Total Value Locked (TVL)
In simple terms
Total value locked adds up everything deposited in a protocol at current prices. It is the headline size figure, and it moves when prices move even if nobody deposits or withdraws anything.
Definition
The total value of assets deposited in a protocol, used as a rough measure of its size.
In depth
TVL sums the market value of assets held in a protocol's contracts, denominated in a reference currency. It is not a measure of revenue, profitability or user count, and it is sensitive to methodology: double counting occurs when a deposit receipt from one protocol is deposited into another and both report it, and TVL denominated in a volatile asset moves with that asset's price. Aggregators publish differing figures for the same protocol precisely because these choices differ.
How does Total Value Locked (TVL) work?
A tracker reads the balances held by a protocol's contracts, multiplies each by a price from an oracle or exchange feed, and sums the result. Because the price component is live, a protocol can lose a large fraction of its TVL in a day with no user doing anything at all. Conversely, TVL rising during a rally says more about prices than about adoption.
An example
A protocol reports an illustrative $500m TVL. The underlying assets fall 30 percent while every deposit stays exactly where it is, and TVL now reads $350m. Nothing about the protocol changed, and a headline about a $150m outflow would be simply wrong.
Figures are illustrative only.
What beginners get wrong
- Reading TVL as a safety rating. Several protocols with very large TVL have been exploited, and size attracts attackers rather than deterring them.
- Comparing figures across trackers without checking methodology, particularly how each handles double counting.
- Treating a TVL change as a deposit flow when it is mostly a price change.
Related terms
Part of
What is DeFi, and how does decentralized finance work? — the subject page for defi, with all 18 of its definitions in one place.
Educational only — not financial advice.