Bybit Learn spoke to TraderMercury, a long-time Bybit partner and trader known for his disciplined and philosophical approach to markets. 

Bybit Learn spoke to TraderMercury (@TraderMercury on X), a long-time Bybit partner and trader known for his disciplined and philosophical approach to markets. 

Mercury reveals his journey as a trader, how he overcame his biggest challenges and navigated markets to become a successful trader.

Please note that this article and any tokens mentioned does not constitute financial advice. The interview has been edited for formatting and grammatical accuracy.

Q: Firstly — congratulations on retiring your parents! How did that feel?

 It feels incredible. My family has been through a lot and many of my followers have heard my story about how my parents went from being broke, to millionaires, to being homeless. My ultimate goal has been to grant them an early retirement ever since I was 14 years old, and at the end of 2024 I was finally able to do that, thanks to markets.

Q: You've tweeted that you got into crypto 7 years ago — how did you first get into trading crypto? What sparked your interest, and what motivated you to dive into the wild west of crypto?

 I initially got into crypto by scrolling Twitter and seeing an ad for XRP/Ripple at the time. It piqued my interest and I immediately saw crypto as a ‘get-rich-quick’ scheme. I was naive enough to dive into things head first, and ironically I actually did get rich quick — I bought just before the final push upwards in 2017, and my account was up 4x in the span of a few weeks. I remember thinking to myself: “I’ll just hold these assets forever and retire,” to which I was met with -90% drawdowns over the course of the next few months, after taking no profit at all.

I became intrigued by the premise of volatility. My large losses only exacerbated my fuel to achieve large gains; I figured someone was making money from this market, why couldn’t it be me?

Q: Tell us about TraderMecury's trading journey — what were some of the biggest challenges you faced as a beginner, what advice would you give yourself if you were just starting out?

 My trading journey was initially described above, and was followed by a large humbling in March of 2020. Prior to that, I had spent the past 2 years recovering my losses from that initial naivety since joining crypto, and once again managed to rally my account 5x in that time period, leading up to March 2020. When the covid crash happened, I was caught with positions in the middle of it, and due to a failure of applying risk management, and overconfidence in my abilities, I was once again met with -80% drawdown on my entire portfolio — which, because I was only 20 years old at the time, also happened to be 100% of my net worth.

That moment was by far the most difficult event I’ve ever dealt with, but the most difficult aspect of trading was my inability to hold unrealized profit.

After my humbling, I regathered myself and restructured my approach from the very foundation. I began to view the market differently than my prior-self. I was now finding myself detaching from the market and at peace with the way I was trading, which felt very refreshing in comparison to the 2 years I had spent prior slaving away at the charts and utterly destroying my mental health.

But I was met with a new issue: I often closed positions too early, out of fear that the market would take those gains away just as quickly as it gave me those gains. I was now struck with trauma due to my experiences.

It was difficult, but I had to pace myself; slowing down with the amount I was trading with, and also forcing myself to hold positions, no matter how much my brain wanted to impulsively close positions out of randomness.

Q: You're known for your disciplined approach to trading, your 'snowball to snowman' way of thinking and trend-following strategy. Tell us about how you use it to navigate markets.

 After March 2020, when the dust had settled and I was forced to look at my new, networth of -80% lower than where it had been just a few weeks prior, I remember thinking to myself “there was nothing I could have done.” But I soon realized that was not true — I saw the downtrend, I acknowledged the drawdown, I knew what options I had, yet I consciously decided to do nothing. I had friends that made a doctor's annual salary during that same event. Again, I thought to myself, “why couldn’t that be me?”

I vowed to never let the market ‘catch me off-guard’ ever again. I realized that for whatever happens next, I must see it coming to a smaller degree first in order for that same momentum to be exaggerated further — hence “it is impossible to build a snowman without making a snowball first.”

Combine that analogy with the manner of which you build a 1000-piece puzzle. You do not randomly grab two pieces and question if they go together — you grab the pieces with a flat-edge, which clearly makes the border for the puzzle, and start there. You then fragment the puzzle and categorize by color schemes, using objects within the puzzle that are more easily identifiable, and begin piecing those together. From there, the puzzle’s completion is well on its way, and by understanding each section of the puzzle, you’ve now given yourself the clarity to understand the puzzle in its entirety, with the utmost clarity.

