On-Chain Capital

Definition ∞ On-chain capital refers to the value of digital assets, typically cryptocurrencies or tokens, that are actively held and utilized within a blockchain network. This includes assets locked in decentralized finance (DeFi) protocols, used for staking, or serving as collateral. It represents the measurable economic activity directly recorded on the distributed ledger. This capital is distinct from assets held in centralized exchanges.
Context ∞ The movement and allocation of on-chain capital are crucial metrics for assessing the health and activity of decentralized ecosystems. News often reports on changes in total value locked (TVL) in DeFi, indicating shifts in investor confidence and utility. Increases in on-chain capital can signal network growth and greater adoption of specific protocols, while outflows may suggest declining interest or security concerns.