In a recent clip shared by the official Solana account on X, Lily Liu, the President of the Solana Foundation, breaks down why Total Value Locked (TVL) – a popular metric in the crypto space – isn't as crucial as many think. For those new to the term, TVL refers to the total amount of assets locked in decentralized finance (DeFi) protocols on a blockchain. It's often used to gauge a network's popularity and economic activity, but Liu argues it's not the full picture.

The clip, from an appearance on the Unchained podcast, has sparked discussions in the Solana community, especially among meme token enthusiasts. Solana has become a hotspot for meme coins like BONK or WIF, thanks to its lightning-fast transactions and low fees. But as Liu points out, TVL can be misleading because it doesn't capture how actively that locked value is being used.

She uses a simple example: Imagine $100 million in TVL sitting in a lending protocol. If it's only touched once a year – say, deposited and withdrawn – it generates fees just twice. But if that same $100 million is traded or borrowed multiple times a minute, the fee generation skyrockets. TVL alone doesn't tell you which scenario is happening. "It's not a metric that tells you how much value that liquidity is actually bringing to the broader ecosystem," Liu explains.

This resonates deeply with the meme token scene on Solana. Meme coins thrive on hype, rapid trading, and community engagement rather than long-term locked value. Platforms like Pump.fun allow anyone to launch a meme token instantly, leading to explosive volume but not necessarily high TVL. Solana's high throughput – processing thousands of transactions per second – supports this frenzy, creating real economic activity through fees and trades, even if TVL lags behind networks like Ethereum.

Liu emphasizes that while TVL provides baseline liquidity for others to trade against, it's not the "end-all, be-all" metric. In the context of Solana's ecosystem, where meme tokens drive massive user adoption and on-chain activity, metrics like transaction volume, active users, and fee revenue might paint a better picture of health and growth.

For blockchain practitioners diving into meme tokens, this is a reminder to look beyond surface-level stats. Focus on networks that enable real, frequent interactions – that's where the value capture happens. If you're building or trading on Solana, Liu's take validates the platform's strength in fostering dynamic ecosystems over static locks.

Check out the full clip in the original tweet to hear it straight from her. As the crypto world evolves, insights like these help us refine how we measure success in decentralized tech.