Instadapp
Investment Thesis
Given the rise in U.S. treasury yields (5.00% - 5.25% at the time of writing) and the suction of liquidity that ensued from risk assets, perhaps the most useful metric to gauge product-market fit at this stage of the bear market is Total Value Locked (TVL). Essentially, the consideration that is front and center in the minds of savvy investors is, ‘Would this investment or strategy yield better than 5% on a risk-adjusted basis?’
In our view, TVL is a direct reflection of that question - it is an investor’s expectation of return for locking their liquidity in a specific dApp. For reference, DeFi TVL plummeted 15% for the past 12 months as risk-free rates rose. Conversely, Instadapp TVL increased by 40% in the same period. In this piece, we explore the drivers of this, and more specifically, how a protocol with $25m market cap has managed to retain $2.2b in TVL (9th out of all DeFi apps per DeFiLlama).
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