Glossary

Total Value Locked (TVL)

Plain-language definition Crypto glossary

Key takeaways

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 calculated by summing every asset supplied to a protocol's smart contracts and valuing it at current prices, so it moves both when users deposit or withdraw and when underlying prices change.
TVL is a common proxy for adoption and trust, but it should be read with care since rising token prices can inflate it and the same assets can sometimes be counted across linked protocols.

Definition

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.

FAQ

Frequently asked questions

Does a higher TVL mean a protocol is better?

Not on its own. A larger TVL suggests users are willing to commit capital, which signals adoption and trust, but it can be inflated by rising token prices or by counting the same assets across linked protocols. It is a useful gauge, not a verdict.

Why does TVL change even when no one deposits or withdraws?

TVL is priced in a currency like the US dollar, so it moves whenever the value of the underlying assets changes. The number of tokens locked can stay the same while their dollar value rises or falls with the market.

What does TVL actually measure?

TVL measures how much capital a protocol has attracted into its smart contracts for activities like lending, liquidity and staking. It is a quick proxy for the scale of usage and the confidence users place in a protocol.