Chainfeeds Summary:
Protocols that generate fees, absorb deposits, and distribute value to token holders leave clear data trails, which often exist before the narrative is formed.
Article source:
https://x.com/patfscott/status/2008268336941973563
Article Author:
Patrick | Dynamo DeFi
Opinion:
Patrick | Dynamo DeFi: In traditional finance, TVL is similar to AUM (Assets Under Management). Hedge funds use AUM to show the amount of money clients entrust to them; TVL serves the same purpose: it quantifies the amount of capital users are willing to entrust to a protocol, reflecting the level of trust in smart contracts. Since most deposits in DeFi are volatile assets, TVL is easily distorted by price fluctuations. More sophisticated analysts will look at it in conjunction with USD Inflows to distinguish between price changes and real fund flows. TVL still has value, provided that both USD-denominated and token-denominated metrics are observed simultaneously and combined with activity or productivity indicators. It remains an important tool for measuring protocol size and trust, but it cannot be used alone. Fees are from the user's perspective: how much do you pay to use the protocol? When trading on a DEX, the fees you pay may go entirely to LPs, entirely to the protocol, or a split between the two. Fees track the total amount paid by users, regardless of where it ultimately goes. In traditional finance, it is closest to Gross Revenue. Holders Revenue has been further narrowed, only counting the portion that actually flows to token holders: buybacks, burns, and staking dividends. This is closest to traditional finance: dividends + stock buybacks. This distinction is extremely important for valuation. Some protocols have huge fees, but almost all of them go to LPs, leaving the protocol itself with very low revenue. Volume reflects trading activity. DEX Volume refers to the trading volume of all decentralized exchanges. Perp Volume, on the other hand, is the trading volume of perpetual contract platforms, a proxy indicator for market participation. Whether it's a frenzied rise or a panic sell-off, as long as users are using assets, trading volume is generated. Compared to previous cycles, the growth in perpetual contract trading volume is particularly significant. In 2021, Perp DEX was almost negligible; now, platforms like Hyperliquid, Aster, and Lighter have daily trading volumes reaching billions of dollars. Due to the rapid changes in industry size, absolute value comparisons across cycles have limited meaning. Changes in market share within the same sector are more informative. [Original text in English]
Content source 
