What is TVL and why do public RWA on the blockchain need to generate fees?

Total Value Locked (TVL) is a popular metric used to assess the health of blockchain ecosystems. However, according to Mike Cagney — CEO of Figure, a leading financial services company — increasing interest in Real-World Assets (RWA) on public blockchains will be completely ineffective if it doesn’t generate real yields for token holders.

The misconception between activity and true value — the problem with only looking at TVL

Cagney stated in a public discussion that the market often confuses activity levels with actual economic value. Metrics like Total Value Locked (TVL — meaning the total amount of funds deposited into protocols) only matter if they truly generate fees that benefit token holders.

He emphasized an important point: public blockchains are built to replace traditional financial intermediaries, not to support or contain them. This distinction is key to understanding why the presence of giant companies like Visa, Nasdaq, JPMorgan, or DTCC doesn’t automatically mean blockchain success.

The three pillars of token value: yield, utility, and governance

Cagney explained that true token value comes from three fundamental sources:

Yield is generated from network fees and other cash flows. This mechanism allows token holders to share proportionally in the value created on the network.

Utility includes tangible benefits such as lower transaction fees, better access to financial products, or increased transparency. These benefits can be converted into monetary savings or real cash.

Governance enables token holders to influence system rules and outcomes. When decision-making power is decentralized, users have more control over the network’s future.

The clear conclusion: ecosystem metrics or TVL only have real meaning if they increase fees paid to token holders. Without this mechanism, they are just numbers that don’t reflect economic value.

Why major companies like Visa can’t (and won’t) pay high blockchain fees

Cagney made a strong economic argument: the fact that traditional financial companies explore blockchain doesn’t mean public networks will benefit from them. Take Visa as an example: if this payment company processes transactions on a blockchain but pays very low network fees, then neither the blockchain nor token holders will receive real value.

The core issue is: Visa owns most of its infrastructure. They keep costs low and have little incentive to pay more than they currently do. Even if they use blockchain, they will seek to minimize fees — just as they do with all other infrastructure.

Cagney pointed out an inherent conflict of interest: traditional financial firms exist to act as intermediaries and profit from transactions. Public blockchain, on the other hand, aims to eliminate these intermediaries entirely. The real value of blockchain comes from making companies like Visa or DTCC obsolete, not from supporting their continued operation.

The same applies to clearing, settlement, and exchange infrastructure. Merely moving parts of the traditional system on-chain doesn’t create the same economic impact as fully replacing them with decentralized finance.

Stablecoins and payments: from theory to practice

The discussion also touched on the role of stablecoins in consumer payments. Cagney noted that stablecoins combined with biometric technology and multi-party computation could reduce fraud by eliminating credit card numbers and centralized identity data. Without these attack points, common payment fraud would decrease significantly.

However, critics raised valid concerns: irreversible transactions, wallet breaches, smart contract exploits, consumer protection, compliance, and insurance.

Cagney responded that stablecoin payments function like digital cash — settled instantly with no refunds. With lower fraud risk, blockchain systems don’t need complex fraud mitigation solutions like credit card networks. Merchants can also directly reward users through faster payments and lower fees.

Decentralized governance — a key factor for RWA success

Transparency and decentralization are essential for any successful blockchain system. Cagney cited Provenance blockchain and HASH token as prime examples. This network focuses on generating real fees for token holders instead of just increasing TVL, limits token issuance to maintain value, and provides token holders with both utility and voting rights.

Recent data shows the RWA market is booming: Solana’s RWA ecosystem hit an all-time high of $873 million, with an impressive 325% growth throughout 2025.

Conclusion: RWA needs to replace, not just participate

Finally, the discussion highlighted a profound issue for RWA: the true progress of public blockchain doesn’t depend on traditional finance simply participating in the system. Instead, it must build entirely replacing networks for old intermediaries. Only then does TVL truly matter — not as an activity indicator, but as a reflection of the real economic value created for all participants.