What is a DeFi Diversity Score?
The DeFi Diversity Score is a metric that measures how many decentralized finance (DeFi) protocols collectively make up 90% of a blockchain ecosystem's total value locked (TVL). In essence, it quantifies the concentration or dispersion of value within a network's DeFi sector.
Key Points
- Calculation: The score is determined by counting the number of protocols that together account for 90% of the ecosystem's DeFi TVL. For instance, if five protocols together make up 90% of a network’s TVL, the DeFi diversity score for that network is 51234.
- Interpretation:
- High Score: Indicates a well-diversified DeFi environment—many protocols share the majority of the capital, lowering systemic risk.
- Low Score: Highlights ecosystem concentration—few protocols dominate, making the network more vulnerable if one major protocol encounters an issue5678.
- Ecosystem Comparison: Ethereum and Arbitrum typically show the highest scores (20+), representing a robustly diversified DeFi ecosystem, while networks like Hedera, Sei (pre-2024), and Stacks in earlier periods have much lower scores, reflecting high concentration4962+1.
- Usefulness: This metric is valuable for assessing risk, resilience, and maturity of a DeFi ecosystem. A higher diversity score often signals innovation, competition, and a lower likelihood of single points of failure184.
Example Table: DeFi Diversity Scores Across Networks
In summary:
The DeFi Diversity Score is a straightforward yet insightful metric that helps measure the health and resilience of a DeFi ecosystem by showing how widespread or concentrated TVL is across protocols. A higher score means more protocols are significant, while a lower score means only a few dominate the space.