Bitcoin DeFi Faces Risks as TVL Inflation Casts Doubts on $30B Valuation
Two startups, Nubit and Nebra Labs, are collaborating to address the issue of inflated Total Value Locked (TVL). Figures in the Bitcoin DeFi ecosystem, which has surpassed $30 billion.
TVL, a key metric for DeFi projects, helps measure liquidity and trustworthiness but is difficult to assess accurately in Bitcoin due to its UTXO model. This model allows projects to potentially overstate their TVL claims by advertising promised funds from liquidity providers without proof of actual control. To combat this. The startups are developing a proof-of-TVL system using zk-proofs and BitVM, a Bitcoin-based smart contract framework. To verify and ensure that only demonstrable assets are counted toward TVL. Preventing fraudulent claims and promoting transparency. The technology is expected to be integrated into Nubit’s Goldinals product, a Bitcoin fungible token standard.
Clever Robot News Desk 16th January 2025
