# Paul Berg - Schrodinger's TVL: Until You Hack It, It’s Not Real

- Channel: [ETHCluj Meetup](https://streameth.org/ethcluj-meetup)
- Date: 2025-10-07
- Duration: 17:53
- Watch: https://streameth.org/watch/yt-MoJaVjSpXW4
- YouTube: https://www.youtube.com/watch?v=MoJaVjSpXW4

## Description

Total Value Locked (TVL) is DeFi’s favorite vanity metric, but it's an inaccurate metric for measuring value deposited in smart contracts.

Those big TVL figures look great on dashboards, but consider this: if a contract were hacked, how much could the attacker actually cash out? Spoiler—often much less than the headline number.

Enter Total Obtainable Value (TOV), a liquidity-aware metric that prices each token at what it can be sold for right now. This talk explains why TOV beats TVL, shows how to calculate it with swap aggregators like 1inch, and walks through live examples where TOV and TVL differ by multiples.

## Transcript

Hi everyone. Yep. I'm glad that the last panel start ended with some figures on like dollar treasuries. If I remember correctly was something like 14 billion. Um, I hope that by the end of this talk, I will I will persuade you that that figure is maybe just slightly incorrect. Uh, my background is I've been an Ethereum developer for six years. Um, and I'm the co-founder and CEO at a company called Savior. Um, we're building uh a token distribution protocol. People use us for like fasting, airdrops, and onchain payroll. And I'm also very active on Twitter. Um, and over these years, I've seen, you know, people use TVL back and forth. Um, it's gotten a little less popular nowadays, but still arguably the one of the the the the biggest highlights projects used to, uh, you know, brag about how big they are. Um, and this pisses me off a bit. Uh, because I like many of those figures are not accurate. Um, but we have a problem because because at the same time, you get you can't just write it off to zero. Um so um I I want to use this analogy with quantum physics and for the physicists in the room um I suppose some people here know um the Schroinger's cat experiment where um actually let's let's raise your hand if you know about this so I can get a sense of okay there we go everyone loves physics inclusion um there's only like a few who don't who who know but for them I'll just explain it's is it's basically In in quantum physics um the the state of a quantum system does not exist until you measure it. Um it can be in multiple states same at the same time and that thing is called superposition. Um and yeah the the the cat is both alive and dead until observed and I will use this to to uh compare TVL and to which I will um tell you about in the future slides. Um but yeah, so let's look at the classic TVL um and what it actually measures. So fundamentally it's about like you take the price of the uh token, you know, this is like unis swap um or Coinbase, Binance, whatever. Um and you multiply it by the token count and you get a magic number. Um and the the token count is what like the number of tokens sitting in the protocol. Um so this can be like a smart contract. Um, and it has a specific value and this makes protocols look bigger than they are, right? You have like tokens with a 10 million market cap and protocols with like a 100 million TVL from that token alone. Um, that can be right. Um, and in fact like what happens is that we have DA treasuries and vested tokens. They're like inflated. And to to persuade you that this that tov makes sense, I will use my own company's TVL. Um and I will deflated it and give you like a more accurate figure. We will take two extremes. The one reported um using classic TVL and the one reported with the other extreme which is that to say that oh this is worth zero and try to persuade you that the truth is somewhere in the middle. Um, so one of our Sablier contracts when I performed the analysis in 2023 in October 2023 had uh a TVL like a classic TVL of 51.8 million um and this was a combination of like hundreds of different tokens and assets uh ERC20s and uh the problem was that 48.4 um million was various tokens that were not like they were they were just minted. They were not ether. they were not stable coins. Um, and the question is, are those vesting tokens worthless? Like this is the the big problem. Um, and I will answer that in a bit. This is the the DeFi Lama dashboard. You know, it's nice 51.8 million. That's a good number for our investors. Was very helpful for fundraising. Um, but I'm like trying to come up with like an honest answer like what is the actual value of those assets? And I came up with this solution. Um, frankly, because I was being asked by our investors like like what is the value that you guys secure? And I was saying 51 million, but they were like, okay, but what's in there? And I came up with this um uh uh idea called total obtainable value or in short to ov. Um, I put it on Twitter like in October 2023, so uh you know almost like a year and a half ago. And the the the basic idea is what if a hacker steals the funds? Like what if you have North Korea take like assume the worst happens and they take the funds out of your protocol. How much can they obtain? They can go to UNISOP and like dump everything. How much can they obtain in dollars or in ETH? Um and uh for the record, we have never been hacked at Savior. So this is purely hypothetical. Um and and but it's still