As the DeFi ecosystem continues to mature, the concept of Total Value Locked (TVL) has gained significant attention. TVL is a measure of how much money users have stashed in a given protocol, and was originally focused on digital assets such as cryptocurrencies. However, with the adoption of blockchain technology by traditional financial institutions, the inclusion of tokenized Real-World Assets (RWA) in the TVL framework has become increasingly relevant.
Since RWA, such as mortgages, private equity investments, and illiquid funds, have not been historically represented on-chain, TVL primarily focused on the value of digital assets deposited within DeFi protocols, said the Global Blockchain Business Council.
As of July 2023, most blockchains’ TVL is largely representative of digital assets, such as cryptocurrency and NFTs. However, there are a select few notable blockchains whose TVLs are heavily weighted to RWAs. For example, Provenance Blockchain has an overall TVL of $9.3 billion, of which more than $8.1 billion is from real-world financial assets.
By identifying a blockchain’s current RWA TVL and TVL growth over time, institutions can assess which blockchain platform is best suited to support transactions in tokenized RWAs. This data is not readily available, however, and is rarely segmented by asset class. As such, analytics firms such as RWA.xyz are working to make this data more accessible.
TVL is a crucial indicator for institutions seeking to tokenize RWAs, helping them identify the most suitable blockchain platforms based on real-world asset adoption and growth. As the financial industry continues to adopt these innovations, RWA TVL is expected to play an instrumental role in guiding decisions and driving institutional adoption.