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.