Bitcoin TVL

Bitcoin TVL or Bitcoin Total Value Locked is a metric that measures the total dollar value of Bitcoin locked or staked through decentralised finance (DeFi) platforms or decentralised applications (dApps).

Unlike Ethereum, Solana, and other new-age Layer 1 (L1) blockchains, Bitcoin does not natively support smart contracts. As a result, it is not possible to stake or lock native Bitcoin (BTC) directly into any protocols. Platforms such as Babylon have made it possible for Bitcoin holders to earn yields from their idle bitcoins in a secure way without third-party trust or bitcoin bridging to any other chain. Bitcoin holders simply lock their bitcoins in a self-custodial way to gain the rights to validate PoS chains and earn yields as a return.

WBTC (Wrapped Bitcoin) is a custodial way of using Bitcoin in DeFi platforms as an ERC-20 token on Ethereum. While there is no best way of locking Bitcoin, the self-custodial way is gaining more momentum recently where holders earn yield in a different token. Hence researching the tokenomics is extremely important before locking your Bitcoin.

Significance

ICR does not consider TVL as a scoring parameter for Bitcoin’s ICR score directly. However, this metric is extremely useful to gauge the adoption of protocols that are putting Bitcoin to use in its underlying layers. Higher TVL of Bitcoin in protocol indicates more and more Bitcoin is being put to use to secure other PoS Blockchains. Since Bitcoin’s Tokenomics and adoption is the strongest of all crypto linking a token’s tokenomics to Bitcoin can be a great strategy.

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