Part 5/8:
Yet to get the best out of this index, it has to be used in conjunction with other metrics that guide investment decisions.
Tool #3: Defillama and Total Value Locked (TVL)
Each altcoin has its intricacies, and one of the best ways to gauge potential is through Total Value Locked (TVL). This metric measures the capital staked in specific altcoins and provides insight into their traction.
For instance, when I compared two altcoins, Aura and Stader, I noticed they both had similar TVLs of around $630 million. However, Stader's market cap stood at $30 million—almost 25% less than Aura’s. Such disparities can signal greater potential growth for lower market cap coins as they may be underappreciated relative to their locked value.