- The Polygon blockchain suffered massive losses in the TVL metric system. Apparently, more than 8% of the TVL reduced in the past seven days.
- There are suspects for the cause of the drop in TVL. One of them is the market crash.
Polygon suffered some massive losses, and it is affecting the crypto network. The protocols existing on the network saw increased activity in liquidation. This affected the TVL rankings, with as much as 8% lost within seven days. How did this happen?
What is Total Value Locked?
- It would be quite essential to understand the meaning of total value locked before discussing Polygon losses. Total value locked (TVL) is the number of assets locked or staked in a decentralized finance (DeFi) platform. However, note that this activity can also happen in distributed applications (dApps).
- Furthermore, TVL often showcases how trustworthy a platform is. In other words, the higher the TVL, the more trust users will likely have for the platform. TVL calculation is quite simple. Assuming a DeFi or DApp protocol has $10 million Ethereum, $15 million MATIC, and $5 million Cardano, the total TVL will be around $30 million.
- In the case of Polygon, it seems the TVL is decreasing, even worse, at an increasing rate.
Polygon TVL Decreases By Over 8%
- It seems many people are losing trust in the Polygon blockchain as the TVL suffers a massive decline. Apparently, the drop in the TVL reduced its value to less than $1 billion. Previously, the TVL of this crypto project was more than $1 billion.
- Going into much detail, one can see the Polygon network suffers from a very acute decline. At the time of writing, there are about 480 protocols existing on the Polygon network.
- In the past 24 hours, the blockchain network made a meager increase of less than 1%. This is nothing compared to the losses the network suffered. Within the past seven days, the network suffered a loss of more than 8%. This is quite massive, considering the caliber of the network. Over the past 30 days, TVL suffered losses of more than 17%. At press time, the TVL is currently standing at $979.34M.
What Caused the Decline in Polygon?
- It isn’t far to fetch the decline in the Polygon network. Apparently, the crypto market crash contributed to the decline. During the market crash, there was more than $1 billion in liquidation.
- Apparently, some of these liquidations came from locked and staked tokens. Moreover, many traders feared worse scenarios leading them to liquidate their holdings and investments.
- Furthermore, Polygon is suffering these losses due to the decision by Yoots to leave the network. Many of the tokens contributing to the TVL through NFT activities reduced drastically.
Conclusion
The TVL of a crypto project is a crucial aspect of such a project. Apparently, in the case of Polygon, it seems many of the investors are withdrawing their staked tokens. In the past seven days, it made the crypto project lose more than 8% of the TVL. Many community members suspect the recent market crash is the cause of the drop in TVL.
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Featrured image from Polygon
