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In the evolving landscape of decentralized finance, the efficacy of Total Value Locked (TVL) is under scrutiny, with experts like David Silverman advocating for a more precise metric.
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Silverman emphasizes the importance of Chain-Aligned TVL (CAT), arguing it reflects true ecosystem contribution instead of merely quantifying idle assets.
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According to Silverman, “CAT helps users find better yield opportunities and promotes ecosystem growth,” marking a significant shift toward sustainable blockchain development.
This article explores the limitations of Total Value Locked (TVL) as a DeFi metric and introduces Chain-Aligned TVL (CAT) as a more meaningful alternative.
Why TVL Falls Short as a Key DeFi Metric
Silverman acknowledged that while TVL provides a general overview of the assets held within a protocol or chain, its importance and accuracy remain debatable. He emphasizes that many users do not grasp the realities behind this metric.
“TVL mainly serves as a tool for crafting headlines and providing a general overview of the value held on a DeFi platform or a chain, and most people don’t really know what exactly this metric entails in particular. Saying that Ethereum has a TVL of $44.38 billion doesn’t really mean much until you dig deeper into the specifics,” Silverman told COINOTAG.
According to DefiLlama data, in April 2025, Ethereum (ETH) ranked the highest among all chains in terms of TVL, dominating more than half of the market. Meanwhile, Polygon’s (POL) TVL stood at $760.9 million, making it the 13th largest chain.
Although advancements have been made in tracking TVL over time, Silverman believes several issues persist, leading him to advocate for what he calls a Chain-Aligned TVL.
“Knowing how much USDC or USDT is on a chain can make for good headlines, but if those tokens are just collecting dust in a wallet and don’t contribute to anything, do they really add any value to the ecosystem?” he questioned.
To illustrate his point, he emphasized that holding $1 million worth of USDT in Morpho is significantly more beneficial for the chain and its users because it actively earns yield and extends credit, enhancing the ecosystem’s overall value.
“This is the main idea of Chain-Aligned TVL, which is the total value of assets that directly support and strengthen their underlying chain, whether held natively or within aligned protocols,” Silverman disclosed to COINOTAG.
Furthermore, the goal encompasses associating CAT with projects that genuinely add value to their communities.
Maximizing DeFi Potential: How Chain-Aligned TVL Benefits Users
The Polygon executive outlined that Chain-Aligned TVL brings considerable benefits to users. He explained that CAT’s nuanced measurement of a chain’s value can help users unearth better yield opportunities.
“Chains will naturally want to promote projects that benefit them and their ecosystems, so they are more likely to promote projects with higher chain-aligned TVLs, making it easier for users to locate high-yielding opportunities,” he noted.
Silverman emphasized that focusing on CAT can drive the development of more effective and user-friendly applications, as the underlying chain prioritizes well-integrated projects beneficial to its ecosystem.
“Benefits include more accessible, cheaper, and faster transactions, alongside improved DeFi opportunities,” he claimed.
Moreover, CAT-driven projects could provide better interest rates and create engaging experiences, particularly in gaming and non-fungible tokens (NFTs), as developers are encouraged to enhance ecosystem engagement.
The benefits are not limited to users alone, as this shift can positively impact entire blockchains.
“CAT is a metric that all chains can leverage and benefit from to better understand their development focus,” Silverman revealed to COINOTAG.
He also pointed out that transaction fees alone are not always a sustainable business model for chains. According to Silverman, focusing on CAT helps create long-term value for a chain and its ecosystem beyond just short-term transaction revenue.
Meanwhile, to showcase Chain-Aligned TVL in action, Silverman referenced Agora’s AUSD deployment on Polygon.
“While other stables may have large amounts of idle TVL, only the issuer benefits from this; not the chain or the users. With AUSD, a portion of the yield generated from reserves is emitted on the chain as incentives, helping grow protocols, rewarding active users, and expanding the chain’s economy even when assets remain idle,” he highlighted.
While Silverman presents a compelling case for Chain-Aligned TVL, widespread adoption of this metric remains a challenge. TVL has dominated the DeFi space for years, becoming the standard for evaluating projects.
Shifting to a more nuanced metric like CAT will require industry-wide education and a reevaluation of how both developers and users assess blockchain value.
However, as the ecosystem matures and the demand for more accurate assessments of chain health increases, metrics like CAT could gradually gain traction, providing a more sustainable and meaningful method to measure a chain’s true impact.
Conclusion
As discussions around the effectiveness of traditional TVL metrics unfold, the emergence of Chain-Aligned TVL presents a promising pathway toward a more robust framework for evaluating blockchain ecosystems. By shifting focus toward active utility and ecosystem contributions, CAT could reshape how stakeholders perceive and engage with decentralized finance.