The analysis I make about any market operates in the same manner. I understand what’s occurring on one timeframe, and how that relates with the timeframes higher or lower. I keep repeating this process until the chart as a whole makes sense — at which point I’m now able to break down the market's complicated movements to a 5-year old, as if I were reading a storybook. Context is key, so considering the context of one timeframe into the next is a great way of adopting an intuition, a feel for the market’s movements and getting a jump on what may happen next.

Q: What was your best trade? How did you go through with the thesis, setup, execution and exit?

 My best trade as of now was just recently, as I bought Bitcoin around $57k, and sold it at an average of $100k. The percentage gain may not seem like much for crypto natives, but due to my conviction in the thesis I was playing into, I was able to justify risking more than usual in order to fully capitalize on the opportunity before me. Conviction is that feeling in your gut that tells you you’re witnessing an incredible opportunity in its’ infancy, before the greater market has been able to identify it — I remember telling the members in my discord that the price action in September 2024 and the sentiment in the air reminded me of the bear market lows in 2022. As a trader that thrives off of exaggerated momentum driven moves, it’s my job to extract lots of value from those moves; I also remember telling my members, both at the time and now, about how “even though I’ve managed to benefit from all 6 of the major rallies throughout the past 2 years, I’ve only ever compared to the bear market lows once” — that’s conviction.

Prior to that rally, my biggest win was in March 2023, once again on Bitcoin, after USDC began to depeg. I felt my back was against the wall as I hold most of my trading portfolio in USDC whenever I’m pending a new setup, and the environment at the time was plagued with uncertainty — not just for stablecoins, but for banks that were seemingly going insolvent every other week as well. Even though it was against my trading philosophy to do so, I managed to buy Bitcoin at the exact bottom with a bulk portion of my trading account, just beneath $20k, before it rallied to $30k in the next week — thanks to a fundamental understanding of Bitcoin as an asset. Whenever I tell this story, people immediately interject that I got lucky, and whilst luck plays a role in every success story, I like to believe that my luck was a byproduct of my discipline and decisions leading up to a major FUD event. Remember in March 2020 I did not have the luxury of ‘buying the dip’ — this time, I had previously cut positions 15-20% higher than where the market bent my hand and forced me to buy Bitcoin due to its’ fundamentals. The tier of quality of options that I had given myself were substantially greater than what an alternate version of myself could have been presented with, and therefore, so was the outcome.

Q: How do you maintain emotional control and deal with FOMO or fear during extreme market volatility?

 At some point, I think you become numb to it. I’ve found myself treating volatility as ‘normal’ and because I’ve traded the market for over 7 years now, there’s nothing that I haven’t seen, in either direction. That emotional discipline and maturity comes with experience — which is why it’s frequently mentioned that experience, especially in crypto, is invaluable. I also like to remind myself that “opportunity is abundant.” In a true manic rally, there is always more opportunity than what you can catch, so it’s inevitable that you will miss out on most things. The beauty in this is: even if you manage to capture a crumb of the opportunity that’s presented to you, that alone can be sufficient. It’s imperative to accept that you will not catch everything, and also realize that you do not need to. Bend your perspective to be in an ‘abundance’ mindset as opposed to a ‘scarcity’ mindset.

Fear on the other hand is inevitable; regardless of your positioning, there is always something to be fearful of. If you’re long: you fear a selloff. If you’re sidelined or short: you fear a market rally. If fear is inevitable, then it is also redundant. Find a way to mitigate fear of the market by taking comfort in whatever risk you’re taking, and formulate a strategy that allows you to express that positioning in a rational manner in order to achieve that comfort. ‘Balance’ is incredibly underrated, and allows for greater and more consistent results over time, in my experience; whereas extreme positioning and stances in the market invoke emotions and often create large setbacks.

Q: The recent market selloff has hit a lot of traders hard. How did you navigate the drawdown, and what tips would you give to those who’ve taken significant losses?

 As mentioned above I managed to cash out some of my investments, as well as close positions near the highs. There were a few losses that were taken since then as the market began to chop up and eventually downtrend, but that’s nothing out of the ordinary for me with my system — I navigated this selloff just like every other selloff in the market, and to the degree that I expect myself to. I have my fair share of bags that went to 0, but that was a calculated risk, which had previously paid off, and is not a substantial portion of my trading account by any means, mostly because I knew exactly what I was doing and “if you play stupid games, you’ll win stupid prizes.” 

