Total value locked (TVL)
Also called: TVL
Definition
Total value locked (TVL) is the total market value of crypto deposited in a DeFi protocol or blockchain's smart contracts, used as a rough measure of its size and usage.
This entry is shown in English.
How Total value locked works
TVL adds up assets in pools, lending markets, staking contracts and vaults, valued at current market prices. Data sites such as DefiLlama track TVL for protocols and for entire chains.
Because it is measured in dollars, TVL rises and falls with token prices even if nobody deposits or withdraws. A protocol's TVL can drop 30 percent in a market sell-off with no change in users. TVL can also be inflated by counting the same assets twice, for example ETH staked for an LST that is then deposited elsewhere.
TVL is useful for comparing size and liquidity, but it does not measure revenue, profit or safety. A high-TVL protocol can still be exploited, and rewards can attract short-lived deposits that leave when incentives end.
Example
Imagine a lending protocol holds 40,000 ETH at 2,500 USDC each and 150 million USDC in stablecoins. Its TVL is 40,000 times 2,500, which is 100 million, plus 150 million, for 250 million dollars. If ETH falls to 2,000 USDC, the ETH part drops to 80 million and TVL becomes 230 million, an 8 percent fall without anyone withdrawing.
Common mistakes
- Reading a TVL drop as users leaving when it is mostly a price fall.
- Treating high TVL as proof that a protocol is secure.
- Comparing TVL across sites that count staked or borrowed assets differently.
Learn and practise
FAQ
Is a higher TVL better?
It usually means more liquidity and usage, but it does not guarantee safety, sustainable revenue or good token performance.
How is TVL different from market cap?
Market cap values a token's supply. TVL values assets deposited in a protocol's contracts. They measure different things.