The amount of funds frozen in DeFi protocols is almost half what analytical portals claim. Incorrect counting occurs due to multiple accounting of the same investment.
The founder of the blockchain community Encode Club, Damir Bandalo, suggested that the DeFi Pulse portal incorrectly displays statistics on the amount of funds frozen in DeFi protocols. According to data from DeFi Pulse, approximately $6.7 billion are frozen in the 15 leading DeFi-protocols. According to Bandalo, the figure is almost two times lower ($3 billion).
“A lot of talk these days around the total value locked in DeFI. However all of them count the same $ many times. So I did my own calc to find out how much is actually locked in top 15 DeFi protocols. Answer: $3.5bil. (compared to $6.7bil on defipulse),” Bandalo tweeted.
In subsequent tweets, the analyst explained how duplication occurs when collecting statistics.
“Let’s say you deposit ETH into MakerDAO and mint DAI. Take that DAI and go to CurveFinance and put it into ycurve. Your $ can actually be counted 5 times. First when your ETH goes into Maker. Then when the DAI goes into ycurve. That’s obvious however there is more. When it goes into ycurve it’s using ytokens a yield switching abstraction on top of stablecoins from
iearnfinance That’s 3. Currently ytokens don’t really switch yield it deposits it into AaveAave, so that’s 4. Now if you put that ycrv into UniswapProtocol. That’s 5.”
To calculate the real amount of frozen funds in DeFi protocols, Bandalo tried to exclude compasibility.
In addition to this indicator, the analyst found out that 3.85% of the total emission of ETH is frozen in the DeFi protocols, while this indicator for bitcoin is only 0.18%. The share of blocked stablecoins is much higher: 29% of the USDC issue and 62% of the TUSD issue are blocked in DeFi protocols. Of the total frozen funds, 33% are in stablecoins, 50% in ETH and 10% in BTC.