So it’s not to say that I was unaffected by the market’s downturn, it’s just that it’s nothing new for me, and is no different than any other downturn, and I’ve allowed myself the grace to see it that way due to my philosophical approach to markets, and the foundation I’ve built for myself. When I see a downtrend that looks like, smells like and trades like a downtrend… and it continues downtrending, I am not allowed to be surprised. From there, it’s a matter of expressing the discipline and patience to step out of the way and wait for better days; knowing when to deploy capital to take asymmetric risks, but also knowing when to preserve capital in order to have the luxury of deploying later on.

Q: What are your thoughts on the current market condition? Which part of the cycle do you think we are at now, and has the cycle played out as you expected?

 There are lots of caveats, but the cycle has pretty much done exactly what I expected it to. I know people say it’s the worst bull market ever, but I think the market is what you make of it, and it seems unfair to throw labels onto something like that with no way of quantifying it — this has been my best bull market ever. With that said, I’m not sure what to expect next from a cyclical standpoint, and I truly think it’s best to avoid those thoughts because it seems like energy wasted in comparison to the value those thoughts bring, even if uncannily accurate. I do, however, think that the crypto market is broken as of my time of writing, and I’m waiting to see if stocks are as well, because that would be potentially indicative of a market that disallows for recoveries as we’ve seen the past 2 years. Many charts in crypto need lots of repair before we can have a conversation of a bull market resumption, and that’s typically not something that occurs in a few days.

Q: Finally, how do you use Bybit in your day-to-day crypto trading or investing, and what aspects of the platform do you like? Is there anything you would like to see improved on Bybit?

 Bybit has been my primary trading platform since 2019 — back when they only had 3 pairs to trade, and they were all inverse perpetuals, haha! It’s come a long way, and I remain in awe at the improvements made, the integrity of Bybit and its team, and the seamlessness of the trading experience. It is truly incredible to watch Bybit succeed and continue to grow, and I look forward to the future. I think the recent hack, and how Bybit managed to communicate, handle and operate through that unfortunate event, put on a global display of the same values that established my desire to be a partner with Bybit for all these years — absolutely incredible job.

Beginner

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Mastering crypto market psychology with TraderMercury

Aave has integrated Chainlink’s Smart Value Recapture (SVR) on Ethereum Mainnet to recapture liquidation-related MEV, historically lost to block builders, and redirect it to DeFi apps.

The S&P 500 fell 1.53% last week amid tariff concerns, with investors awaiting jobs data and earnings. Gold dips to $3,025 as Ukraine peace talks reduce safe-haven demand, but Fed rate cut expectations may limit losses. Market focus shifts to U.S. retail sales data for further direction. CoinDesk Indices, which tracks the broader crypto market, rose 1.06% in the past 24 hours, Bitcoin dropped 0.75%, while Ether rose 0.07%. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is ZRO, up 9.3%, as Wyoming partners with LayerZero for multichain stablecoin development.

LayerZero (ZRO), launched in 2021, is a cross-chain interoperability protocol enabling secure blockchain communication. It has raised $260M+ and reached a $3B valuation. Supporting 48 blockchains, its V2 upgrade enhances security and programmability. Its first DApp, Stargate Finance, enables seamless cross-chain transfers. Wyoming Stable Token Commission has 

 with LayerZero to develop the WYST stable token, announced at the DC Blockchain Summit. Test WYST has been deployed on multiple blockchain testnets using LayerZero’s Omnichain Fungible Token standard, meeting legislative requirements for a multichain stable token. The Commission aims to launch a fiat-backed, fully reserved stablecoin soon.

Check out the latest prices, charts, and data of 

 Chainlink’s Smart Value Recapture (SVR) on Ethereum Mainnet to recapture liquidation-related MEV, historically lost to block builders, and redirect it to DeFi apps. Developed with BGD Labs and Flashbots, SVR enables Aave to reclaim Oracle Extractable Value (OEV) from liquidations, boosting protocol revenue. Initially applied to select markets (tBTC, LBTC, AAVE, LINK), the recaptured revenue will be split between Aave (65%) and Chainlink (35%). SVR is also the first Chainlink service integrated with Payment Abstraction, allowing seamless LINK conversions for fees. Future upgrades will enhance decentralization, gas efficiency, and cross-chain functionality.

The BTC spot ETF data for the week of March 24–28, 2025, shows a total of $196.4 million in Non-GBTC, with no changes in GBTC. The week's total was negative due to a significant drop on March 28, where Non-GBTC was down by $93.2 million. The current total from inception stands at $36,334 million for Non-GBTC and -$22,526 million for GBTC.

