This paper investigates the relationship between Total Value Locked (TVL) and the yield dynamics of liquid restaking tokens (LRTs), a key component of decentralized finance (DeFi). Using data from the Pendle protocol, we systematically explore how liquidity levels relate to fixed yields and implied annual percentage yields (APYs) across contracts. Statistical methods, including quantile analysis, Anderson-Darling, and Kolmogorov-Smirnov tests, reveal statistically significant disparities in yield distributions across TVL quantiles. We further assess economic significance via median differences and effect sizes, illustrating that these disparities are also practically meaningful. Our results demonstrate that lower TVL pools consistently offer higher yields, reflecting elevated risk premiums demanded by investors and the inherent risks associated with lower liquidity. These findings carry practical implications: investors can leverage these systematic yield differentials for arbitrage strategies, while protocol designers can optimize yield structures to enhance competitiveness and support sustainable liquidity. Additional time-series analysis confirms that TVL and yields share a stable long-term relationship, while Granger causality tests do not indicate a unidirectional causal effect. This study is among the first to systematically evaluate the relationship between TVL and yield dynamics in LRTs, offering insights into building more resilient and efficient decentralized systems.
Emiliya James, Parthajit Kayal, Moinak Maiti, G. Balasubramanian
This study examines the hedging and safe-haven characteristics across the various segments of non-fungible tokens (NFTs). It adopts the case study approach to blend the key study findings on the risk and return aspects of different NFT segments. The study finds that various segments of NFTs have mixed levels of correlations with traditional financial assets. Online games and metaverse segments of NFTs display a link to the crypto assets. Similarly, only the metaverse segment shows an association with the market sentiment. Art, online games, and collectibles segments within the NFTs space show mixed levels of hedging. However, all NFT segments under consideration show ambiguous safe-haven facets. Overall, the present study highlights some of the important aspects to consider while investing in the different segments of NFTs with respect to portfolio optimization, market dynamics, and risk management. JEL Codes: C12, C13, J64
Non-Fungible Tokens (NFTs) have revolutionized various industries and aspects of the digital world in several ways. Built on blockchain technology, NFTs provide a secure and transparent way to establish ownership and provenance of unique digital or physical items. This has wide-ranging implications, from art and collectibles to virtual real estate and digital goods. While NFTs offer many benefits, however, they also raise concerns, including environmental impacts due to energy-intensive blockchain networks, copyright and plagiarism issues, and speculative bubbles in the NFT market. In this work, we collected 200,000 tweets about NFTs and employed state-of-the-art neurosymbolic AI tools to better understand what are the online conversation drivers and sentiments around NFTs and, hence, gain insights about what makes them valuable.