Is the surge in TVL of lending protocols really a warning sign of a market top?

This question has been causing quite a stir in the community recently. Someone noticed a phenomenon: whenever the total locked value (TVL) of a lending protocol skyrockets, even surpassing the hundred-billion mark, a market top often follows. It sounds convincing, but is it really that absolute?

LISTA's performance on BNB Chain is quite representative. The TVL has already surpassed $4.3 billion and continues to grow. Some are worried: once it doubles to reach $10 billion, should we just exit everything and run?

My view is that TVL is just surface data. A high TVL indeed indicates a thriving ecosystem and also reflects leverage stacking — but this cannot be simply equated with crash risk. The key is where the growth comes from. TVL growth driven by assets like USD1 and slisBNB reflects genuine liquidity demand and ecosystem innovation. This kind of growth is healthy. Conversely, if TVL is purely inflated by cycles of borrowing and lending, then it’s definitely a warning sign.

Rather than blindly believing in the "hundred-billion curse," it’s better to judge based on leverage health. How to do that? Maintain disciplined position management — always keep a portion of assets in a no-debt state. This way, you can share in the ecosystem’s growth dividends and avoid forced liquidation during market volatility.

Having experienced several bull and bear cycles, my takeaway is: don’t guess the top, just control your positions. Data can be deceptive, but position management won’t. Don’t go all-in during the hype, and don’t zero out during panic. That’s the real way to survive long-term.