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Aave integrates Chainlink SVR to recapture MEV and boost DeFi revenue

Mar 31, 2025: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

 explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly highlight — Payroll is expected to further soften

US employers likely slowed hiring in March amid rising consumer caution and a dimmer economic outlook due to concerns over higher tariffs. Payrolls increased by 138,000, falling short of the 151,000 rise from the previous month, marking the slowest average job growth since October. The unemployment rate is expected to remain at 4.1%.

The labor market report comes as economic data shows a significant slowdown in Q1, with personal spending barely rising, soft disposable income growth and declining consumer sentiment over inflation fears.

Federal Reserve Chair Jerome Powell and other Board of Governors members will address the economic outlook shortly after the jobs data release next Friday. The anxiety surrounding President Trump's aggressive trade policies is mounting, especially with the expected significant tariff increase on imports.

Trump stated he is unconcerned about potential auto price hikes due to these tariffs. 

 predicts that effective tariffs could reach around 15% next year, the highest in nearly a century, which may keep the Fed from lowering rates amid inflation risks.

With consumer confidence waning, any significant drop in job growth could heighten economic concerns. Upcoming manufacturing and services surveys from the Institute for Supply Management (ISM) and S&P Global are anticipated to provide further insights.

Weekly crypto highlight — Ether doubts mount as volatility rattles market

Vitalik Buterin, Ethereum’s founder, was once celebrated as a visionary in the cryptocurrency realm. Known for his quirky style and idealistic views, he’s aimed to revolutionize finance and digital life via Ethereum, a significant competitor to Bitcoin. However, as Ethereum enters its second decade, it’s struggling to meet early expectations amid a rapidly evolving industry influenced by political shifts, notably under Donald Trump.

Developers are leaving, early supporters are frustrated — and Ethereum's token (ETH, or Ether) has underperformed compared to Bitcoin and other competitors. Complaints about Buterin's leadership have intensified, leading him to express the challenges of maintaining a positive environment for talent within the Ethereum Foundation.

Despite Ethereum remaining the world’s second-largest cryptocurrency, its value plummeted approximately 44% in 2025, marking its worst quarterly performance since 2022. While BTC has gained 30% over the past year, ETH has declined 45%, losing ground to rivals like Solana, which has experienced 83% growth in developer activity.

Analysts have downgraded Ethereum's year-end forecast by 60%, citing an identity crisis and dwindling dominance. At a recent conference, Buterin acknowledged the unmet promises of Ethereum but stressed the need for sustainable long-term value.

Buterin, who authored the Ethereum white paper in 2014 after dropping out of college, envisioned a decentralized platform for digital contracts and applications. Despite Ethereum's speculative highs, he has remained detached from material wealth.

In contrast to the crypto landscape embracing Trump's rhetoric, Buterin has maintained a critical stance, labeling “politician coins” as risky and detrimental to democracy. He hasn’t commented further on these issues, reflecting his commitment to Ethereum's foundational ideals amid shifting industry dynamics.

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Weekly Institutional Insights: US payroll expected to weaken; Ether doubts mount

Following the success of recent Bitcoin and Ethereum Spot ETFs, asset managers are actively pursuing the creation of spot ETFs for altcoins. Learn more here.

US president Donald Trump's return to office has ignited renewed institutional interest in 

 (ETF) applications centered on these innovative digital assets. This surge reflects a growing recognition of altcoins as viable investment opportunities. 

In this article, we’ll take a deep dive into the dynamic 

 landscape, spotlight key altcoins that are drawing ETF proposals and discuss the potential market impact and regulatory challenges. 

An altcoin spot ETF application is a formal request submitted to regulators to create an exchange-traded fund (ETF) that directly holds altcoins (cryptocurrencies other than 

) as underlying assets, allowing investors regulated exposure to the altcoins’ real-time market prices without owning the altcoins themselves.

How does an altcoin spot ETF application work?

The process of applying for such an ETF in the United States involves several detailed steps, primarily overseen by the Securities and Exchange Commission (SEC).

During its review, the SEC assesses several critical factors to determine whether the altcoin is suitable for inclusion in an ETF. The agency examines the market surveillance capabilities of the exchange, ensuring it can effectively monitor trading activities to prevent fraud and manipulation. In addition, the SEC evaluates custody solutions to guarantee secure storage of the altcoin, protecting it against theft or loss. Finally, the agency considers the liquidity and market size of the altcoin, assessing its market maturity through indicators (such as trading volume and market capitalization) to ensure it can adequately support an ETF structure.