like a worthwhile like thought experiment. Um and it is very much worth it because this is like a real hypothetical liquidation value. It's not fantasy numbers. Um so let's assume that Saber gets wrecked. Again, we have never been hacked, but this is a thought experiment. So like a hacker would take the tokens, they will swap them for USC and ETH. they will probably run to some country where they cannot be tracked and you know retire on a beach. Um and let's look at some specific tokens that were locked up in Savior uh one year and a half ago. And specifically we'll look at the comp comp governance token Fox from from Shape Shift and ichi. Um, and the the the value reported on on DeFi Lama and Ether Scan was something about 48 million for these tokens. But if you were to go to one inch, which is like a DEX aggregator to try to sell those tokens like liquidate everything on the open market, you would get something like 879K USC for Comp, uh, 840K USC for Fox and 145K USC for for Ichi. Um, which brings us to this uh to value of 1.86 million and that is actual hard cash that if Sablier gets hacked, I mean our users would lose a lot of money of course but um you know this is the actual value that we are securing and I argue um that this is an a method that can be applied to other protocols as well. The only assets that are immune from from this issue of tov are the stable coins like USC and ETH and maybe like highly liquid assets like the unis swap token or something like that. They're like so big that you can liquidate everything and it's the same approximately the same value as that shown by by defa um and these are the quotes on on one inch and uh to can of course be developed. Um it's not static. It's not just like a like a single uh square to 1 in. Um you can do crosschain liquidity. You can you know partially sell on Binance Cobase. You can slice up your your orders or you can sell over time. Um this is like more like an like advanced feature um for the future. But in the short term, I I I I do believe and I I um I do want to promote TVOV as just a better approach compared to standard TVL that you know DeFi users, analysts and maybe VCs can use for like appraising like tracking the values in smart contracts and yeah a meme because why not? Memes are always helpful. Um and I will pause this after the talk. Yeah. And uh the conclusion is that is better than TVL. It's just like much more accurate. It's fair. It's fairer than than than TVL for everyone, not just, you know, the the D5 users, but also for the founders, they have a better idea of like what value is in their uh protocols. Um, and if anyone from D5 Lama, Ether Scan, and so forth is watching this talk, please, please integrate uh to it's not easy, but you're going to do the industry a big service. Um, and you know, the core idea is here like dollar treasuries, investing tokens are funds at risk. Uh, but they're not worth 14 billion. They're not worth zero. So, it's something in between. And no more vanity metrics. We need to grow up as an industry. And so, yeah, please integrate POV. Uh, and thank you in advance. And that was the end. Thank you very much. You can follow me on X if you scan the QR code. And, uh, yeah, thank you for coming to my talk. Thank you. Thank you so much Paul. Um I believe we have one question. What is still a measure of what do we prove by this metric? >> It is a dollar value of the ERC20 tokens deposited in a smart contract that is queried by dumping everything on one inch. [Music] That's like a one sentence explainer. >> Good. Do we have any more questions? Question over there. Can you just give me two questions? Can you give me a second? I'll grab my mic. >> So, besides TVL, what other vanity metrics do you see people using in the crypto space and what else should they use instead of that? If you look at, you know, the layer twos, they they um talk about this like ecosystem projects and many of them are the same like the graph like the graph is deployed on 30 chains. Um and it's like this cartel of projects that are deploying on the same chains all over again. So I think we should we should be more specific about what it means as an ecosystem or like if if you if you converted like a web two company to a web three. Yeah. that that's a big win for your chain. Um, for example, Chile is this like sports blockchain that I I I like a lot because, you know, they're bringing like normies to to to uh Ethereum um EVM ecosystem. That's one thing. And the other thing is like daily active users again on chains. Many of those are like bots or me bots or like trading bots or whatever. So um you know in their defense it's like impossible to differentiate EOA like like a simple account from like a bot account. Um but um yeah so those would be two that I would put on the list of like vantage matrix is like e like how big our ecosystem is is like the same 30 infrastructure projects deployed on every chain and like daily active users. Maybe we should I don't know I I don't have a solution for the daily active users problem but maybe ne maybe next year. Thank you. We have one more question here. >> Uh question is I don't know it's kind of bad uh to compare or to try to really poke holes at other protocols, but have you tried converting this TVL value to to other popular protocols to see how how it would change the rankings between them or the popularity between