Network Economic Depth

Definition ∞ Network Economic Depth measures the economic activity, value, and liquidity present within a specific blockchain network or decentralized protocol. This includes factors such as total value locked in decentralized finance, transaction volume, active user count, and the market capitalization of native assets. Greater depth indicates a robust and highly utilized ecosystem.
Context ∞ Network economic depth is a crucial metric for assessing the health and utility of a blockchain, particularly for institutional participants evaluating investment opportunities. Debates sometimes concern the accuracy of various metrics and how to account for different types of economic activity. Future analysis will increasingly focus on granular data points to provide a more comprehensive understanding of value creation and retention within decentralized networks.