Current altcoin spot ETF application landscape

 in the United States in 2024, asset managers have expanded their focus to other cryptocurrencies. Major firms Grayscale Investments, Bitwise, VanEck and Canary Capital have filed applications with the US SEC for ETFs tied to cryptocurrencies such as 

 from Bloomberg Intelligence have assigned a 90% approval probability for a Litecoin ETF in 2025, with 

, Solana and XRP following at 75%, 70% and 65% likelihoods, respectively. 

In the international scene, Brazil's securities regulator, the Comissão de Valores Mobiliários (CVM), 

 Spot XRP ETF, the Hashdex Nasdaq XRP Index Fund. This ETF allows investors to gain direct exposure to XRP through Brazil's B3 stock exchange without the need to purchase and store the cryptocurrency themselves. 

Why is there a sudden rise in altcoin spot ETF applications?

Several factors have contributed to the surge in altcoin spot ETF applications.

An overview of altcoins with spot ETF applications

The growing interest in altcoin spot ETFs has led several asset managers in the US to file applications for a range of digital assets. Below is a detailed list of the altcoins currently targeted by spot ETF applications, along with the companies behind each filing.

 is a high-performance blockchain platform renowned for its scalability, speed and low transaction costs achieved through its unique Proof of History (PoH) 

. In February 2025, the SEC acknowledged several Spot Solana ETF applications from prominent asset managers, as follows.

Currently under review, these applications collectively carry an estimated 70% likelihood of approval, though this outlook may be affected by the regulatory classification of SOL as a security. 

 is a decentralized cryptocurrency launched in 2011 as a faster, lower-cost alternative to Bitcoin. Dubbed "digital silver," it uses a 

 (PoW) consensus mechanism and serves primarily as a payment network.

Several asset managers have submitted applications for a Spot Litecoin ETF.

The SEC’s final decisions are expected by late 2025. Bloomberg analysts estimate a 

 for Litecoin ETFs in 2025, due to Litecoin’s commodity classification and reduced regulatory risks as compared to other cryptocurrencies. Analysts also highlight that Litecoin’s technical similarities to Bitcoin are favorable factors in the ongoing review process.

’s decentralized blockchain platform is designed to enable interoperability between different blockchain networks. Pending DOT Spot ETF applications include the following.

The applications are under review by the SEC, and 21Shares recently 

its application in early March, 2025, indicating active collaboration with the SEC. 

 is a third-generation blockchain platform that uses a 

 (PoS) consensus mechanism, making it more energy-efficient than PoW blockchains. It’s known for its rigorous, peer-reviewed development process and focus on sustainability, scalability and interoperability. 

filed the first-ever (and, so far, only) Spot Cardano ETF application 

 with the SEC, aiming to list the ETF on the New York Stock Exchange (NYSE). 

Grayscale's Spot Cardano ETF application is currently under review by the SEC, with the regulatory body 

 on Feb 24, 2025. The SEC's decision is expected by August 2025. 

 is a decentralized public network that uses the novel 

 (based on a directed acyclic graph, or DAG) to offer high-speed, secure and energy-efficient transactions. It’s designed as an alternative to traditional blockchain systems, supporting applications across various industries like finance, gaming and healthcare. 

The following asset managers have submitted HBAR Spot ETF applications.

The SEC review process for the HBAR Spot ETFs has begun. It can take up to 240 days for a full response. However, HBAR isn’t considered a security by the SEC, which could potentially expedite the approval process for an HBAR Spot ETF. 

 is a decentralized oracle network that helps connect smart contracts to real-world data, ensuring that these contracts can securely and reliably access external information. 

Although no asset managers have filed for a Spot ETF focused solely on Chainlink (LINK), the asset is gaining exposure through broader crypto ETF filings. For instance, Hashdex's crypto ETF, which also features major cryptocurrencies like Bitcoin and Ethereum, includes Chainlink in its portfolio. This ETF application 

 on Nov 25, 2024, and is currently under review.

 cryptocurrency that originated as a satirical take on the burgeoning digital currency market. Despite its humorous beginnings, Dogecoin has developed a significant following and has been used in various charitable events and crowdfunding campaigns. 

