Market Cap to TVL Ratio
Market cap to TVL divides a token's market capitalisation by the value of assets deposited in its protocol. It asks what the market pays for each dollar of capital the protocol has actually attracted. Running the same division on fully diluted value asks the question against all future supply instead, and the two answers can diverge far more than the underlying businesses do.
TradFi parallel: Price-to-book, with two differences that matter: the assets in the denominator belong to depositors rather than to the protocol, and TVL is gross deposits rather than net equity, so it behaves more like assets under management.
Key Takeaways
- 01Market cap to TVL = market capitalisation divided by total value locked: ARB and OP screened at 0.62 and 0.63 despite roughly three times the difference in absolute size
- 02Running the same division on FDV asks about all future supply: the same pair read 4.65 versus 8.15, which the analysis took as ARB looking too low or OP too high
- 03When the MC ratios agree and the FDV ratios do not, the disagreement is about supply still to unlock, not about how much capital the protocol has attracted
- 04Extreme readings are the signal: LAYER's $286M market cap topped EIGEN's $273M while holding around 65 times less TVL ($140M against $9B), and LAYER later fell more than 60% from its peak
- 05It reads low as well as high: Radiant Capital's TVL was estimated at $683 million against roughly $125 million of circulating market capitalisation
- 06TVL is a USD stock that moves with deposit prices, can be rented with emissions, and does not exist for protocols without deposits, so the ratio is only comparable within a sector
How It Works
The ratio exists to normalise size. When Tokenomist compared Arbitrum and Optimism, ARB's market capitalisation of $1.49 billion was nearly three times OP's $0.54 billion, which looks like a large disagreement until you notice that Arbitrum's TVL of $2.38 billion was also roughly three times Optimism's $848.83 million. Dividing one by the other collapses the difference: market cap to TVL came out at 0.62 versus 0.63. On circulating supply, the market was pricing the two chains almost identically per dollar of capital on-chain.
Swapping market cap for fully diluted value changes the answer, and that change is the useful part. The same pair read 4.65 versus 8.15 on FDV to TVL, a divergence the analysis read as either ARB being priced too low or OP too high. Nothing about the deposits moved between the two calculations. The entire gap comes from how much supply each token still had to release, which is why running both versions localises a disagreement: if the MC ratios agree and the FDV ratios do not, the argument is about supply, not about usage.
The ratio earns its keep at the extremes. In March 2025, LAYER carried a market cap of $286 million against EIGEN's $273 million while Solayer held $140 million of TVL to EigenLayer's $9 billion, roughly 65 times less. Tokenomist described this as a disconnect between price and fundamentals, and the token subsequently fell more than 60% from its peak, reversing what many suspected had been an artificially driven rally. It cuts the other way too: Radiant Capital's TVL was estimated at $683 million against a circulating market capitalisation of roughly $125 million, a ratio far below one.
Treat the output as a comparison, never as a verdict. TVL is quoted in US dollars, so the denominator re-prices whenever deposited assets move, and a ratio can fall without the token getting any cheaper in real terms. Deposits can also be rented rather than earned, since protocols routinely pay emissions to attract them, and the ratio is simply undefined for businesses that hold no deposits at all, such as launchpads or a pure fee-capture application whose contracts never custody user capital. Read it alongside a revenue multiple and the unlock schedule, and only against comparable protocols in the same sector.
Real World Examples
Arbitrum: Three Times the Size, the Same Ratio
View →With real circulating supply around 12.75%, ARB's market capitalisation stood at $1.49 billion against $2.38 billion of TVL. Optimism's $0.54 billion sat against $848.83 million. Both differences were close to threefold, so the market cap to TVL ratios landed at 0.62 and 0.63, and the analysis concluded that on current circulating supply the two prices looked appropriate relative to each other.
Optimism: Where the FDV Version Disagrees
View →The picture changed on fully diluted value. Measured that way, ARB and OP produced FDV to TVL ratios of 4.65 and 8.15, a much wider gap than the near-identical market cap ratios. The analysis read the divergence as either ARB being priced too low or OP too high, with the difference driven by remaining supply rather than by on-chain usage.
Solayer vs EigenLayer: 65x the TVL, Less Market Cap
View →In March 2025, LAYER held a market cap of $286 million against EIGEN's $273 million, while Solayer's TVL of $140 million sat against EigenLayer's $9 billion. Tokenomist flagged the disconnect between price and fundamentals; LAYER went on to fall over 60% from its peak, in a pattern the analysis compared to the earlier OM collapse.
Radiant Capital: TVL Well Above Market Cap
View →Radiant Capital's TVL was estimated at $683 million while the market capitalisation of its circulating native tokens was approximately $125 million, putting the ratio far below one. Radiant's design is a reminder to check what the deposits cost: users had to lock dynamic liquidity tokens to activate RDNT emissions on deposits and borrows.
Frequently Asked Questions
What counts as a good market cap to TVL ratio?
There is no absolute threshold, only comparisons. Arbitrum and Optimism at 0.62 and 0.63 told you the two were priced consistently with each other, not that either was correctly priced. The ratio is most useful between protocols of the same type, where deposits mean roughly the same thing, and least useful across categories where a dollar of TVL does very different work.
Should I use market cap or FDV against TVL?
Run both. Market cap to TVL prices the tradeable float against present usage; FDV to TVL prices the eventual supply against that same usage. ARB and OP showed why: near-identical ratios on market cap (0.62 versus 0.63) and a wide spread on FDV (4.65 versus 8.15). The gap between the two versions is a supply story, and it belongs next to the unlock schedule rather than next to the deposit data.
What does the ratio miss?
Three things. TVL is denominated in US dollars, so the denominator moves when deposited-asset prices move, with no change in usage. Deposits can be bought with emissions, as with Radiant's requirement to lock dynamic liquidity tokens before RDNT rewards activated, so part of the base is rented. And the ratio does not exist for protocols that hold no deposits, where a revenue multiple is the appropriate tool instead.
Where does the TVL figure come from?
In Tokenomist's research the TVL side is sourced externally, typically from DefiLlama, while Tokenomist supplies the supply-side inputs: circulating supply, market cap, fully diluted value and the unlock schedule that separates the two ratio versions. That division of labour is worth keeping in mind, because the numerator and denominator update on different cadences and from different methodologies.
Related Terms
total value lockedmarket capmarket cap vs fdvfully diluted valuationtoken price to earningsprotocol revenue
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Supply-side analysis for educational purposes. Not financial advice. Verify assumption and precision labels on the relevant token page.
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