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Analyzing Market
Glossary

Total Value Locked (TVL)

Total value locked (TVL) is the combined value of all assets currently deposited in a DeFi protocol — or across the whole DeFi sector. It is the most common gauge of how much capital a protocol has attracted.

How it works

TVL is calculated by adding up every asset supplied to a protocol’s smart contracts — for lending, liquidity, staking and similar — and valuing it at current prices. Because it is priced in a currency like the US dollar, TVL moves both when users deposit or withdraw and when the underlying asset prices change, even if the number of tokens stays the same.

Why it matters

TVL is a quick proxy for adoption and trust: more capital locked suggests users are willing to commit funds. It should be read with care, though, since rising token prices can inflate it and the same assets can sometimes be counted across linked protocols.

Example

If a lending protocol holds deposits worth a billion dollars, its TVL is one billion dollars.

Total Value Locked (TVL): Frequently Asked Questions

How is total value locked calculated?
TVL is calculated by adding up every asset supplied to a protocol's smart contracts for lending, liquidity, staking, and similar uses, then valuing it at current prices. Because it is expressed in a currency like the US dollar, the figure moves both when users deposit or withdraw and when the underlying asset prices change.
What does a high TVL tell me about a protocol?
TVL is a quick proxy for adoption and trust, since more capital locked suggests users are willing to commit funds. A high figure can indicate confidence, but it should be read with care. It does not directly measure profitability or safety, only how much value is currently deposited.
Can TVL be misleading?
Yes. Because TVL is priced in dollars, a rising token price can inflate the number even if no new deposits arrive. The same assets can also sometimes be counted across linked protocols, double-counting capital. For these reasons TVL is best used as one signal among several rather than a definitive measure.
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