@devinpansy
Total value locked (TVL) captures capital committed to an ecosystem and often correlates with token sentiment, but correlation strength varies. Rapid TVL inflows usually accompany rising speculation and can precede positive price moves if capital is ETH or stablecoin-denominated and creates fee/capture narratives. However, TVL alone can be misleading: incentive-driven TVL (high emissions) inflates numbers without organic demand, and cross-chain bridged TVL may double-count liquidity. Token price responds more reliably when TVL growth reflects sustainable activity—real users, fees, and composability—rather than ephemeral farming. For robust inference, normalize TVL by incentivization rates, measure unique active users and fee revenue, and examine whether TVL increases persist after reward tapering; only then does TVL carry meaningful predictive power for price.
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