Asset managers who have submitted applications for Dogecoin (DOGE) Spot ETFs include the following.

These applications are currently under review by the SEC, and a decision regarding Grayscale's application is anticipated by mid-October 2025. 

 blockchain platform developed by Ava Labs and launched in September 2020. It’s designed to support fast, scalable and secure 

The following asset managers have submitted applications for 

These applications are currently under review by the SEC. 

 is a Layer 1 blockchain platform developed by Aptos Labs, founded in 2021 by former Meta (Facebook) employees Mo Shaikh and Avery Ching. Leveraging the Move programming language, initially created for Meta's Diem project, Aptos aims to deliver a scalable, secure, and efficient infrastructure for DApps. 

As of now, Bitwise Asset Management is the only asset manager that has 

 for an APT Spot ETF. The application, submitted on Mar 5, 2025, is still pending with the SEC.

 is the native digital asset of the XRP Ledger, an open-source blockchain designed to facilitate fast, low-cost and energy-efficient cross-border payments. XRP aims to provide a scalable alternative to traditional financial systems such as SWIFT. 

All of these applications are currently under review by the SEC, with possible approvals expected later in the year.

 is a Layer 1 smart contract platform designed to enhance digital asset ownership by making transactions fast, secure and accessible. Its PoS consensus mechanism and use of the Move programming language enable Sui to support high-speed transactions and a wide range of DApps, positioning it as a scalable solution for various blockchain use cases. 

 with the SEC to launch an ETF tied to the spot price of SUI. This filing represents the first, and for now, only attempt to introduce a SUI-backed ETF in the United States.

The SEC has acknowledged receipt of Canary Capital's application, kicking off the regulatory review process. 

 is an Ethereum Layer 2 blockchain platform built to improve scalability and efficiency. It leverages the Move programming language for faster transaction speeds and lower costs, seeking to establish itself as a next-generation blockchain solution.

 for an ETF designed to track the MOVE token. Submitted on Mar 10, 2025, this marks the first, and currently the only, application for a MOVE Spot ETF.

The SEC is currently reviewing the application, having confirmed receipt.

Could this trend pave the way for crypto mainstream adoption?

The growing number of altcoin spot ETF applications and potential approvals could significantly impact the cryptocurrency landscape, potentially accelerating mainstream adoption. Here's how.

Historical data suggests that significant regulatory milestones, such as ETF approvals, often lead to market rallies. For instance, following the SEC's approval of Bitcoin Spot ETFs in early 2024, Bitcoin's price surged over 

, reaching a peak of $100,000. This rally contributed to the overall cryptocurrency market cap’s climb to approximately $3.5 trillion. Similarly, spot ETF approvals could trigger a bull run, as increased demand drives up prices. With easier access to crypto investments, more individuals and institutions may enter the market, further driving adoption and innovation within the ecosystem.

While the outlook is optimistic, it's essential to approach these developments with caution.

, and their market movements can be unpredictable. Investors should 

 and consider their risk tolerance before investing in cryptocurrencies or related products.

The altcoin Spot ETF landscape is rapidly expanding as asset managers like Grayscale, Bitwise, 21Shares and Canary Capital file applications for digital assets beyond Bitcoin and Ethereum. With ETFs targeting Solana, Litecoin, Polkadot, Cardano and other altcoins, these initiatives aim to enhance market accessibility and institutional participation, though final approval remains subject to regulatory review.

Intermediate

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Crypto ETF landscape: An overview of altcoins with ETF applications

Bybit Learn

DeFi

Total Value Locked (TVL) is an important metric in cryptocurrency; find out why this is so and how you can calculate the TVL ratio by reading this guide.

Total locked value (TVL) has become an important metric for assessing 

 (DeFi) protocols. Many of today’s traders use this simple measure to understand a system’s strength and potential. This article will explain what TVL is, how it relates to the DeFi ecosystem, and how it’s calculated. Once you understand what this essential metric says about a protocol, you’ll be able to make it a key factor in your most important crypto decisions.

TVL is the value of all the assets contained within a DeFi protocol. It has become a key metric for appraising DeFi projects because it provides a useful measure of a protocol’s general health.

By counting all the coins currently staked within a protocol, TVL reveals the total supply underlying the system. This supply corresponds to the capital locked within the system, and it directly reflects the potential proceeds available for investors from involvement in the protocol.

What’s the Meaning of TVL in the DeFi Space?

