Total Value Locked

What is TVL?

TVL is the total dollar value of all assets deposited into a DeFi protocol. It is the primary metric for measuring a protocol's size, liquidity depth, and user trust.

How does TVL work?

TVL is calculated by summing the value of all assets in a protocol at any given moment. For a lending protocol it includes total collateral; for an AMM it is the sum of all liquidity pool values.

TVL changes continuously as users deposit and withdraw and as asset prices fluctuate.

Why does TVL matter?

Higher TVL means more liquidity, lower slippage, and greater protocol stability. It is the key signal investors and users use to evaluate whether a protocol is trusted and battle-tested.

Key features of TVL

• Aggregated across all pools and vaults in a protocol
• Tracked in real time by tools like DefiLlama
• Rises in bull markets as asset prices increase
• Sharp TVL drops signal user withdrawals or a protocol crisis

Examples of TVL

• Aave consistently holds billions in TVL, making it the benchmark for lending protocols.

• A new protocol launching with $1 million TVL is considered high risk.

• A protocol dropping from $100 million to $10 million TVL signals users are losing confidence.