Skip to main contentMeasuring penetration in a declining market requires shifting focus from absolute growth to relative dominance and capital quality. In a bear market, TVL often drops simply because token prices are falling, even if no one is withdrawing funds.
Relative Penetration (TVL Dominance)
Instead of looking at your TVL in USD, measure your slice of the total pie. If the entire market drops by 50% but your TVL only drops by 10%, your Relative Penetration has actually increased significantly.
TVL Dominance = Protocol TVL / Total Sector TVL
Adjusted Net Inflow (The “Anti-Price” Metric)
To see if your incentive program is actually “penetrating” the market with new users, you must strip away price fluctuations. Measure penetration in Native Units or Stablecoins.
Delta Deposits - Delta Withdrawals in Token units
Why it matters: If your USD TVL is “negative” but your ETH-denominated TVL is positive, your incentive program is working. You are successfully attracting more assets; the “market” is just devaluing them.
Incentive Stickiness (Retention Rate)
In declining markets, “mercenary capital” (users who jump from protocol to protocol for the highest yield) flees first. You can measure the penetration of Conviction Capital using a retention formula:
Retention TVL Remaining after X days / Initial Attracted TVL 
