Overview
Total Value Locked, or TVL, is a metric used in decentralized finance to measure the total amount of assets deposited into a protocol's smart contracts, usually expressed in U.S. dollars. It is widely used to compare the size and adoption of DeFi protocols and chains. Higher TVL generally indicates more capital and user trust, though it is not a direct measure of safety.
How It Works
TVL aggregates the dollar value of all assets held in a protocol, whether in liquidity pools, lending markets, or vaults. Analytics platforms like DefiLlama sum these deposits across every protocol and chain, using token prices and on-chain balances. Because it is dollar-denominated, TVL moves with asset prices as well as with real inflows and outflows.
Why It Matters
TVL is the most common headline metric for DeFi growth and is used by users, researchers, and media to gauge market share. It can be inflated by double-counting, borrowing to deposit, or price appreciation, so it must be read alongside user numbers and volume. For choosing between protocols, TVL indicates liquidity depth, which reduces slippage and risk of bank runs.
Related Concepts
TVL is tracked by analytics tools like DefiLlama and applies across Liquidity Pools, Lending protocols, and Yield strategies. It is a key dimension in comparing DeFi projects and chains.