Pomp raises the question: Has Bitcoin DeFi project Sovryn truly surpassed Uniswap v3 by TVL?

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Analysts are debating whether the Sovryn Bitcoin money market, situated in RSK, has a TVL of $52 million… or $2 billion.

Sovryn, a BTC money market protocol built on the Bitcoin-based smart contract platform RSK, looked to be rocketing up the decentralised financial rankings recently.

On June 9, Bitcoin analyst Anthony Pompliano posted statistics from DeFi Llama, a decentralised financial data aggregator, with his one million followers, revealing the protocol had a total value locked (TVL) of $1.95 billion, putting it 14th in the sector and beating even DeFi favourite Uniswap v3.

Pomp and many of his followers are upset that Ethereum-focused platforms like DeFi Pulse do not include Bitcoin DeFi projects like Sovryn and Stacks, with the influencer stating:

“One would be in top 15 of TVL list and the other would be top 25. Why are they not included?”

Pomp’s tweet regarding Sovryn drew criticism from Ethereum ecosystem supporters who challenged the notion that Sovryn had built a ten-figure TVL. Staked governance tokens, according to “ChainLinkGod,” may have led to an overstated TVL estimation.

DeFi Llama has updated its statistics on Sovryn since Pomp’s original article, currently identifying the project as having a TVL of only $52 million. The corrected data now corresponds to the TVL supplied on Sovryn’s wiki.

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DeFi Llama stated in a June 10 statement that its prior estimate of Sovryn’s TVL of approximately $2 billion had derived from incorporating the capitalisation of staked assets. The data aggregator also stated that it would soon upgrade its website to allow customers to select whether or not staked assets are included in TVL data.

Since the popularity of decentralised banking skyrocketed in 2020, TVL has emerged as the key criteria for determining a protocol’s success.

Many experts, however, have stated that TVL is reductionistic and should not be used as the primary indicator of a DeFi project’s progress.

CoinGecko co-founder Bobby Ong told Cointelegraph that, similar to how market capitalisation has been the major measure of a token or coin’s performance, TVL has grown in popularity owing to its simplicity, highlighting the convenience of establishing “one number to compare against all DeFi protocols.”

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“It’s not the perfect measure […], but it is the most straightforward measure for people to understand and use as a benchmark,” he added.

Ong argues that overall trading volume should be the key indicator used to evaluate decentralised exchanges (DEXes), adding that volume “drives protocol revenue.” He also believed that borrowing volume should be the primary gauge of money market procedures for the same reason.

Ong also advised analysts to place a greater emphasis on integrating TVL with other critical measures to demonstrate the capital efficiency of liquidity trapped in a certain protocol:

“For a DEX, looking at Trading Volume / TVL will give a measure of how efficiently the liquidity is utilized to drive fees for the protocol and LPs.”

Ong further claimed that dividing a project’s TVL by its market value or fully diluted valuation (FDV) is beneficial for comparing DeFi protocols in the same market sector.

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