DeFi Total Value Locked Rose $20 Billion but Token Price Inflation May Explain Much of the Gain

WHY IT MATTERS

In traditional finance, if a bank reports that total deposits grew by $20 billion, that usually means customers actually deposited more money. In DeFi, the equivalent metric — total value locked, or TVL — works differently. Imagine you deposited one gold bar into a vault last month. If the price of gold doubles, the vault now reports twice the value, even though you did not add anything new. That is essentially what can happen with DeFi TVL when crypto token prices rise. This story matters because TVL is one of the main numbers people look at to judge whether DeFi is growing. Understanding that price changes can inflate this number helps beginners avoid being misled by headline figures and encourages looking at multiple data points before drawing conclusions.