Network Effect
The phenomenon where a product or service becomes more valuable as more people use it.
In-Depth Explanation
Network effects are powerful moats in crypto. DEXs become more valuable with more liquidity (better prices attract traders, who attract more LPs). Blockchains benefit from developer and user network effects. Protocols with strong network effects can sustain higher take rates because switching costs increase with adoption.
Related Terms
More in Metrics
View all →Total Value Locked
TVLThe total value of crypto assets deposited in a DeFi protocol or across all of DeFi.
Protocol Revenue
Fees collected by a protocol that accrue to the protocol itself or its tokenholders, rather than to liquidity providers or other participants.
Take Rate
The percentage of transaction volume or fees that a protocol captures as revenue.
Fees
Total fees generated by activity on a protocol, regardless of who receives them.