You can’t thoroughly explain TVL without understanding how the term specifically relates to the world of DeFi. After all, the concept developed primarily as a way to assess decentralized protocols and the DeFi system as a whole. TVL is already giving traders a new way to understand decentralized markets and make important investment decisions.

The TVL reveals the total value of all coins invested in the protocol at the present moment without regarding potential future 

. This focus on the present makes the metric a tangible, sturdy data point for analyzing a protocol in real-time.

TVL can also serve as a gauge of the entire DeFi ecosystem. You simply treat the entire world of DeFi as a single giant protocol, and then measure the total value of present assets.

In order to really grasp the meaning of TVL, you need to understand how the metric is calculated. By learning about the specific factors that determine the total value and TVL ratio of a protocol, you’ll better understand what the metric is actually measuring and what the numbers say about the service in question.

Calculating the TVL of DeFi protocols requires measuring the metric across different product categories. Each protocol or DeFi service operates according to its own particular structures, and these differences in turn alter how TVL can be calculated. 

Lending-based services, for example, focus on deposited assets, while tokenization protocols involve minted assets. Many protocols combine these features in unique ways, requiring more in-depth analysis to arrive at the TVL. In any case, the calculation of total value locked and TVL ratio comes down to the consideration of these central DeFi components.

In a DEX, experts can measure the TVL by adding up all the assets deposited in the exchange. Many of the world’s largest DEXs, like Curve and Uniswap, have remarkably high TVLs. This indicates the breadth and depth of the liquidity that these types of services have been attracting.

Liquidity pools are the crypto funds that have been locked into a DeFi protocol through smart contracts. They’re created through deposits, giving investors within a protocol the leeway to draw from a pool of accessible funds. Since they involve the direct and immediate locking of assets within a protocol, they’re relatively easy to measure within the parameters of crypto TVL.

Investors will often deposit crypto assets into a protocol in exchange for a return on those assets. Whenever they make these deposits, they’re increasing the value of the total assets held within the protocol. The deposits, therefore, produce an increase in the protocol’s TVL. The size of a protocol's liquidity largely determines its TVL, meaning you can often use the metric as a measure of the liquidity available to traders.

Since crypto TVL is meant to measure the entire value of a protocol’s locked assets, staking has an obvious, immediate effect on the metric. Each time an investor stakes more currency in the system, the TVL will rise accordingly. A higher TVL suggests that many investors have been staking currency in the protocol, which in turn suggests that the system is in a healthy place.

Once you understand the meaning of crypto TVL, you can start using the metric to inform your decisions. While TVL is far from the only data point to consider when trading in DeFi protocols, it’s certainly worth considering.

When examining DeFi protocols by using the TVL metric, it can help to start by looking at the projects that have the most value. These six protocols use different mechanisms and pursue different goals, but they all boast impressive TVL figures. Their apparent strength makes them worthy of consideration the next time you’re looking to invest in a DeFi protocol.

Curve is one of the top DEXs. The protocol’s high TVL boosts its stature. At the time of writing, Curve’s TVL is $8.54 billion. While this figure represents a considerable drop from a high of $24 billion, it still places the protocol among the top performers in the DeFi ecosystem.

Lido, a DeFi protocol designed to provide liquidity for staked assets, has a current TVL of $7.42 billion. This total value, which reflects the assets that traders have staked in the system, has decreased as a result of general market fluctuations, but the protocol’s outlook is still considered positive.

Aave is a DeFi protocol that focuses on lending. Its TVL of $8.24 billion shows that a considerable number of investors have deposited funds into the protocol. As long as this number remains high, investors and lenders alike can expect the system to remain strong.

Uniswap joins Curve as a DEX with an impressively high TVL. The current figure of $5.5 billion suggests that the protocol will continue to be an attractive option for crypto traders.

A lending platform on the Ethereum chain, Compound boasts an impressive TVL of $3.97 billion. While recent drops in total value have been somewhat dramatic, the remaining liquidity keeps the protocol’s TVL higher than that of most of its competitors.

TVL — the total value of the crypto assets in a DeFi protocol — is an important measure of a system’s health and vitality. Whether you want to assess the total assets in a system or examine the TVL ratio to determine whether a protocol’s tokens are undervalued, the metric can prove useful on a daily basis. Now that you understand how crypto TVL works, you'll be better informed as you plan your next maneuvers in the world of DeFi.

Total Value Locked: What TVL Means In DeFi

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