them. >> That's an interesting uh idea. uh to to to be fully upfront, I haven't actually developed like implemented any to tracker myself yet. I'm just promoting the idea. I didn't have time to do it. But uh yes, I would be very curious to see how that changes the the the rankings. Um I would suspect that the the big projects like like Ave will will will stay up up there because because they have you know ETH and stable coins but when you go in the you know middle of the uh like rankings yeah I think there will be some interesting uh you know uh new leaders out there. >> One more question. Uh yeah. Hi. Um I don't know if I agree with you completely on this. Like I feel like if you go back to Tradfi, you mostly have order books and then you don't have this like deep liquidity that you see in AMMs and now we have center limit AMMs and you know the trend is for uh dexes to go into order books as well. So I feel like at some point this tov notion might not be very you know good for for a token because obviously you can do so much more like for example uh comp okay let's say it's not huge in AMM as liquidity but if I were a hacker I would probably first short the hell out of it and then you know just make more money that way. Um, so I feel like um obviously order books don't let you see the whole picture, but um I don't know if it's enough. That's that's what I'm saying. Like >> that is good uh feedback. Um what I was saying return is that with crypto and like web three the like it's like so much easier to like tokenize assets. You know, you can go from zero to her with your token in couple of days, weeks, and that will lead to a world with significantly more financial assets than in like Trafi. And for for for this like small cap assets, which is what we're dealing with at Sablier, um valuing them using TVL is just like overblown. It's like too much. But at the same time, it's not fair to say that, you know, it's zero. I mean our literally our customers are paying their bills using those tokens. So there's something in between there and um I think you're right like as a token matures you know it grows and it's like you can get off the training wheels and you don't you no longer need to but in this like wild wild west of you know uh early stage tokens that have low market caps which is something more difficult to achieve in a trouty markets because I don't know you have regulations you have to like in in like biotech you have to raise millions of dollars before you can have your product out right it's like a different um you kind of like come on the market already like as as a grown-up here you can do something out of your basement and how do we value them well I introduce to and let's see how it goes like I don't know I as I haven't implemented yet I hope somebody will take the idea and implemented it maybe I'll implement it myself sometime you know to hack it or something but uh I to end I think on the small value tokens to can actually be super helpful because it will give them more accurate metrics and they can you know use it to fund raise to be like honest to your investors and so forth. So >> uh so the the formula that you use is instant exchange of that token to ETH or USDC but if you slowly drip a big amount of money probably the market would stabilize stabilize the price and your TOV would be the TVLish. Well, yes, but this is about like hackers. If if if so North Korea in their track record, they're like dumping everything the moment they're like getting the tokens. They're using that money to survive because otherwise nobody's going to, you know, send money to North Korea. So, um, TOV is about like instant liquidity that you can get if it gets hacked. Um yeah, you know, if you have genuine normal users who hold the tokens, the tov wouldn't accurately measure the the value over time. Um but uh the instant liquidity is actually just trying to map what happens when your protocol is hacked and uh all the black hat hackers in the world are basically dumping it as soon as possible. >> Do we have any more questions? No. Oh, the gentleman. Oh, you have to turn on the mic. So, press the button. Thank you. I'm struggling a little bit. I mean, it's clearly useful metric, but I'm wondering if it is fair or it is accurate. I'm not sure which one of those it is or if it is at all because if you do this with the Apple stock, whatever, you'll get Apple shares at the price that is below their cash reserves and so on. So is it fairer is it accurate or is it not and it is just useful? >> I think it's fairer than classic TVL and fairer than zero. It obviously can be improved. Um but I I would say it's fairer whether is more accurate. I don't know, but I would say it's fairer because um it's clearly not worth 51 million like those random tokens like ichi tokens like nobody heard of ichi uh it's not 51 million but at the same time it's not zero because some people are getting those so it's like something in between right um with the Apple stock I think Apple is so liquid that if you if you obtain even like I don't know 2% 1% you can liquidate everything so as I said before like if if a token matures, you can get off the training wheels and you no longer need this. But this is for the I don't know first one, two, three years of tokens and we will have a lot of you know like young tokens in the future or at least we hope so. Um so I hope I answer your question.