Definition
Total value locked (TVL) measures the monetary value of assets deposited in a protocol or group of protocols under a specified methodology. It is commonly used to describe the scale of DeFi deposits, not the protocol’s revenue or market capitalization.
How It Works
A simple calculation multiplies each counted token balance by its reference price and sums the results. For example, 100 tokens priced at 20 units contribute 2,000 units of TVL. The figure can increase because prices rise even if no new tokens are deposited. Providers differ on whether they include borrowed, restaked or native governance assets.
Key Considerations
TVL should be read with its date, currency and counting rules. Reusing receipt tokens across protocols can produce double counting in ecosystem totals. A high TVL does not establish profitability, security or available withdrawal liquidity. To understand activity, consider net deposits, borrowing utilization and trading volumes alongside TVL.