Total Supply

Overview

The Total Supply indicator essentially measures the total market size of a DeFi (Decentralized Finance) lending protocol. It comprises both the deposits made into the protocol by lenders and the funds borrowed by borrowers. This metric focuses on the total volume of funds actively engaged in the lending and borrowing process, providing a dynamic view of the protocol's activity.

The indicator encapsulates the entire ecosystem of a lending protocol, including:

• Deposits: The total amount of funds that lenders have supplied to the protocol.

• Borrows: The total amount of funds that borrowers have currently taken out as loans from the protocol.

The sum of these two components gives us the aggregate market size of the lending protocol, offering a comprehensive snapshot of its financial activity.

How can I use it?

This indicator allows users, investors, and analysts to gauge the overall size of the lending protocol's market. A larger aggregate amount suggests a more extensive ecosystem. Moreover, changes in the aggregate amount of funds supplied can be a clear indicator of the protocol's growth or contraction over time. An increasing trend may signal rising trust and participation in the protocol, while a decrease could indicate the opposite.

By comparing this metric across different DeFi lending protocols, stakeholders can evaluate the relative market position and competitiveness of a protocol. This can inform investment decisions, protocol improvements, and strategic planning.

In essence, the aggregate amount of funds supplied for lending is a critical indicator for understanding the scale and dynamics of a DeFi lending protocol. It provides valuable insights into the protocol's market size, growth trends, risk profile, and the liquidity environment, serving as a crucial tool for decision-making and analysis within the DeFi space.