At a Kraken-hosted webinar titled “DeFi-ing expectations: the future of Ethereum,” panelists discussed the rise of decentralized finance, its defining features and how to measure its success.

The webinar was held on July 31 and featured known DeFi influencers Anthony Sassano, co-founder of, Ryan Sean Adams, founder of Mythos Capital, Andrew Keys, managing partner at Darma Capital and former ConsenSys executive, and William Mougayar, an early Ethereum investor and former advisor to the Ethereum Foundation.

Pete Rizzo, editor-at-large at Kraken, moderated the panel, often asking somewhat provocative questions about the nature of the DeFi movement.

Metrics and decentralization

One of the questions touched on the Total Value Locked metric, with Rizzo asking why it matters and what is its utility. 

Sassano gave a brief introduction, noting that it was first popularized by statistics website DefiPulse as a way of measuring how much Ethereum is locked in the protocols, with the implication that it would not be contributing to selling pressure.

“That’s a very primitive way to look at it,” Sassano said, explaining that the metric recently came under scrutiny as that value can be easily withdrawn from the networks. 

A potential improvement would be the metric of “on-chain cash flow” which measures how much money goes through the protocols in a given period. Wash trading could still be used to bolster this metric, he warned, especially if the protocol does not collect fees. “Any metric that we try to assign is going to be imperfect due to the way the systems are designed,” he concluded.

Keys proposed a different metric:

“What I’m most interested in is the Gini coefficient. I want to see millions of people take out $100 loans rather than one person taking a $1 million loan. [...] I think that’s an important metric for the growth of the ecosystem so we don’t have [...] a 1% [against] 99% type economy again.”

This hits at an important issue with the current top-heavy nature of the DeFi ecosystem. For example, 30 wallets account for over 70% of activity on platforms like Compound, according to DappRadar data.

Keys also maintained that the Gini coefficient is an important component of measuring decentralization, saying:

“We need to decentralize the user base. The smaller [the] amounts of money, the better.”

Nevertheless, Sassano noted that due to the current cost of Ethereum gas fees, starting out small in the DeFi space is somewhat impractical.