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4 DeFi Projects With Ridiculously Low MCap/TVL Ratio

I’ve spent a lot of time on CoinGecko recently, trying to figure out ways to put the data they provide to some good use, and I recently found out about the magical Market Cap/TVL (Total Value Locked) Ratio;

This is the ratio of market capitalization against the total value locked in the protocol of this asset. A ratio of more than 1.0 refers to its market cap being greater than its total value locked. A value beneath one means that its market cap is much lower than its TVL. 

Considering the fact that it's so early in DeFi space, it's difficult to tell whether a project is overvalued or undervalued. With this indicator, it just became far more straightforward.

In my opinion, I repeat, in my opinion, if the Mcap/TVL ratio is super low, say below 0.5 low, the project seems to be undervalued. 

After doing a little digging on the Mcap/TVL ratio, I stumbled across this tool made by Johnson Lai, the product engineer at CoinGecko. Mr. Lau has done all the hard work for us and pulled all of the Mcap/TVL ratio data in one place for us.

I sorted the projects by the Mcap/TVL ratio and saw a nice list of projects to overview for you sorted by lowest TVL. I skipped Lido as honestly I don't have much knowledge on it and secondly, it's not listed on defipulse (anyone knows why?). Let's see what the bottom 4 are about!

Source: https://alpha.whatisonchain.com/tvl

BadgerDAO - [0.08] 

Source: https://app.badger.finance/

BadgerDAO was created by Chris Spadafora and was launched onto the market in early December 2020. Badger attempts to create a community-run organization that bulbs protocols and infrastructure to bring Bitcoin across different blockchains as collateral to be used in DeFi. 

Key Info on BadgerDAO: 

  • Their first project was called Sett, which is an automated Defi aggregator focused on tokenized BTC assets.
  • There are a total of 11 Setts so far, collectively attracting $1.137 billion in Total Value Locked. These Setts can be seen as yield farms.
  • The yearly ROI for each set ranges from as low as 90% to as high as 445%.
  • The WBTC/WETH sett has over $246 million locked.
  • They recently launched their second project called Digg, which is an elastic supply token that targets a peg with BTC.
  • 8-days after the launch of Digg, 83% of the circulating supply was staked in the BadgerDAO app.

BarnBridge - [0.13] 

Source: https://app.barnbridge.com/pools

Tyler Ward and Troy Murray co-founded BarnBridge, initially conceived in Q2 2019 and eventually came onto the open market in October 2020. It is a cross-platform protocol for tokenizing risk with fixed yield and volatility tranches. It provides a way for users to mitigate their risk and still earn a yield through DeFi.

Key Info on BarnBridge: 

  • They launched with two products to offer; Smart Yield Bonds & Smart Alpha Bonds.
  • Smart Yield Bonds provide interest rate volatility risk mitigation using debt-based derivatives. This involves pooling funds and bundling them into different tranches.
  • Smart Alpha Bonds provide market price exposure risk mitigation using tranched volatility derivatives. It creates a situation where the riskiest tranches take the highest percentage of loss/gain when prices move. This is expected to be launched in Q2 2021.
  • There are a total of 3 different pools to choose from, which collectively have a total of $475.7 million in the TVL.
  • They have plans to release a betting protocol and a no-loss gambling protocol called Bond.Bet
  • Both Haechi and Quantstamp are currently auditing Their BarnBridge DAO system.
  • They released a standards and disclosures document to improve their transparency.

Curve Finance - [0.16]

Source: https://www.curve.fi/

Michael Egorov created the first prototype for Curve Finance in October 2019. It was designed to be a decentralzied exchange, an AMM similar to Uniswap, but with a focus on stablecoins. It provides a method for users to trade stablecoins against each other with extremely low slippage - rather than having to do two transactions on Uniswap. The CRV token itself came onto markets in August 2020.

Key Info on Curve Finance: 

  • Curve.fi has a total of 27 different pools with a TVL of around $3 billion. It had reached $2 billion by the time it was one year old at the start of January 2021 and increased by another billion dollars since.
  • They collaborated with Andre Cronje, or Yearn Finance, to develop a pool factory to allow anybody to deploy a pool for their stable or algorithmic coin in just a few clicks.
  • Curve.fi has been audited by both Trail of Bits and Quantstamp.
  • Alpha finance is expected to integrate Curve products into its new product launching this month. Peckshield and Quantstamp have audited Alpha Finance.
  • They recently surpassed over $100 million in cross-asset swaps.

Harvest Finance - [0.17] 

Source: https://harvest.finance/

Harvest Finance is an automated Yield Farming Defi Protocol that enables users to farm the highest yields available on the marketplace automatically. The protocol can be described as a Farming-as-a-Service (FaaS) platform. It was launched in early September 2020 and was designed to make farming easier for its users, with them only having to deposit their funds and let the protocol pick to the job for them

Key Info on Harvest Finance: 

  • Their $FARM token can be seen as a cashflow machine as it grants farmers 30% of the profits protocols through its Profit Sharing Pool. At the time of writing, the Profit Sharing Pool generates over 120% APY - compounded Yield.
  • A total of 74% of the $FARM in circulation is staked within the protocol.
  • They have a total of 44 Farming Strategies to choose from, with more added very regularly.
  • In total, they have around $567+ TVL locked into the protocol and are sharing $10.8 million in total profits to Farmers.
  • The protocol has been audited by PeckSheild, Haechi Audit, and Certik (results expected soon).
  • The strategies are deployed on 14 different protocols, including; CRV, COMP, SUSHI, IDLE, INDEX, BAS, and SNX.

Conclusion 

In conclusion, spotting gems isn’t easy in crypto, especially with many new projects popping up every week. The Mcap/TVL ratio might be one of the best analytical tools to spot these undervalued cryptocurrencies before the masses catch on to them.

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