabilities?
What tools can we use?
DappRadar: Check user numbers and transaction activity.
DefiSafety / Certik / Code4rena: Audit status ratings.
Dune Analytics: Investigate liquidation records and risk events.
Rekt.news: Attack event tracking and incident analysis.
A small tip:
A sudden spike in user numbers without a corresponding increase in revenue is likely "airdrop volume manipulation," rather than healthy growth.
In summary: How to interpret DeFi data? Remember these three keywords:#
Locked: Look at the TVL structure and trend, whether the assets are "real" and if the project is stable.
Earned: Check if the protocol has sustainable revenue and whether the profit-sharing logic is reasonable.
Sustainable: Assess the real user usage and risk resilience, whether it has "long-distance running capability."
Next time you encounter a DeFi project, you can use this approach to make a general judgment. I will update the tools used in the community later, thank you.
Welcome to join the community
Feel free to join the community WeChat: BQ221858
Follow us on Weibo: @QuarkMing202
Follow us on Twitter: @xian202766693