Skip to content
Onchain Economics
Metrics

Unit Economics

The direct revenues and costs associated with a single unit of business activity.

In-Depth Explanation

Unit economics asks: is each transaction, user, or dollar of TVL profitable? If a protocol pays $2 in incentives to earn $1 in fees, unit economics are negative. Sustainable protocols need positive unit economics, or a clear path to achieving them as they scale.

Learn More

Defi Unit Economics

Related Terms

Gross Margin

Protocol revenue minus the direct costs required to generate that revenue, expressed as a percentage.

Loan-to-Value Ratio

LTV

The ratio of borrowed amount to collateral value, determining how much you can borrow against your deposits.

More in Metrics

View all →

Total Value Locked

TVL

The 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.

Back to Glossary