Many people look at TVL when choosing DeFi projects, thinking that the larger the locked amount, the lower the risk, since the funds are right there. But these folks never really consider whether these funds are actually flowing in the lending market to earn interest, or if most of the capital is just lying around basking in the sun😂

Focusing only on the TVL number is actually like only looking at an exchange's on-balance-sheet assets; it's easy to be deceived by illusions. What really matters is how much of these locked funds are actually being put to work, how much is being lent out, and how well the lending rates match the liquidity. This is the key to judging whether a DeFi project is truly operational and capable of generating sustainable returns.